Firstly – what exactly is Client Dependence? Client Dependence is over-reliance on ONE primary client. Sound familiar? Often when we are just starting out in business, and finally hook that one big client, the temptation can be to give them most of our time and energy. But relying too heavily on one client can be risky.
I’m sure most people understand the concept of “never put all your eggs in the one basket” as my mum used to say, but to be more specific, relying on ONE primary client leaves your business open to:
· Financial Vulnerability – If your client decides to reduce their spending, switch to a competitor or gets into financial difficulty then your cashflow is directly impacted – significantly. If your primary client pulled the pin tomorrow, how long would you be able to keep the doors open?
· Lack of Negotiation Power – If you have only one major client, they hold the balance of power. You need them, more than they need you. You may be forced into unfavourable terms or pricing structures, crippling your ability to grow in the future.
· Innovation Stagnation – If you are catering exclusively to one client, your creativity is stifled and your drive for innovation lessens. Your focus will naturally narrow – meaning you may miss out on new opportunities in other markets.
· Lack of Agility – Market conditions change rapidly, and industries are dynamic. Putting all your resources into one client can mean you are not as responsive and able to pivot as required.
· Over-dependency on Relationships – Whilst the very best businesses are built on robust relationship, relying on just one client can put excessive pressure on your relationship with them. Which, if it sours, can damage your entire business.
So how do you protect your business from becoming too reliant on the one client?
· Identify New Markets: Conduct thorough market research to identify potential clients in different industries or regions. Look for sectors that align with your expertise and can benefit from your products or services.
· Networking and Partnerships: Attend industry events, join professional associations, join your local Chamber of Commerce (and dare I say all those Facebook groups you’ve been avoiding) and leverage your existing network to build new connections. Collaborate with complementary businesses to expand your reach. Collaboration is one of the quickest and most effective way of broadening your reach without a huge investment of time or money – plus you build a great new business relationship simply by working on a project with a joint vision.
· Invest in Marketing: Develop a comprehensive marketing strategy that targets a broader audience. Utilise online marketing, social media, content marketing, and SEO to attract potential clients (or – see above re Collaborations). If you are interested in finding out ways of increasing your digital reach without increasing expenditure, book a Marketing Session with me today.
· Diversify Services or Products: Consider expanding your offerings to appeal to a wider range of clients. This might involve adapting your current products or services or introducing entirely new ones. Always remember though - diluting your attention from your core product or service can prove a distraction. So, if you are considering Diversification, get some solid advice and do your research first.
· Client Retention: While seeking new clients, don't forget to nurture your existing relationship(s). If you have smaller clients, don’t neglect them. They too, are growing their businesses, and may one day become a much more profitable source of income. And remember - a loyal client base can provide referrals and stability during times of change.
Mitigating your risk as a small business owner with these strategies will not only make your business more resilient to change but will encourage healthy growth. Which as a small business owner, is after all, the primary goal.
If you are keen to keep chatting all things business, book a free Discovery Call today.
Have an amazing week!