However, there is no guarantee that the discounted order will be fulfilled - or that it will be paid if it is fulfilled. The company may already have spent money on raw materials, training, and labor. As discussed at several accounting and finance conferences, the company may also suffer when a client is slow to pay invoices or when that company's demands are reduced. When a company relies heavily on a single customer, discounts aren't the only way to lose money and reduce revenues. While giving discounts to existing customers or prospects can increase sales, a value to just one large client can reduce profits. It is not uncommon for a company to offer a discount to a large customer to secure the client's business. If the client suffers a slowdown, disaster, or bankruptcy, the business that relied on the client will suffer as well, without the opportunity to take corrective actions. Relying on a single large client gives the organization little control over its future and no ability to plan defensive business moves. When a company depends on a single large client for most of its revenue, its fate is inextricably linked to the client. It's analogous to putting all of a company's sales expectations and potential into a large client.
The adage "don't put all of your eggs in one basket" may be outdated today, but the wisdom behind it remains. Client diversification entails developing and implementing a client growth strategy, which includes broadening your client base. Similarly, market changes may impact your margins, pricing, and bottom line.įor these reasons, experts from Money 2.0 Conference, a global finance event, suggest agents must have a solid client diversification strategy in place. If your single client group suddenly withdraws, your profit will most likely fluctuate. Relying solely on one group of clients can quickly expose your business book to risk. This is especially important for the key stakeholders in the finance industry. To stay ahead of the competition in today's business world, you must constantly strategize, which includes diversifying your client base.
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