Diversify Your Business

Diversify Your Business

Diversify Your Business

4 Ways to Eliminate Customer Concentration and Build Confidence with Prospective Buyers

It’s value suicide. A company with more than 15 percent of its revenue with one customer is at high risk of having the rug pulled out from under them.

As the owner of such company, it’s going to add difficulty when it comes time to sell.  And for any potential buyer, the risk is higher unless you can prove growth potential by finding more like customers, and fast.

If you are preparing your business for sale, you need to start to think like a buyer. If you have customer concentration issues, stop looking at the business as the operator and start looking at it from an opportunity and sustainability stand point—especially under new ownership. Remove yourself, your history and past knowledge from the business, because that is exactly what a buyer is going to get.

There’s no doubt that you worked hard at building long lasting customer relationships, especially with a major client. But in selling your business, it’s a red flag.  It’s risky. That client could leave shortly after you are gone. The buyer will always be fully aware of such risk and there’s no hiding it.

Here are some ideas on how to minimize that risk for the potential buyer and better position your business for a premium value:

Remove the Client Trap

You aren’t alone, a lot of business owners fall into this trap. It’s easier to please and upsell existing clients than it is to look for new business.  Start looking for “like clients”.  Every good client is a profile for another new client. Same size, same problems or same needs, figure out the key component and start looking for a new client that mimics your cash cow.

Ask for Referrals

Happy clients are also happy to refer you to others.  It’s the entire basis of the Net Promoter Score and why so many companies are using it not only to improve customer service but to prove viability of the business.  If you don’t ask for referrals, you won’t get them.  Stop by or give your best customer a courtesy call, let them know you are looking to grow your business and ask if they know of any other business that could utilize your services. If not now, ask them to keep you in mind.  In some cases, businesses offer a referral fee. This may or may not work for you, but it’s another option to reward the referring party.

Seal the Deal in Writing

When you have a customer or client who is a significant portion of revenue, get the deal in writing including the duration of the agreement. Although contracts can be nullified post-transaction, at least the contract minimizes the risk of them leaving and gives the new owner some peace of mind.

Remove Sole Dependency

Many times in key accounts like this, the customer has become dependent on you. They want to only work with you or negotiate with you.  Start to transition this responsibility with another team member now, even if you aren’t looking to sell right away. The customer needs to transfer their confidence from you, to the business. This will add even more assurance to the prospective buyer.

Minimizing risk is the number one thing you can do before listing your business on the market. The less risk there is, you can sell for more and sell faster. Customer concentration is just one area to reduce that risk. Keep reading our blog as we go through other areas to increase the salability of your company.

Sale of Specialized Early Childhood Education Business

Sale of Specialized Early Childhood Education Business

Sunbelt Business Brokers is pleased to announce the sale of a Houston,Texas area early childhood education and behavior management business. The business specializes in management of children with autism with the goal of main streaming the children into the conventional education system.

The business was purchased by a multi-unit childcare education company located in The Woodlands, Texas.

Sunbelt Business Brokers has significant experience in the sale of early childhood education and daycare businesses.


This has nothing to do with business…it’s a fishing story (and a marriage story, kinda)

This has nothing to do with business…it’s a fishing story (and a marriage story, kinda)

While in Santa Fe a while back we (my wife Barb and I) decided to try fly fishing in New Mexico.  But first a little about our fishing experience. We are experienced fishermen and we fish the Galveston bay system probably 60 days a year.  We fish primarily in Galveston West Bay and in  shallow water 1? -3? deep. Our usual targets are speckled trout and redfish. We will often find some undesirables on the end of our line.. fish like shark, gafftop, ladyfish, sting rays, etc. My wife had never tried fly fishing before and my only prior fly fishing experience was about an hour trying to learn to fly rod cast in Laguna Madre about 10 years ago (unfortunately it was late at night and there was beer involved so I didn’t learn much).

We decided we needed professional assistance (and we are sure glad we did!). We spend many weeks a year in Santa Fe and we were familiar with High Desert Anglers on Cerrillos Road. I put in a call to them and they were very helpful and willing to take on two fly fishing novices. We booked a trip for the Pecos River.

We had the good fortune to be assigned to an experienced guide, Jim Jones. Mr. Jones is as nice a guy as you’d want to meet.  We met at 8am at the shop and got fitted for our waders and other gear which all seemed to be in very good condition. We hopped in Jim’s truck and took the ride to the Pecos River private water we had booked. In about an hour we were putting our gear on and walking the river bank heading to a spot to wade in. Prior to our hike Jim showed us the basics of fly casting and he did a great job of simplifying things with very easy to follow tips. I have fished with many guides over the years and here I was having been with a guide for almost 2 hours already and he hasn’t yet called anyone an idiot, that was a good sign.

After a short hike we wade into the Pecos River. Remember please, we’re from Houston and the 58 degree water felt mighty cold and mighty nice.

We were a little surprised that the water was flowing as strongly as it was. If you waded into a 2 ft deep spot the water could exert a lot of pressure on you. So please keep in mind that my wife needs the waders on to get up to 100lbs and for her the water current was a battle all day.

We wade into the middle of the stream with a plan to wade into the current, cast into the current and let the fly drift back. About the second or third cast the water boils up and Barb misses her first fly fishing trout! The technique for actually hooking a fly fish is opposite the technique for the artificial lure fishing we do in Galveston, that was a surprise to us. Fortunately a few minutes later I got a bite and managed to land a small brown trout, my first fly fishing catch.

That’s the good news, the bad news is Barb has not caught a fish yet and our guide makes it his personal mission in life to make sure she does. She’d had a number of strikes so far but was unable to land anything. Being the gentleman that I am (and also because Jim told me to) I let Barb and Jim go ahead so they could have the “fresh” water to work. Barb had some more opportunities but still no hook-ups.

I guess I got impatient in the back and when Jim wanted Barb to re-rig and fish a deeper hole I decided to go ahead of them and explore the new water. It all went well for a minute or two. I got to a deep spot and decided to climb a few rocks in order to get to a perfect, trout looking spot ahead.  I climbed up the rock and as I stepped down on the other side my knee went out (old basketball injury). I went down like I was shot. Bounced off the rock and now horizontal, half in the water and half out… but I was facing up stream and my waders were filling up fast! I gotta tell you it was not a fun event. I felt like I was being dragged under water. I was clinging to the rock like I was on the edge of Everest. I managed to pull myself onto a flat spot, waders filled with 58 degree water, and look back down stream. What do I see? Barb and Jim pretty much laughing at me. They claim they were shouting, trying to see if I needed help, but they sure weren’t heading my direction! They claim this all happened in about 18 inches of water but by my memory it was about 10 feet deep!

I emptied my waders and onward we moved upstream. Barb had a few more opportunities but was unable to land her first fly fish. I had another hook up that didn’t get landed.

All the while our guide, Mr. Jones, was helpful and good spirited. We didn’t catch many fish but we had a great time. The weather was as spectacular as the the scenery and spending a half day walking up a beautiful river is hard to beat. Even with my near death experience it was a perfect day on the river.

And, oh yea, did I mention that the camera Barb told me not to bring was in my waders when I fell in? That didn’t go over well. Uhhh, no pictures for this post.