Field Guides / Growth

When one big client owns your video business

A big anchor client is a gift and a risk at the same time. While it lasts it pays for everything, and in the back of your mind you're thinking: I hope it never ends, I know it probably will. Don't wait for the day it goes. Measure what share of your revenue and margin that client carries, work out who your most profitable clients are, then go and find more clients like them.

Why does one client end up owning the business?

One client ends up owning the business because the work keeps you too busy to build the alternative.

I've lived this. For twelve or thirteen years I was Sony's go-to producer for their camera launch films in the UK. A massive client, constantly feeding me work. I always knew it would end one day, and eventually it did. It was a great gravy train while it lasted. The trouble is that when one client keeps you that busy, you never have the time to build the alternative. You're too busy dealing with what's in front of you.

The same pattern comes up with owners on sales calls, with a hidden cost attached: the staff and freelancers hired to serve that one client. If the client leaves, the revenue goes and the team is still on the books.

The way out isn't to push the big client away. It's to stop relying on luck and referrals and build a marketing engine you can switch on. The question to ask yourself is simple: if they disappeared tomorrow, what would you do on Monday morning?

How to measure how much of the business one client carries: the method, step by step

The measure is a client concentration check on every client from the last twelve months, starting with your top five: the share of revenue each one carries, the share of margin, the margin per day, and what happens to the business if each one leaves.

1. List every client from the last twelve months, top five first. From your invoicing: total revenue, number of jobs, average spend, days spent and margin. Build the margin from a real cost base (crew at day rates plus direct costs), your own days included; Know your numbers walks through the build.
2. Work out each client's share. Divide each client's revenue by your total for the year, then do the same for margin.
3. Work out margin per day and rank them. Margin per day is the client's margin divided by the days their work took. The Client Profitability Calculator does the arithmetic and sorts the list.
4. Draw the breakeven line. Annual fixed operating costs, including gear replacement (replacement cost divided by the years it lasts), divided by the production days you can realistically bill in a year. Any client below that line is being subsidised by the ones above it.
5. Run the leave test on each client. If they went tomorrow: the revenue and margin you'd lose, the days you'd get back, the people you'd still be paying, and the days of your next-best work it would take to replace the margin (margin lost divided by the next-best client's margin per day).

How to find more clients like your best one without dropping the anchor

The method is to profile the client at the top of your margin per day ranking, find their sector and list the businesses that look like them, while the anchor carries on as before.

1. Choose the profile client. Take the top of your margin per day ranking, which may not be the anchor: ranked by margin per day, the biggest client is often not the best one. If another client beats the anchor per day, profile that one, because work like the anchor's would return less for the same days.
2. Fill in the profile. Use the block below.
3. Find the sector. A good profile usually points at a whole sector. How to choose a niche covers checking that the sector has more than one buyer and writing the sentence you'll market with.
4. Build the lookalike list. Businesses that match the profile on sector, size and the job title of the person who hires.
5. Put the outreach in the calendar. One channel, a number of approaches a month, a fixed time to do it. Qualify before you pitch covers the first conversation once someone replies.

How to protect the relationship with your anchor client while you diversify

Protect the anchor relationship by keeping the standard of the work exactly where it is and by asking, at a regular review, where the client is heading, so a change on their side reaches you early. The diversification plan is yours to run; the anchor doesn't need to hear that you're reducing your dependence on them.

Keep the anchor's response times, the people on their jobs and the quality of delivery where they are. If the anchor offers more work, take it on terms that clear your target per day; How to grow revenue from the clients you already have covers growing an existing account.

How to plan the next twelve months, quarter by quarter

The twelve-month diversification plan runs in four quarters: measure in the first, reach out every month from the second to the end of the year, and measure again in the fourth.

A worked example

This is the three-client teaching example from the 12 month audit, in round numbers. KLM, ABC and XYZ are placeholder names.

Shares are rounded to the nearest per cent.

The anchor. KLM carries about half the revenue and just over half the margin, on a third of the days. It's also the best client per day.

The leave test on KLM. If KLM went, the business would lose $36,000 of revenue and $8,000 of margin and get 12 days back. Replacing that margin with work like ABC's at $250 a day takes 32 days; with work like XYZ's at $333 a day, 24 days. The 12 days KLM frees up don't come close at either rate.

The leave test on ABC. If ABC went, the business would lose $25,000 of revenue but only $4,000 of margin, and get 16 days back. Filled with work like KLM's at $667 a day, those 16 days would earn about $10,667.

The plan for this business: profile KLM and find the sector it sits in.

The mistakes that undo it

The plan fails in four predictable ways. The ways the margin itself goes wrong are in Know your numbers; these four are about concentration.

• Starting after the anchor has gone. By then you're building with no revenue coming in and a team still to pay.
• Leaving the team out of the leave test. Counting only the revenue you'd lose misses the staff and freelancers you'd still be paying.
• Reaching out only when the anchor goes quiet. Outreach that stops every time the anchor sends a big job never builds anything. The calendar slot stays, busy or not.
• Replacing one anchor with another. Swapping one big client for a different big client moves the dependency without reducing it. Look for a sector with more than one buyer.

The rule of thumb for one-client dependency

Measure the share your biggest client carries every year, and keep finding more clients like your best one while the anchor is still paying for everything.

The benchmark is your biggest client's share of margin, re-measured every twelve months and compared with the year before.

Hold yourself accountable

Which of these have you taken on or put in place recently?

• You know what share of last year's revenue came from your biggest client.
• You've worked out margin per day for every client, not just revenue.
• You know what you'd do on Monday morning if your biggest client left.
• You've approached a business that looks like your best client in the last month.

Your one move this week

What's the one thing you can commit to implementing this week? If you're not sure, start here.

Put the last twelve months of clients in a spreadsheet: revenue, number of jobs, days spent and margin. Work out margin per day and circle the top two. Those are the clients you go and find more of.

One thing executed every week creates 50 strategic moves a year.

Related tools and guides. Client Profitability Calculator (rank the clients you already have by profit per day), Know your numbers (build the margin on a job from a real cost base), How to choose a niche (find the sector your best client sits in), How to grow revenue from the clients you already have, Qualify before you pitch, Recurring revenue.