When one customer is too much of your revenue

Work out the actual number

Take last year's invoices and calculate what share your largest customer represents. Then the top three combined.

Anything over about a quarter from one customer is worth watching. Over forty per cent and the business is not really yours to run any more — their decisions become your decisions.

What it costs before anything goes wrong

Concentration changes how you behave long before it changes your income. You discount for them. You drop other work for them. You do not raise prices. You tolerate slow payment.

Each of those is rational on its own and together they are why a business with one big customer is frequently less profitable than one with twenty small ones.

• —What share your largest customer is
• —How long they have been growing as a share
• —Whether your prices to them have moved in two years
• —How long they take to pay compared with everyone else
• —How many months you could survive losing them

Growing out of it beats cutting

The instinct is to reduce the big customer. That is painful and usually unnecessary.

The better route is to grow everything else until the share falls, which means putting real effort into finding customers while you are busy — precisely when it feels least urgent and is most possible.

Advertising is cheap insurance here

A modest ongoing marketing spend while you have a full diary from one client is not a cost, it is a hedge. It keeps other work flowing and it means you are not starting from nothing if the call comes.

Businesses that switch marketing off because one customer is keeping them busy are the ones that get hurt worst when it ends.