#4 Elephant in the Room: Customer Concentration 🐘

An elephant standing in an empty room, symbolizing the hidden danger of customer concentration in business.

A company we advised went from 245 consultants to just 70 due to customer concentration.

It was painful.

Customer concentration is when too much of your revenue depends on too few customers.

Many companies celebrate growth without recognizing the shadow it can cast.

When your largest customer leaves overnight, it can hit you like a ton of bricks. 😬

You already know the typical business journey.

Head down. Chase growth. Land big accounts. Celebrate the wins.

Just keep growing. 🙌

That approach can cost you everything.

That journey? It can build your revenue.

It’s how you can become known in your industry. 😊

• Expand operations, hire more people, and feel successful.

• Stop worrying about tomorrow and start celebrating today. 

>>>> But then reality can strike.<<<<

A client representing 70% of revenue gives 90 days’ notice.

Another $500 million business collapsed when their largest customer walked away.

Some businesses with pages of growth plans never consider this vulnerability. 📔  

You’ve been there too, right?

It’s dangerous. It’s deceptive. It’s the success that becomes your downfall.

But here’s the part that most people get wrong.

The solution isn’t to stop growing with big customers. It’s to grow even faster elsewhere.

Because while landing a major account feels great, it can also create a dangerous blind spot. You:

Celebrate the revenue

• Expand operations

• Hire more staff

And eventually, you realize: someone has to have the courage to address the elephant in the room.

Someone has to create a plan for diversification. (That someone being YOU .)

That’s when it’s time to think about your niche strategy.

If you’ve built a business dependent on a few key accounts...

...the next right step isn’t just enjoying success. It’s ensuring you survive if they leave.

The truth is, every business is vulnerable to customer concentration.

The secret: Define your niche and understand the profitability of each customer, not just their revenue.

So ask yourself…

What percentage of your business comes from your top three customers? What would happen if you lost one tomorrow?

Three Critical Steps to Address Customer Concentration 

1.    Awareness: Calculate your exposure. If your top customer represents more than 25% of revenue, or your top three more than 50%, you’re at risk.

2.    Profitability Analysis: Determine if your largest customers are actually your most profitable. Sometimes your biggest accounts operate on the thinnest margins, turning little or no profit.

3.    Strategic Diversification: Say “yes-if” rather than “no-because” to opportunities within your niche that could reduce concentration risk.

Hit reply and let me know: 

- What’s your current customer concentration percentage?

- What percentage of your total business is generated from your largest customer?

Harry T. Jones