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13100 West Lisbon Rd, Suite 600

Brookfield, WI 53005

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Client Diversification Can Save Your Business


It’s great to land that big client. But counting on a single client – no matter how huge – is a recipe for failure. It’s critical for small businesses to have a diversified base of clients as they attempt to move forward and grow. This blog article was orginally published on the Small Business Experts Forum.

I learned that lesson the hard way. When I started one of my first companies. The business had three customers. One customer accounted for 90% of our revenue. When that client decided to scale back, we weren’t prepared and lost the majority of our revenue. It was a huge hurdle to overcome.

As I’ve grown, I’ve learned over the years the number-one key to my success has been customer diversification.

Always be Selling Even if you think you already have enough customers or clients to sustain your business at comfortable level, you should always be looking for new business. Many small business owners worry about having to staff up to accommodate new business. But that’s a good problem to have. After all, the goal is continued and sustained growth. Having new business prospects in the pipeline means you won’t be scrambling if you’re faced with a client leaving.

Size Doesn’t Matter It is extremely important to bring new customers on board, regardless of their size. Having a handful of smaller customers insures that if one leaves they won’t be taking the majority of your business with them. And replacing the revenue brought in by that departing business is much easier.

Use the 10% Rule The old axiom, “don’t put all your eggs in one basket” definitely applies when it comes to building your customer and client base. It’s a common business rule of thumb that no single customer should represent more than 10% of your annual sales. Let’s face it, clients come and go. In many case, it might have nothing to do with how you conduct business. Companies go bankrupt. Leadership changes on their end can cause a switch in vendors.

Plan for Client Departure Of course, having a positive attitude goes a long way, but planning for the what-ifs and mitigating risks is just smart business. Think about how any customer leaving would impact your business in terms of shifting resources, loss of revenue, time needed to on-board a new customer, etc. Having a plan in place – even if you don’t have to execute on it – will allow you to adjust and make decisions more quickly.

In the end, diversifying your client base ensures your business will grow and put you in control of your business’s success.

This blog article was orginally published on the Small Business Experts Forum.

Follow the Small Business Experts Forum on Twitter and Facebook.

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