The Physics Siege
In 2021, I walked away from ₹48 Lakhs in monthly revenue. That’s ₹5.76 Crores a year ~ 20% of my total business at the time.
My team thought it was crazy to walk away from it. My competitors thought I was naive. But I had done the math on Pressure.
The Trap
The client was a providing service to a government agency in Chandigarh. As Covid lockdown ended, contract renewal discussion were scheduled.
The optics were beautiful: “Huge volume,” “Prestige client,” “Top-line growth.” The reality was a suicide pact.
With pressure mounting from their HQ, the local team demanded a service fee reduction from 5% to 3%, while extended payment terms to 60 days from current 45 days.
I opened my spreadsheet and looked at the Real Math:
- Service Fee: ₹2.4 Lakhs
- Direct Overheads: ₹1.0 Lakhs
- Interest on Working Capital (₹72L locked): ₹75,000
- TDS Deduction: ₹96,000
- Net Cash Flow: Negative ₹31,000 per month.
The Verdict: Even if the books showed a theoretical 8.4% return, the cash reality was a bleed. I wasn’t running a business. I was financing their operations and paying for the privilege. A simple bank FD would have given me ~7% returns with zero risk and zero stress.
The Blade: P = F / A
In physics, Pressure (P) equals Force (F) divided by Area (A). In business, this equation determines if you break.
- Force: The financial demands (Working capital, compliance liability, interest).
- Area: Your margin and terms.
The client was increasing the Force (60-day terms) while shrinking my Area (3% margins). When Force goes up and Area goes down, Pressure creates a fracture.
The Walk Away
I countered: “I can do 3%, but only on immediate payment.” (Reducing the Force). They refused. I declined the renewal.
They hired a competitor who said “Yes” to the bad math. Six months later, that competitor was caught underpaying EPF and ESIC compliance payments to survive. The pressure had forced them to cut ethical corners. They are now fighting government audits.
The Monday Morning Raid
Stop worshiping Revenue. Revenue is vanity. Cash flow is gravity.
Run the Index Fund Test on your biggest client this week:
- Calculate the True ROI (Net Profit / Working Capital deployed).
- Compare it to a Nifty Index Fund (12-15% return, zero effort, limited stress).
If your client yields less than 15% and demands 100% of your stress, you aren’t an entrepreneur. You are a subsidizer.
Fire the client. Save the business.