Array Digital is Erik’s third company. His first business consisted of him being a third-tier subcontractor for the Navy. All of his revenue came from one client and his client wasn’t the decision maker. Whenever something needed addressing it would have to go up the chain of command to the decision maker. When the project was eventually awarded to another company it put Erik out of business. That’s when he learned the importance of diversification in the client base.
Diversification is important in the number of clients but also the industries those clients serve. Ideally you want to have numerous clients that pay smaller amounts rather than a handful of clients that pay you large sums of money. That way if you ever lose one client or a couple you stand a far better chance I’m going on without them.
These days, the way Array Digital is set up, we could lose our biggest client and still be okay. Erik regularly checks on the health and diversification of our client list to make sure no one client or industry provides the bulk of our revenue.
Think about your client base and whether its diversity is good for business longevity.