Big Customer, Bigger Risk: When to Walk Away

Business owner reviewing customer concentration risk charts before deciding whether to keep a major client
A business owner assesses whether a major customer creates more risk than reward.

You should walk away from a big customer when the account’s profit, payment behavior, demands, or control over your business creates more risk than its revenue can justify. Customer concentration risk becomes especially dangerous when one client supplies more than 20 to 30 percent of your revenue and you have no credible replacement pipeline.

A dominant customer can look valuable on your income statement yet weaken your margins, consume your team’s capacity, and limit your ability to pursue better work. The decision isn’t simply whether you can afford to lose the account. You need to determine whether you can afford to keep serving it under the current terms.

What Is Customer Concentration Risk?

Customer concentration risk is the financial and operational exposure created when one customer provides a large share of your total revenue. The more dependent you become on that account, the more control it gains over your cash flow, staffing, pricing, and business decisions. View More... 

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