Are You Treating Your Client Base Like An Investment Portfolio?

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It doesn't matter what trade you're in, what market you're in or even what industry you're in.

At the end of the day, client diversity is a big one.

Imagine that 50% of your business is dependant on a single client (this is something we see a lot when it comes to plumbers or electricians being largely dependant on a single builder!)... 

It might sound great because you're not so reliant on marketing to new clients, or your cashflow is fairly steady and seems safe.

But you've got to ask yourself... What happens if they go under? Or they choose to start using a different subcontractor? 

You've really just lost 50% of your business overnight, and that's going to be really hard to recover!

That's why you've got to look at your client base like you would an investment portfolio.

If you put all your eggs into one basket and invested all your money into the shares of a single business and that business goes under, then your whole investment portfolio will tank.

And that's why in the investment world, they're always pushing diversification.

Because if your portfolio is diversified, and one of the companies you've invested in does crash, then you've still got a safety net acting as protection and keeping your portfolio largely healthy.

You've got to have this same mindset when it comes to your client base to because if you're overly dependant on one or two clients, you're putting your whole business at risk because you don't have that protection...

And it's why we always recommend that no client should account for more then 15-20% of your revenue, because then you've got the remaining 80-85% acting as protection for your business and ensuring that if you do end up losing a client overnight, you'll still be safe!

If you're an electrician, plumber, painter, carpenter, or any other trade business owner who is looking to take your business to the next levelclick here to learn more about how our team can help!


Troy Larkham | Engineer & Trade Business Coach

About the author

From being raised on a cattle farm, to running around the workshop of my families V8 Supercar race team, my upbringing was nothing short of unique. The cowboy-motorsport influence naturally...


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