Having the lion’s share of your sales coming from one market or handful of clients can be bittersweet.
On the one hand it’s comfortable with regular, predictable income. On the other, it links your success to theirs, if they struggle, you will too.
For and Against
When starting up you find your niche and excel at it, but as you grow this might need to expand.
I completely understand that specialising in one market, and/or servicing just a handful of big clients is easier and involves less administration, and allows you to focus on them really well. Keeping them happy is a full time job!
However, to rely on their custom if a competitor undercuts you, or their market conditions change for the worse, or they re-negotiate terms (as they know you rely on them) is quite a worry. Or at least it should be.
Eggs in one basket?
How much this golden egg of a market or client represents in your revenue is up to you of course, and I’ve read advice pieces that state you shouldn’t let it become more than 10 or 25%, which is a wide bracket. I’d say that common sense comes into play, can you survive without this business if something should happen? If not, let’s try and avoid the risk.
Spread the risk
Invest the profit you’re making during the good times into developing new markets and clients.
You can use your success with them as a springboard to new pastures. This doesn’t necessarily mean hiring lots of new staff, you can outsource until you are steady.
Your marketing and sales strategies should always include prospecting for new clients. Not just the big ones (though I get that it’s tempting!).
It’s Sales 101, keep your pipeline full.
If you don’t have time – find help- someone specifically to concentrate on new business.
Where do you start?
Look at what you have in assets (premises, tools, staff, IP) and how it can be used in other ways. What can you offer that doesn’t add cost?
Test yourself – look at your numbers. If you lost one sector or one big client, what would the impact be?
Check profitability. Is this sector or big client profitable or could another yield more? Not revenue-but profit.
I don’t want to scare you – I love a big sale as much as the next person – but keep your eye on the risk, and keep prospecting for new business. If you’re not sure how, get in touch.