Small Business Customer Concentration & How it Affects the Value of a Business.
Video from The CBB Group. Watch on YouTube.
What you'll get
A business broker explains how much revenue from one customer starts to worry a buyer, a bank or an appraiser, and what changes the risk: a recurring contract versus repeat business with no commitment, how long the relationship has lasted, whether it depends on a personal tie to the owner, and whether the contract needs the customer's consent or notice if the firm is sold. It is written for owners preparing to sell, but the same questions show any service founder how exposed they are to losing one client; the speaker works for a firm that brokers business sales.
Do this week
List your clients by share of last year's revenue, circle any that is more than a tenth, and for each one write down how long you've worked together, who at the client knows you and whether a contract covers the work.