This week’s edition of Let’s Talk tackles client concentration risk, and our experts share what they wish more founders knew before it became a crisis.
For many small and medium-sized businesses, landing a major client feels like a breakthrough. It often is. The contract is signed, the revenue is real, and the business finally has room to breathe. But when that one client grows to represent 50 percent or more of total revenue, a growth story can quietly become a vulnerability.
The relationship you cannot afford to lose becomes the one that keeps you up at night. In this week’s edition of Let’s Talk, our experts share how they think about client concentration risk, what they have done to protect their own businesses, and what they would tell any founder sitting with too many eggs in one basket.
Let’s Talk!
Jay Patel, Founder & CEO, Vrinsoft Technology
“50% of revenue coming from a single client, I think that’s basically a partnership at this point. We might think that it’s hypothetical, but I have seen this before. One client is helping the company keep the lights on. This is not an ideal scenario, because the more percentage of business they offer, the dependency increases. So, you need to start building a moat around your business.
First suggestion, don’t lose them, assign a dedicated, cross-functional team. Make sure to keep at least three people from your side to have direct relationships with their counterparts. That’s your real insurance.
Then, diversify your client base. Actively acquire smaller clients, even if they’re less profitable initially, to grow your denominator. Ten new accounts at modest monthly recurring revenue can meaningfully change your concentration ratio within a year.
I have been working in this industry for more than 16 years now, and we have faced similar issues. With the right approach and team, we can turn a single point of failure into a long-term partnership. Nurture the existing client, but make sure they are not the reason you have to run a “breakup simulation” every quarter.”
Brad Eisenhuth, CEO, The Outperformer
“Relying on a single client for over half of your revenue is a structural vulnerability that many passively accept because the alternative feels like hard work. Securing your business viability requires moving from being reactive to becoming a confident business builder.
Start by identifying your true risk tolerance. Be honest – if this client left tomorrow, what’s the immediate impact on your solvency? Avoiding this question only enables the risk.
Once you’ve faced the facts, you can secure revenue by deeply understanding your retention points, identifying service gaps and closing them. Stability here provides the confidence needed to diversify elsewhere.
Contrary to the belief that larger, more diversified businesses take more work, they’re often easier to run because they implement the right systems and hire outcome owners to manage delivery.
The transition to a resilient business requires the business owner to stop reacting and implement a deliberate business development strategy that systematically builds a portfolio to spread risk across multiple streams.
If you’re worried that your success is at the whim of a single contract, you need to embrace developing a strategic discipline to never let one client hold your future hostage.”
Pamela Jabbour, Founder and CEO, Total Image Group
“If one client accounts for more than half your revenue, your business is exposed. It may feel secure in the moment, but that level of concentration puts you at the mercy of decisions you don’t control, whether that is budget cuts, leadership changes, or shifting priorities.
I learned this the hard way. Early in my journey, we lost a major client that represented a significant portion of our revenue. It was a turning point, and it exposed just how vulnerable the business was.
That experience forced a reset. We made a deliberate decision to diversify, not just for growth, but for stability.
Today at Total Image Group, we actively manage client concentration. No single client is allowed to represent more than 5 to 10 per cent of our revenue. It takes discipline, especially when large opportunities present themselves, but protecting the business long term always outweighs short-term wins.
A diversified client base doesn’t just reduce risk, it gives you leverage, stability, and the ability to make better strategic decisions.”
Eamon Williams, Procurement Specialist, OneAdvanced ANZ
“Over-reliance on a single client is a significant but often overlooked risk for Australian companies.
When more than 50 per cent of revenue is tied to one relationship, any shift in that client’s priorities, procurement approach or financial position can quickly impact cash flow, resourcing and overall business stability.
This risk became highly visible during COVID, when many organisations suddenly discovered how exposed they were – not only to major customers changing spend patterns, but also to suppliers becoming unavailable overnight. Businesses that lacked clear visibility across contracts, obligations and supplier dependencies were forced into reactive decision-making at the worst possible time.
