Many years ago, one of my trade-based clients, Kevin, won a large government contract worth around $1.6 million per year over a five-year term — roughly $8 million in total.\

Kevin had spent a couple of years pursuing government contracts and had been building his business to handle work of this scale. Once he won the contract, he hired an additional 20 staff to deliver the project within the required timeframe. The first year went smoothly: deadlines were met, and the customer was happy. Everything was going well.

Then, at the start of year two, the government department decided it no longer needed the full scope of works agreed in the contract, and would instead only require around $400,000 worth of services per year. Kevin had built his business around the original contract value — not just in staffing, but in vehicles, computer equipment, software subscriptions, additional insurance, and expanded office space and fit-out.

Losing $1.2 million in annual income was devastating for Kevin and his business. He'd borrowed funds to grow the business and had taken on ongoing costs and commitments he could no longer meet. With surplus staff on the books — and being over 15 employees in NSW — we had to have serious conversations about redundancies.



We also had to work through some difficult discussions around solvency and restructuring. It was a hard few years for Kevin, and a clear reminder that relying too heavily on one source of income always carries risk.