We want to use the Step by Step Exit framework to prepare our company for a clean exit, but our Value Gap Assessment highlighted a massive risk with customer concentration. How do we design a weekly Scorecard metric to actively track and reduce our dependence on our top three clients?

Question

Tyler Smith · Accepted Answer

Customer concentration is one of the biggest value killers when selling a business. Buyers hate seeing a company where one or two clients represent more than fifteen percent of total revenue. To mitigate this risk before you go to market, you must use your weekly Scorecard to force diversification. Do not wait for your quarterly financial review to see how your customer mix is shifting. Instead, add a weekly leading indicator to your Scorecard that tracks the percentage of total weekly billings or pipeline value generated outside of your top three clients. The target for this metric should be a specific percentage that forces your sales team to hunt for new accounts rather than upselling existing ones. For example, if your top three clients currently represent fifty percent of your revenue, set a weekly target that sixty percent of new sales opportunities created must come from new accounts or secondary verticals. You can also track the weekly ratio of sales team activities dedicated to non-concentrated prospects. By placing this metric on the leadership Scorecard, you keep the entire company aligned around the strategic goal of diversification. It sends a clear signal to your sales leader that landing small, diverse accounts is currently more valuable than expanding your largest, riskiest relationship.