What Client Concentration Actually Is

Most business owners know client concentration is a risk. Fewer can tell you what the threshold actually is — or why the percentage is the wrong thing to focus on.

In this episode, Richard McMullan breaks down what client concentration means in practice: where the 15% guideline comes from, why the real threshold depends on your margins and business model, and the single question that cuts through the noise and tells you whether you actually have a problem.

If you're not sure how exposed your business is to your biggest client, this is the place to start.

From the outside, the business looks successful – multi-million sales, decent profits, loyal customers and team. On paper, it’s doing exactly what it’s supposed to do. And if you’d asked the owner five or ten years earlier what they were trying to build, this is probably very close to what they had in mind.

Most owners would expect, at that point, for things to start to feel easier, less stressful, more freeing.

Because, as the business grows, as the team improves, as the processes mature, and you break through the £10m mark, you’d expect the weight to come off. You’d expect to be less involved in the day-to-day. Less pulled into problems that shouldn’t need you anymore.

That’s the expectation. And in a small number of cases, that is what happens.

But for many owners, it doesn’t feel like that at all. Yes, they’re making good money. They’ve got the lifestyle and toys to go with it. From the outside, everything looks fine and people envy them for it. But alongside that, there’s something else running underneath it.

At first glance, it looks like our UK manufacturing and engineering businesses are growing strongly as the number of companies doing between £10m and £50m turnover has increased from 7,550 in 2019 to 9,535 in 2025.

The growth seems impressive, doesn’t it?

But don’t be fooled.

Those revenue bands don’t allow for inflation, which was 28.3% over the period. If you’d been doing £8m a year in 2018 and increased your prices at the rate of inflation, you’d have broken through into the £10m+ bracket last year without winning any new business.