Diversifying your customer base is a good strategy regardless of the size of your business or what the economic forecast looks like. A wide customer base makes your business more valuable and manageable, and it means that losing one client will not hamstring your entire company.

Customer concentration can affect how you run your business. If your sales are concentrated among one or two large clients, those clients may dictate how things are done.

While it might sound “easier” to cater to fewer customers, business owners often end up bending over backwards to please those important clients — which means working harder and constantly feeling like someone else is in charge.

Having too few clients can create a risk-averse atmosphere where new ideas are passed up for fear of losing your one big fish. Procedures end up rigid and resistant to streamlining since everything is customized to your top clients.

All of this affects the value of your business, as buyers avoid businesses that have only a few big clients — they fear, rightly so, that those clients may decide to leave when ownership changes hands.

Remember that business owners don’t purposely try to narrow down their client list. It’s just something that happens over time if there is no sales strategy in place to pursue additional customers and explore new markets.

As long as you are in business, you should always be growing. Be aware and intentional about your purpose when it comes to growing. It should be a part of your operations, not an afterthought when there’s extra time. Even niche businesses can find ways to grow, serving a larger geographic area or expanding that niche.

So, if you find that your top five clients represent 25% or more of your business, what can you do?

First, face your fears. Reprioritizing energy and possibly “firing” clients is difficult. Eagle Corporate Advisors can bring an outside perspective, as well as the confidence needed to realize your worth as a service or product provider. Yes, sometimes this will lead to dropping clients who are a drain on your resources and clog your bandwidth.

You may have to adjust your prices and/or the scope of your work. Successful diversification of your client base should lead to a cycle of attracting more clients and then hiring new employees. Like the old question about what comes first, the chicken or the egg, sometimes a business will need to hire more staff before it can attract and serve more customers. An analysis of your specific situation will help determine the best strategy.

Customer and revenue diversification is essential to growing the value of your business. Eagle can help assess where your liabilities are in terms of customer base and what steps you can take to break away from the dangerous pattern of customer or revenue concentration.

Take our full Altitude Assessment here to find out more about how your business is currently performing in eight fundamental areas.