Ask the CFO Recap: How to Rethink Customer Concentration Risk - August 18th, 2025

The Real Risk Lurking in Your Revenue: Customer Concentration

Let’s talk about something that doesn’t always make it onto the dashboard but has an outsized impact on your financial health: customer concentration.

If more than 30–40% of your revenue is coming from just one or two clients, your business is more exposed than you might think. Whether you're planning to grow, transition, or eventually exit—this is a number worth paying attention to.

Why It Matters

Customer concentration doesn’t just impact your day-to-day cash flow. It can affect your:

• Valuation: Buyers see concentrated revenue as risky. You might face a discount even if your margins are strong.

• Leverage: Clients who represent a large portion of your business often have the upper hand in negotiations, pricing, and payment terms.

• Growth flexibility: Your resources—and decisions—can become overly influenced by just one or two accounts.

But here’s the thing: concentration isn’t always a weakness. In our session, we talked about how you can reframe it as a strategic asset—especially when you understand your numbers and can tell the right story to potential buyers.

Turning a Risk Into a Strength

If you can show that your concentration is due to long-term relationships, recurring contracts, or embedded services, it can look more like revenue stability than risk. The key is documentation and context. Explain the “why” behind the numbers, not just the what.

We also covered:

• How to calculate your revenue concentration (by customer, product, and margin)

• Where concentration can actually create operational inefficiencies

• What acquirers are looking for during due diligence—and how to prep for it

Beyond the Balance Sheet

Even if you're not looking to sell, customer concentration is still something you should be thinking about. It affects everything from how nimble your business is to how resilient you’ll be when the market shifts.

A few questions I always ask clients:

• What happens if that key customer leaves?

• Are you building processes that serve one client or your whole business?

• How are you tracking margin performance across accounts?

If you don’t like the answers, it may be time to rethink your strategy—or at least build a backup plan.

Final Takeaway

Customer concentration isn't just a financial stat—it's a strategic signal. It tells you where you're strong, where you're vulnerable, and what story your numbers are telling the outside world.

Missed the session? You can read the full recap and watch the replay here:
👉 Read the blog

Until next time—
Build smart. Grow smoother.

Lowell Mora
CFO + Strategic Advisor