The starting point is visibility. Many organisations still do not have a clear line of sight over contract terms, renewal timelines, supplier commitments and revenue concentration. Modern procurement and contract lifecycle management platforms can surface these risks early, giving leaders the data needed to act before issues escalate.
With the right systems in place, businesses can identify concentration risk, upcoming renewal exposure, supplier vulnerabilities, and commercial pressure points early, allowing them to be proactive rather than reactive.
Diversification must then become a strategic priority. This is not just about winning new customers, but expanding within existing accounts across services, business units or contract duration to reduce dependency on a single revenue stream.
Stronger contractual protections are also essential. Well-defined notice periods, pricing mechanisms, service obligations and exit clauses provide a greater level of control if a key relationship changes unexpectedly.
Finally, scenario planning is critical. Understanding the financial and operational impact of losing a major client or supplier allows businesses to respond quickly and with confidence. Large clients can absolutely drive growth, but resilience comes from balance, visibility and preparation, not dependence.”
Paul Turner, Managing Director & CEO, Zynet
“Over reliance on a single client is one of the most underestimated business risks. If more than half your revenue comes from one source, you are effectively exposed to a single point of failure.
The first step is visibility. Understand your concentration risk and model the impact of losing that client. From there, build a deliberate diversification strategy. This does not mean chasing volume, but targeting the right clients across industries and revenue tiers to balance your portfolio.
At the same time, strengthen your operational resilience. Ensure your contracts, cash flow buffers, and delivery capabilities can withstand disruption. Many organisations overlook the importance of scenario planning and governance in this context.
Finally, deepen your existing client relationships while reducing dependency. Expand services where appropriate, but avoid structuring your business in a way that cannot operate without them.
Resilience comes from balance. Sustainable growth is not just about winning large clients, but ensuring your business can adapt if circumstances change.”
Morgan Wilson, Founder & Director, creditte accountants & advisors
“Client concentration risk is one of the most common and least discussed threats in small business. When one client represents more than half your revenue, you don’t have a business. You have a dependency.
The fix isn’t dramatic. It’s structural.
First, set a hard internal rule: no single client should exceed 30% of revenue. That number forces the conversation before the crisis.
Second, use the income from your anchor client to fund diversification. Reinvest a portion into sales activity, referral systems, or new service lines. The big client is buying you time, not security.
Third, document everything. Contracts, scopes, renewal dates. Owners in this position often have no formal agreement in place. If that client walks, so does your leverage.
Finally, be honest about your business’s valuation. A buyer will heavily discount any business with this level of concentration. It’s not just a cash flow risk. It’s an exit risk.
You can’t control when a big client leaves. You can control whether you’ve built something that survives it.”
Fiona Hamann, Founder and Principal, Hamann Communication
“Protecting your business when one client represents more than half your revenue isn’t easy, but can be done.
This has happened to me. That client eventually took their PR in-house to save money, and it was terrifying. When one client represents more than half your revenue, every potential client conversation carries a weight it shouldn’t have to. You also don’t want desperation pushing you toward clients you wouldn’t usually work with.
I now treat every retainer payment as part payment for the future. I set aside a fixed percentage into a separate account, building a buffer to carry the business through lean patches without panic driving decisions. It takes discipline, especially in quieter periods when you are tempted to reduce the amount. Try not to.
The harder work is diversification. Building your client base so no single source exceeds half of revenue. That means reaching out to contacts, posting regularly on LinkedIn, contributing to thought leadership, attending networking events, and investing in your SEO.
Review your contracts and notice periods so you know exactly how exposed you are if that big client moves on, and keep your network warm, even when business is good.
Easier said than done. Worth doing anyway.”
Maria Kathopoulis, CEO & Chief Marketing Officer, UNTMD Media
“Revenue concentration is not just a risk, it is a structural vulnerability.
If one client represents more than 50 percent of your revenue, you do not have a diversified business. You have a dependency.
Start by quantifying the exposure. If that client churns tomorrow, how long does your runway last. Most founders avoid this calculation because the answer is uncomfortable.
Then reduce reliance in controlled phases, not reactive panic.
First, lock in the relationship. Multi-year agreements, clear scopes, and embedded value across their operations. Make yourself operationally difficult to replace.
