A risk point for small business is having concentration in their revenue sources and the resulting receivables associated with them. This is one factor that banks look closely at when determining whether they will lend to companies with concentrations in their client base. If they do, they are likely to severely limit the advance ratio against receivables from the concentrated client(s). I reviewed financials for a company the other day that received 80% of their revenue from a single client. Can you imagine the impact to the small business if this client chose another vendor or experienced financial difficulties themselves? It also places the client in a position to negotiate tighter margins for you and better prices for them. In other words, they are dealing from a position of strength, because they know you are at their mercy. Think of it like this, if you have an investment portfolio, would you want 80% of your money invested in a single stock? Diversification is an important investment concept, but it also applies to small business, as well.
One of the services we provide is to analyze your revenue sources and to help develop strategies to reduce your dependence on just one or two clients. Please contact us if you would like our assistance.
Here is an article that speaks to some of this: https://www.inc.com/ed-powers/five-ways-to-cut-customer-risk.html
Although this article was written in Canada, it certainly applies to American businesses as well. One of the greatest gaps I see when working with companies is an adequate ownership succession plan. I believe this article provides a good overview of the necessity for it and some options available. It is well worth reading. If I can assist in the development or review of your succession plan, please let me know.
Robert Little, LLC is pleased to announce the launch of their new website.
This new website, with its responsive design and clean modern look, meets the needs of the rapidly growing number of consumers using smartphones, tablets, and iPads.
- Simple, clear navigation that remains on the page at all times
- Quick overview of the company and its services on the home page
- Detailed information about the company, services offered, and clients and industries served
- Email contact form and contact information located on every web page
- News blog including an RSS subscription feed
- Responsive design to provide an optimal viewing experience—easy reading and navigation with a minimum of resizing, panning, and scrolling—across a wide range of devices (from mobile phones to desktop computer monitors)
- Social media integration on each page of website