Sample customer concentration report

ClientGuard audit (example data)

Customer concentration risk audit

Clients

8

Largest client

44.9%

Top 5 share

89.9%

HHI and effective clients

2,640 / 3.8

Clients ranked by share of revenue

Flags: red at 25% of revenue or more, amber at 15–25%, green below 15%. The paid report lists your top 10 clients.

12-step action plan

1. 1.Acme Corp is 44.9% of revenue ($96,000 of $213,600). Losing it would remove the equivalent of 5.4 months of total revenue in a year.
2. 2.To bring Acme Corp under 20% without losing any of its work, you need about $266,400 of new annual revenue from other clients (total revenue of $480,000). Make that the diversification target.
3. 3.TechBuddy is also large at 16.9%. Together your top two clients are 61.8% of revenue, so treat both as key accounts in the steps below.
4. 4.Your HHI is 2,640, the same concentration as 3.8 equally sized clients. US competition regulators call a market above 1,800 highly concentrated; getting under that means behaving like at least 5.6 equal clients.
5. 5.Check Acme Corp's contract: renewal date, notice period and termination terms. If it can leave without notice, propose a 60 to 90 day notice period or a longer retainer at the next renewal.
6. 6.Make sure more than one person at Acme Corp knows and values your work, so the account does not depend on a single contact staying in their job.
7. 7.Size your cash buffer to the exposure: Acme Corp brings in about $8,000 a month. Hold enough to cover your costs for the months it would take to replace that revenue.
8. 8.Replacing Acme Corp with clients like your median account ($12,000 a year) would take about 8 new clients. Set a quarterly new-business target with that number in mind.
9. 9.3 of your 8 clients each provide under 5% of revenue (10.1% in total). Pick the two or three with the most room to grow and plan how to expand that work.
10. 10.Your top 5 clients are 89.9% of revenue. Review pricing for this group at each renewal: large, long-standing clients often sit on older rates.
11. 11.Tag each client by industry and add up revenue per industry. If one sector is more than half of revenue, a downturn there hits several clients at once, even with a healthy client spread.
12. 12.Re-run this audit every quarter with the trailing twelve months and track three numbers: largest client share (now 44.9%), top 3 share (now 75.8%) and HHI (now 2,640).