Second, ringfence your margins. Do not over-service to “protect” the account. That accelerates dependency while reducing profitability.
Third, build parallel pipelines. Not broad lead gen, but targeted acquisition of similar client profiles. You are not starting from zero, you are replicating a proven revenue source.
Fourth, productise elements of what you deliver. If one client is paying for it, others will too.
The goal is not to remove the client. It is to ensure losing them is survivable.
Until then, you are not scaling. You are exposed.”
Frances Pratt, Director, Metisan
“The moment one client represents more than half your revenue, you don’t have a business; you have a dependency. But before you run around looking for new clients, ask a harder question: Are they the right client?
I’ve lived this. I was director of a $6M business who deliberately walked a $2M client. Not because the revenue wasn’t real, but because they weren’t aligned with where we were taking the business. Holding onto them meant building our future on the wrong foundation.
If your biggest client doesn’t represent the work you want to be known for, concentration risk is the least of your problems. You’re being held in place by the wrong anchor.
If they are strategically aligned, then the conversation shifts. Build a defined best-fit client profile, a repeatable sales process, and a value proposition that works without you in the room.
Diversification is a revenue outcome. Strategic clarity is how you know which direction to grow.
Ask yourself: does your biggest client represent your best future? Or just your current comfort?
Annette Lackovic, Co-Founder, The Sales Institute
“Concentrating more than half your revenue into a single client is not a growth strategy – it’s a significant operational risk. We navigated this ourselves in 2022, when a large portion of our revenue was tied to high-pressure corporate contracts that demanded intensive travel and servicing. The stability of our business was entirely dependent on those few relationships, and the risk of a single contract ending was a constant threat.
To mitigate this, we made a strategic decision to transition from individual-reliant efforts to a scalable, recurring revenue model. By systemising our intellectual property and shifting focus toward group-based training, we built stability in our annual recurring revenue. This move provided the predictability and control needed to scale without the salesperson bottleneck or client dependency.
The lesson is that to protect your business, you must treat client concentration as a priority risk and act before a contract is lost. Set a strict concentration cap, aiming for no single client to represent more than 20% to 30% of your income. Diversify through layered offers, such as combining high-touch services with scalable group programs. Maintain a robust pipeline at all times to ensure you are never forced to make reactive decisions under pressure, and build a cash reserve that provides a financial buffer to protect your negotiating power.”
Charles Liu, Marketing Director, Cubic Promote
“If one client accounts for half your revenue, you don’t have a client—you have a dependency risk. The fix starts by increasing your indispensability. Make your work so embedded in their operations that replacing you feels costly, disruptive, and uncertain. Look for adjacent problems you can solve, even if they sit slightly outside your original scope. The goal is simple: become part of how they function, not just a vendor they hire.
Formal agreements help, but contracts alone won’t save you if the relationship lacks depth or value.
At the same time, you need a parallel strategy. Reduce exposure by actively building demand elsewhere. Invest in marketing that attracts similar clients, strengthens your positioning, and creates choice. When you have options, you negotiate differently.
Security doesn’t come from one big client. It comes from being essential—and from never relying on just one place to prove it.”
Michael Haynes, SME Business Growth Specialist, Listen Innovate Grow
“Concentration risk is one of the biggest vulnerabilities for any small business. If one client represents more than 50% of your revenue, the priority is not simply to “sell more,” but to build a more resilient revenue base.
For B2B professional services and IT firms, this should start with listening to your buyers and clients. Establish a regular client listening program using in-depth interviews, strategic client workshops, and structured check-ins with decision-makers. The goal is to understand their current priorities, business objectives, unmet needs, buying criteria, and future requirements.
These insights should then be shared across leadership, client delivery — including customer success, service and support teams — marketing, and business development. These are the business units integral to effective Go to Market execution, client retention, client expansion, and business growth.
The insights should be translated into practical action. This may include identifying opportunities to expand current client relationships, developing new advisory or service offerings, strengthening account management, and targeting similar buyers in adjacent markets.
Importantly, close the loop with clients. Let decision-makers know what you have heard, what actions you are taking, and how you are improving the value you provide.”
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