Having customers that you trust is a good thing. Depending on one or two of them for most of your business, however, can be risky.

Relying on just a couple of shippers for your loads means tying your fate to the success or failure of those customers. What happens if one of them switches to a different trucker, defaults on payments, or goes out of business? Suddenly your company is scrambling to replace more than 50 percent of its revenues and struggling to keep its own doors open.

Such dependency, or “client concentration,” is found among businesses in all industries. It is common among small to mid-sized carriers that find a customer they trust and build on that relationship. That approach is especially risky in an uncertain economy. Some companies that rely heavily on a single customer have been known to go out of business because of one payment default.

Below are a few steps your company can take to avoid the risk of high client concentration:

Continuously add new customers

You should constantly strive to diversify your book of business. A good goal is to establish a portfolio in which no single customer makes up more than 20 percent of total revenues. Access to online load boards as well as freight brokers that are connected with thousands of shipping clients make adding new customers less cumbersome than ever before.

Keep a close eye on existing customers

Tracking your customers’ payment patterns and credit scores is another way to maintain a healthy book of business. Some factoring companies provide credit ratings and analysis on many shippers and brokers. This arms you with critical information when deciding whether or not to take on new business with a customer.

Keep your balance 

It is important to regularly assess the diversity of your business portfolio. Is your company becoming overly reliant on a particular customer or industry? Carve out some time each month or quarter to analyze your book of business and identify any possible risks.

Capitalize on a carrier-friendly market

One trend that may help you build a more diverse customer base is a lingering shortage of qualified drivers. Some industry sources estimate that shortage to be as many as 30,000 drivers throughout the United States. The opportunities to pick up new clients should be more plentiful as the economy continues to rebound.

Contact RTS today to learn more about our industry-leading services and programs.

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