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Cartoon business people competing in a tug of war AccountingWEB The client tug of war: small vs large
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The client tug of war: Small vs large

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Would you rather have 100 small clients or 10 big ones? An Any Answers post grappled with this debate as accountants discussed balancing stability and diversification against the potential for deeper partnerships and higher revenue. 

4th Dec 2023
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In a recent Any Answers post, johnthegood questioned the community on whether they would rather have 100 small clients or 10 big ones. He shared his opinion that he preferred a larger number of smaller clients.

“Recently, however, we have taken on a group of clients from a practice with the complete opposite philosophy. I like the large fees but we now have extra staff to manage them and I have to wonder if one or two of the clients ceased trading where that would leave us, and on top of that the demands on my time have increased,” they wrote. 

The preference for fewer, larger clients seems to be part of a wider move from some firms to position themselves more as virtual finance directors, offering a broad range of services on matters such as cashflow forecasting or alternative funding.

Practitioners preference

Despite this shift towards a wider range of advisory services, the majority of the Any Answers community agreed with johnthegood in preferring 100 small clients. 

Not having to be reliant on one big fee seemed to be the deciding factor for regular commenter rmillaree, who replied: “Small clients can give you scope for earning great ‘fixed fee’ income if you have good systems in place and they are not a nightmare.”

AWEB member mumpin felt that having smaller clients meant smaller jobs which were easier to get through. “Small jobs are easy money. Big jobs are more likely to cause unanticipated problems which it's hard to get paid to resolve,” they wrote. 

This was further echoed by Mr Hankey, “The smaller, quicker, and easier the better.” He continued explaining the benefits of having a higher volume of smaller clients and wrote: “Less risk to profit if one leaves you, easy jobs carry much less risk of me making a mistake and it feels good and productive to rattle through lots of work.”

Red Leader agreed with Mr Hankey and replied: “Much easier to create a sort of sausage machine process, leading to greater efficiency and higher profits. Larger clients tend to need more bespoke partner level input, often at short notice.”

This preference for 100 small clients seemed to come from the ease and lower risk of managing smaller tasks, creating a smoother and more productive workflow.

The debate continues 

Joan Adams, director of Adams O'Rourke Accountants, argued that her preference was for working with a smaller number of larger clients, positioning herself more as a virtual finance director as opposed to solely dealing with compliance-only jobs. 

“We focus on providing in-depth services and adding significant value to each client, which is more feasible with a smaller, larger client base,” she said. 

Adams continued, “I enjoy fostering deep client relationships. I genuinely do care about client outcomes and there is high emphasis on developing a personal/business partnering service that we deliver all year round. Again, this is more feasible with a smaller client base.”

Having fewer large clients provides Adams with a more predictable and manageable growth and risk mitigation, although she does recognise the importance of managing client density so she is not reliant on a select few.

Efficiency and profitability was another key reason for this preference. “It’s taken some time but working with larger clients allows us to deliver advisory services at scale, whilst also being able to deep dive into more complex jobs without reinventing the wheel,” Adams said.

The happy medium 

When asked what he would rather have, Glenn Martin, founder and director of Avery Martin, said neither. 

He explained: “I would not want a single client that is too key that if they left, it causes us an issue,” adding, “I would not want only small compliance jobs as I find the work mundane.”

Instead, Martin goes for the Goldilocks approach – not too small, not too big, but just the right number of clients.

“Following Covid, and from a risk perspective, we prefer a good mix of work so we are not exposed and not one client is too valuable to us. We therefore have clients in three groups: start-up, growing business and mature,” he said. 

Martin shared that they make the most money off of middle clients because they pay well but are not over-dependent. 

“I would therefore say I am neither camp and would advocate that a good spread of work is key, but each to their own.”

Would you rather have 100 small clients, 10 big ones… or neither? Let us know in the comments below. 

Replies (10)

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By Self-Employed and Happy
05th Dec 2023 09:29

Obviously the best is a mix, but to answer the binary question above...10 big ones.

Less people to keep happy, less things to have to remember, less deadlines to meet and more chance of knowing every inch of their business, depending on the services you offer you can become an integral part of their business which then of course increases the likelihood you'll retain them for many years.

plus the thought of 100 LoEs...

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By johnjenkins
05th Dec 2023 09:30

My own feeling is neither. A good balance for me is ideal.
There are specialist Accountants out there so it's a question of "what suits".

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WUTSTS
By Michael_R_Grant
05th Dec 2023 10:11

Glenn Martin is right. Trying to get a good mix of clients in terms of size is the approach I favour.

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By Ian McTernan CTA
05th Dec 2023 10:45

I'm with Glenn on this one: over-reliance on a few big clients can lead to huge reduction in earnings (learned that lesson in 2008/10 when 3 large clients in one sector all collapsed due to the banking crisis, painful!).
Also, being too specialised in one area can be problematic too, as changes in the rules can leave you suddenly short on clients (like some contractor firms found out).
A good, healthy mix of small and 'large' makes for a steady income flow (monthly standing orders please!) plus some interesting projects and helps me manage my life/work balance.
Which reminds me, back to getting these 31 March year end stragglers done!

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By JD
05th Dec 2023 10:54

Is there not a case for thinking that those smaller clients will be the ones least willing to move to MTD or pay for the extra time and costs in dealing with it (irrespective of whether that is training time or bringing in house). Is it perhaps not time to ditch the trades, for one's own future sanity?

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By FactChecker
05th Dec 2023 15:40

I was about to make the off-the-cuff remark that the choice is made for you ... by whether your 'style/comfort zone' is represented by Quantity or by Quality. But that's a bit trite (if partially true).

The common response of a 'suitable mix' is hard to argue with - but leaves the definition of 'suitable' up in the air. My plan (often but not always met) was for revenue from small(er) clients to cover my cost base .. so that as much as possible of the large clients' revenue was profit. Incentives all round!

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By Jabba the Hut
05th Dec 2023 16:11

I prefer a mix. It is nice to have a few larger ones to cover the basic costs, but well run small clients are far more profitable, you never fully recover fees on clients that require a high degree of contact, they also require more effort as they have trickier demands.
Much easier to have the small compliance clients. If you can get a csv download of the bank it is so quick and easy to create a pivot table to produce accounts and then tax return. With MTD that can be used to import into software for those that can't use the software themselves, but something like FreeAgent is virtually fool proof.
It is also more interesting dealing with a variety of people, needs and trades.

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By Dogracer
05th Dec 2023 18:29

What is the definition of small?

To me a client paying £2500 a year is small but is that the same for everyone else?

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Replying to Dogracer:
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By Geoff56
06th Dec 2023 09:38

£2.5K would put someone amongst my half a dozen largest clients.
Different client base, I guess. (Either that or my fee structure is lower.)

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By Dogracer
05th Dec 2023 18:32

Would I want 200 clients paying £500 a year or less? Definitely not, to me average fee is important

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