The client tug of war: Small vs largeby
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.
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.
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.