Chad Silverstein lost a major client in 2015 and learned to target mid-size companies instead of pursuing dominant ones. He explains the 10% rule for client concentration risk, why you need to qualify clients upfront, and how to document failures so your team doesn't repeat them.
Questions this video answers
2015.
You shouldn't have more than 10% of your business with one client.
Chapters
A big turning point in my career, and I think a lot of entrepreneurs can experience this, is that we had an experience with one of our very big clients who pulled the rug right out from underneath us and it required us to shift. I not put all my eggs in one basket, but I think when you have a big client who you're a little bit beholden to, that's why they say you shouldn't have more than 10% of your business with one client. You know, when you have to lay people off, when you have to change your business for one client, that's a problem. Because that one client maybe doesn't care about you, doesn't realize the impact they have on you. And when they make changes, you have the aftermath of that. And I had that happen to me in 2015, and that changed everything for me because I stopped going after the big 500 pound gorillas. I started focusing more on my sweet spot, which was the clients that were big but not too big. And I didn't like maybe necessarily going after so many of the small ones anymore. But it helped me get clarity on who I wanted to go after, who was the right fit client. And that allowed me to change how we did presentations in our sales process to qualify clients and not just take anybody because we were trying to grow the business. So, you know, having the ability to have a bad experience with a big client ended up being a great lesson for us that I think saved me from a lot of pain and suffering down the road when I had opportunities to take on a big client and decided not to. And I think, you know, there's always something good that can come out of something tough. The experience transformation that you can take from every situation just requires you to step back after it happens and ask yourself, what happened? What did I learn from that? What did I do that I could do different next time? And then documenting that and then talking about that with your team, sharing that knowledge, I mean, that is such a powerful exercise for leaders to do so that you don't repeat the same mistakes. Because there's no nothing worse than to have something like what happened to me with a big client happen again. Because I took on a client because they were big and we can make a lot of money from them. And you got to get really clear on what you're doing, why you want to do it, what exceptions you will make and which exceptions you won't make. And then just stay disciplined and let your team hold you accountable for that. And just make sure that you, you know, you stay on top of all the things that happen that maybe don't go your way so that you can do it better next time.
