What you'll learn
How to calculate your customer concentration risk and understand what it actually means
Why losing your biggest customer doesn't have to be a catastrophe if you're prepared
The specific strategies that reduce concentration risk without losing the valuable customer relationship
How to expand revenue with existing customers in a way that strengthens rather than undermines the relationship
The relationship between customer concentration and business valuation
Preview
Many successful businesses have a revenue concentration problem they don't fully acknowledge. One customer represents 40%, 50%, sometimes 60% of revenue. It's usually not a problem, until it is. Until that customer goes quiet. Until their business changes direction. Until they get acquired and consolidate vendors. Until they decide to bring the work in-house or try a competitor.
The moment your biggest customer represents too much of your revenue, you're no longer running a business. You're running a customer that happens to have a business around it. And that customer knows it. It changes the dynamic. They have leverage. You can't push back on scope. You can't say no to unreasonable requests. You're always anxious about contract renewal.
The solution isn't necessarily to lose the customer. It's to systematically reduce your dependence on them while making them a more valuable strategic partner. But that requires a specific approach, one that most businesses don't have.
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About the author
Valont
Business capability firm for Australian SMEs
Articles published under the Valont name are written and reviewed by the Valont team, the specialists who do this work for Australian SMEs every day across Finance, People, Operations and Growth. Where a piece has an individual author, it is credited to them by name.
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