A risky business model is one that is one that is based on a dependent relationship with just a handful or even just one main customer. Inc.com has a good case in point from the auto industry in which GM is looking to cut its costs on the backs of its suppliers. Many of these companies are small businesses that are completely dependent on GM for their survival.
My rule of thumb is this: never let a single customer represent a percentage of your sales that is larger than your profit margin. That way if you lose one customer, even your largest customer, you can stay in business.
While this may not always be possible to achieve, it should be a goal that drives your growth. If you are heavily dependent on one or two customers, work hard to grow your business with new customers that can lessen this dependence.
It also allows you to fire any customer, if necessary. If a big customer makes it impossible to do business with them due to shrinking profit margins or impossible terms, you can tell them to take a walk. We did this twice with very large managed care companies in our business. Did it hurt? You bet it did, but we had enough other business to survive. We focused our efforts on replacing these customers with new ones that were more profitable and easier to work with.
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