Why Contractors Need To Be Careful Of The Key Client Trap

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A lot of contractors fall into the trap of having one or two key clients that account for a large portion of their total revenue.

But this lack of diversity is dangerous...

Why?

Your client base is like an investment portfolio.

The less diverse, the greater the risk of a single investment jeopardising the entire portfolio.

It’s easy to not worry about diversifying because...

  • You don’t have to worry about marketing...
  • You don’t have to put yourself out there and build new relationships...
  • You have consistent cash flow coming in from a few key clients...

But you need to ask yourself...

What would happen if your biggest client disappeared?

You can’t be overly reliant on one builder, project, contract or relationship.

Even the slightest change in circumstance could have a devastating impact on your business.

A good rule of thumb is to have no client account for more than 15 to 20% of your revenue.

This way, if something does happen, you have some resilience to replace that revenue and recover.


If you're an electrician, plumber, painter, carpenter, or any other tradie business owner who is looking for assistance with your tax, accounting, and bookkeeping - click here to learn more!


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Troy Larkham | Client Advisor

About the author

Troy has worked with trade and construction businesses throughout Australia, from start-up to $20M in revenue, advising as a specialist in marketing, sales, pricing, and implementing...


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