Ep #011: The Top 4 Concentration Risks and How To Fix Them

Without significant diversification in your portfolio, your employees, your suppliers, or clients, you set yourself up for concentration risk. Now, this can happen intentionally or unintentionally. Maybe you rely too heavily on your top performer’s sales achievements, perhaps you have built your company to be dependent on you as the owner. Through this concentration and dependency, you decrease the value of your company and increase the risk of something going wrong if that person or thing you depend on can no longer provide for your business. In this episode, Tom will be breaking down the top four types of concentration risks that he sees and will explain how you can reduce your risk moving forward.

Listen in as he shares the importance of broadening your customer base to not only reach more people, but also diversify where your income sources are coming from. You will learn why it is essential to make sure your business can run without you, how to make this process simpler for your employees, and how to ensure future buyers have a clear idea of what they will need to be doing as they potentially step into your role.

Listen to the full episode:

What You’ll Learn:

• What customer/client concentration risk is and when this might occur.
• The importance of broadening your customer base to reach more people.
• Why it is essential to have a diverse portfolio.
• How to fix employee concentration risk.
• The benefit of reviewing how much of your services rely on one vendor or supplier.
• The importance of building your company to be able to run without you.
• How to remove owner dependency in your business.
• The importance of building out SOPs to ensure everyone knows how things are done in your business. 
• How to be better at delegating.

Ideas Worth Sharing:

• “Aim to have no single customer/client’s revenue account for more than 5% of the overall company revenue.” - Tom Poltersdorf 
• “By spreading out or growing your team, you decrease the risk of company collapse if that person was to leave.” - Tom Poltersdorf  
• “Any business that has everything flowing through the owner has zero value to a buyer.” - Tom Poltersdorf  

Resources:

• Delegation E-Book 
• Guide to Standard Operating Procedures
  

Share The Love:

If you like the Business Exit Success podcast …

Never miss an episode by subscribing via Apple Podcasts, Spotify, Stitcher, Google Podcasts, Amazon Music or by RSS!

WANT MORE BUSINESS PLANNING TIPS?

Subscribe to the Business Exit Success Newsletter.

As a thank you, you'll receive a copy of The Freedom Point: A Financial Planning Guide for Business Owners.

👉 Click here to subscribe and grab your free guide.