In investing, you get the advice all the time: diversify your holdings. As it turns out, that strategy also works well in business. Having a diversified client base can lead to significant benefits and improve business for your firm.
In fact, making this approach a sales priority can help your business on multiple fronts at once.
Here’s how diversifying your clients can improve your operations:
More Economic Flexibility
Ultimately, your fortunes are tied to those of your clients. When they thrive, so do you. However, you can’t count on every customer to survive every economic disturbance.
That’s why diversity becomes important in your client base. An overconcentration in one area means a wide swath of your revenue can get wiped out with a single economic shift.
Imagine if you were a restaurant supply company in the early stages of the pandemic. Suddenly, you don’t have a customer base. However, if you also had consumer packaged food products, that business might get a boost, even while your restaurant clients went into hibernation.
Uber offers an excellent example. As COVID hit, the firm lost much of its ride-hailing business. Even so, it saw a surge in food delivery. A diversified customer base allowed it to weather the situation.
Less General Risk
Economic dislocation isn’t the only danger with a concentrated client base. When you rely on a few high-value customers, a problem in any one of them can put your business in danger.
Imagine you’re a supplier of computer components. You get Apple as a customer. Pop the champagne, right? Well, there are risks to consider as well.
Last year, the tech giant was forced to cut production of iPhones due to a shortage of computer chips. The result? Apple’s other suppliers suffered because their biggest client paused purchases.
A diverse client base allows you to avoid these issues. Spreading out your revenue sources acts as a buffer against the impact of a single negative event.
Broader Growth Prospects
So far, we’ve looked at a diversified client base as a way to avoid disaster. However, there’s a more optimistic side to the strategy as well. Targeting a broader set of customers also acts to enhance your growth possibilities.
Appealing to a diverse clientele means you have a larger market to target. You can expand on multiple fronts at once. This gives your business more avenues to advance, magnifying your overall potential.
Capturing a more diverse customer base can involve increased investment. You’ll need the products and services that potential clients demand. At the same time, you’ll also need a staff capable of keeping up with growth.
Looking for an Invoice Factoring Partner to Help You Improve Business?
As part of this, you should develop a robust financing strategy. A top funding partner, like Frontline Funding, can bring you the expertise you need to take your business to the next level.
Contact Frontline Funding today to learn more.