What to do if you’re over-reliant on a single client

Landing a major client is a big win, especially in the early stages of growth. But with just one big client there’s an underlying risk that’s easy to ignore.

This is the uncomfortable reality of client concentration that we often see in smaller consulting firms. If one client accounts for more than 15% of your consultancy’s revenue, your business is carrying a level of risk that can quickly become a real headache.

That risk becomes even more serious when you consider that 46% of consultancies have three months or less of total business costs held as cash in the bank, according to our latest Consultancy BenchPress report.

Only one in five consulting firms are in the ‘15% club’, where no single client accounts for more than 15% of revenue. So, for most boutique consultancy leaders, over-reliance on a single client is the reality.

The question is: what should you do about it?

Don’t shrink the client, build around it

The first and most obvious strategy is to make, developing new business, a genuine strategic priority, not something that happens when delivery slows down. No one is suggesting you do less with your major client just to reduce the level of dependency. Those relationships should be protected, grown and valued.

The real objective is to build a broader base around that client, so the business isn’t dependent on one relationship continuing exactly as it is. It is easier said that done but essentially you need to win more deals of significance. The challenge is typically bandwidth.

Make developing new business, a genuine strategic priority, not something that happens when delivery slows down

In consultancies with a major client dependency, the best revenue-generating team members are often the most heavily tied up in delivery. That may make sense in the short term, but it can create a long-term problem. Somehow you need to ensure that the people most capable of opening doors, building trust and converting significant opportunities have the time to do it.

The decisions you make at the start of a big project are critical. You need to set the right expectations form the start so the client does not expect your rain makers onsite every day. Reduce their utilisation target, backfill their delivery expertise and get them out in the market talking to prospects.

Turn existing relationships into future demand

The first and simplest step in seeking to reduce dependency is to proactively seek referrals. Referrals from a major client can be powerful, especially when they create senior-level introductions into other organisations. The same is true when your key contacts move on. If you’ve delivered meaningful results for them, there should be a clear process for staying close to them and following the relationship into their next business.

Your best work should also do some of the selling for you. Too many consultancies deliver excellent outcomes for major clients but fail to make those outcomes visible enough. Case studies, awards, thought leadership, partner conversations and public proof points can all help turn existing success into future demand.

Your best work should do some of the selling for you

Strategic partnerships can play a role here too. The right partners can give you access to a broader range of clients, sectors and opportunities than you could reach alone. But they need to be treated as a growth channel, not a vague relationship-building exercise.

Make your biggest client relationship harder to lose

At the same time, you need to reduce the risk of losing the major client you already have.

A large client relationship should never depend on one founder, one delivery lead or one buyer, because this creates fragility. If that person leaves, loses influence or changes priorities, the whole relationship becomes vulnerable.

The stronger approach is to build multi-layered relationships across the client organisation. That means staying close to senior sponsors, but also developing relationships with department heads, budget holders, procurement and the people closest to the work. It means understanding where else the client has problems you can help solve, rather than relying on one budget or one team.

Large organisations will often have entirely separate decision makers and budgets and they can almost be treated as separate clients reducing the risk of all of the revenue disappearing.

A large client relationship should never depend on one founder, one delivery lead or one buyer

It is also important to be commercially disciplined. A major client should not be allowed to erode margin simply because they’re important. If they value the work, the commercial terms should reflect that.

Longer contracts, clear termination clauses and healthier account planning can all help make the relationship more secure without making it complacent. Statistically, larger contracts are typically more profitable than smaller contracts.

Make your value visible inside the client

This is often an angle that’s often overlooked. A consultancy can be doing great work, but if the value is only understood by one stakeholder, the firm is still exposed.

The work that you’re doing needs internal advocates. Sponsors need evidence they can use and procurement needs to have confidence in the quality of delivery, not just an understanding of the fees being charged.

Your objective is to make sure the client can see what’s changing because of your work.

That means doing a good job of internal PR inside the client organisation. Not in a self-promotional way, but in a disciplined, useful way. This might include sharing progress, showing outcomes, spreading learning over a structured lunch, translating activity into commercial, operational or strategic impact. Your objective is to make sure the client can see what’s changing because of your work.

Build reserves before you need them

One day your client will turn off the tap. The biggest danger is behaving as though that client will always be there.

If the business is still exposed to a small number of clients, it’s sensible to avoid distributing all your profits to the partners. Building cash reserves gives you time and it gives your sales and marketing investment longer to pay off. It also gives you options if a large client slows down, pauses or disappears altogether.

One day your client will turn off the tap

Our research, and having spoken to hundreds of consultancy leaders, tells us that the most resilient consultancies don’t simply protect their biggest client, they use the strength of that relationship to create the next generation of major clients around it.

And that’s your best way of reducing dependency without losing momentum.