Concentration risk.
THE PROBLEM
Depending heavily on one customer or one supplier.
WHAT THAT RISKS
One customer leaving takes most of your income One supplier failing stops your ability to deliver
WHAT PROPORTION IS TOO MUCH
If losing one customer would seriously damage the business, that is concentration.
WHAT TO DO
Work deliberately to add customers Establish alternative suppliers before you need them
THE ALTERNATIVE SUPPLIER POINT
Identify one and establish a relationship, even if you buy little from them.
Finding one during a crisis is expensive.
WHAT ELSE TO CONSIDER
Dependence on one platform, one payment provider, or one channel.
FOR PAYMENT
More than one way to accept money.
FOR SALES CHANNELS
If all your customers come from one platform, a change there affects everything.
WHAT TO MEASURE
The proportion of revenue from your largest customer The proportion of purchases from your largest supplier
WHAT TO REVIEW
Annually.
WHAT TO DO ABOUT HIGH CONCENTRATION
Reduce it deliberately, over time.
