Dr. Paul Borosky, DBA, MBA
Construction Guide · Customer Risk
Contractor Customer Concentration: When One Customer Is Too Much
One great customer can feel like safety. It is also a single point of failure. If they slow down, pay late, or leave, so does your company. This page shows how to measure the risk and reduce it. Part of the construction business guide.
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Last Updated: 10/27/2026 · Written by Dr. Paul Borosky, DBA, MBA
The Short Answer
What Is Customer Concentration?
Textbook Definition
Customer concentration is the share of a company’s revenue that comes from one customer or a small group of customers. A high share raises risk because losing a customer, or a late payment from one, can threaten the whole company.
In Plain English
Concentration means how much of your work comes from your top customers. If one general contractor or builder is half of your sales, that customer owns your schedule, your price, and your pay dates.
Why It Matters
Why Is a Big Customer Also Your Biggest Risk?
A big customer does not just buy work. It sets your price, because it knows you need the work. It sets your pay date, because it knows you will wait. And it can set your future, because it can stop calling. Risk #9 in the book is one customer making up most of your work, and the first fix is to add a new customer before you need one.
Buyers and valuation advisors look at this closely. A CPA firm that works with subcontractors says that when more than 20% to 25% of revenue comes from one general contractor, a sub is in a “general contractor exposure trap,” and relying on two or three GCs for most of your volume can lower what a buyer will pay. That is an advisor’s rule of thumb, not a law or a lender’s policy. Source: Brady Ware.
It also hurts cash. General contractors commonly hold 5% to 10% in retainage, and a customer that pays slowly turns your best account into your biggest cash gap.
Signs you depend on one customer too much:
- One name is above 25% of your sales, or three names are above half.
- You would not know how to refill the schedule if that customer left.
- You bid their jobs at prices you would refuse from anyone else.
- They pay later than everyone else and you do not push back.
- You say yes to every rush job they send.
- You have not won a job from a new customer this year.
What It Looks Like
What It Looks Like: The Customer That Sends Most of the Work
From the book · Risk #9 and Success #2 · A fictional example
Maria Delgado’s company, Square-Up Contractors, gets most of its work from one general contractor, Harborline Builders. The small after-hours jobs Harborline sends are bid out to five or six drywall subs at once. Square-Up wins them by being the cheapest number, builds them on tight schedules, waits 75 to 90 days to get paid, and then waits longer for the retainage. Those jobs keep the crews busy and make almost nothing.
So Maria writes down a minimum margin that every bid must clear. When Harborline’s estimator calls with a rush job and a number well below her floor, it is the hardest call she has made since starting the company. Harborline is still most of her work. She says no, politely, and says she wants the next one. Harborline keeps calling. About a month later it sends a larger job with fewer subs on the list, and Square-Up wins it at its real number.
Maria is a fictional character in the book. Her story shows the cost of dependence and the first step out of it: knowing your floor.
The Fix
How to Reduce Customer Concentration in 7 Steps
You cannot change the mix overnight. You can measure it, cap it, and start adding customers now.
List your sales by customer.
Take the last 12 months. Add up sales by customer and sort from largest to smallest. Work out each customer’s share of the total.
Find your top-one, top-three, and top-five shares.
How much of your sales comes from your largest customer? Your top three? Your top five? These three numbers are your concentration score.
Set a cap and a target.
Pick a share no single customer should pass, such as the 20% to 25% warning line, and a date to reach it. Write it down with your accountant.
Write a minimum margin and a go/no-go list.
Decide the lowest margin you will take from anyone, including your best customer. Then write a short checklist: how fast do they pay, how many subs are bidding, is it our work, who will run it, is it inside our size limit, are the drawings complete, and does it clear the floor. Maria uses a seven-question list like this.
Add one new customer every quarter.
Pick a second general contractor, a property manager, a public agency, or a trade in a nearby market. Call them before you need the work. Our public work guide and the guide to competing against bigger contractors give ideas.
Protect the cash with terms.
Ask for a deposit, shorter pay terms, or reduced retainage from your biggest account, and put them in writing. See the change order guide so extras do not become free work.
Review the numbers every quarter.
Re-run the list. If the top-one share is falling and your average margin is rising, the plan is working.
| Customer | Sales, last 12 months | Share of total |
|---|---|---|
| General contractor A | $720,000 | 48% |
| General contractor B | $270,000 | 18% |
| Property manager C | $195,000 | 13% |
| Eleven smaller customers | $315,000 | 21% |
| Total | $1,500,000 | 100% |
An example. Top-one share is 48%. Top-three share is 79%. Both are above the warning lines in this page’s rule of thumb.
What We Found and Did Not
A Note on Rules of Thumb
Advisors use different warning lines. A former bank officer’s newsletter lists a largest customer above 25%, top three above 50%, and top five above 70%, with an internal cap of 15% to 20% per customer. We could not find a surety or SBA policy that sets a concentration limit, and sureties do review work in progress and backlog. Treat all of these as rules of thumb to discuss with your own accountant, banker, and surety agent.
Dr. Paul’s Insight
A big customer is not a problem. A big customer you cannot say no to is a problem. The goal is not to fire your best account. It is to be strong enough that your best account treats you like a partner, because it knows you could say no. Strong bids and a clear floor are what make that possible.
Work With Dr. Paul
Three Ways Dr. Paul Helps Construction Owners
Read the page and fix it yourself, or get help. Here is where each option fits.
Business Consulting
For owners stuck in the cash gap, bidding blind, or running every job themselves. Dr. Paul works with you on bids, cash flow, job costing, and getting you off the jobsite.
See consulting and prices →Business Plan Writing
For contractors applying for a loan, a line of credit, a bigger bond, or an expansion. Dr. Paul writes the plan and the financial projections for you.
Construction business plan writer →Business Plan Template
For owners who want to build it themselves. A construction-specific Word plan plus an Excel model with editable bids, job costing, labor, and equipment.
Get the construction template →FAQ
Customer Concentration Questions
What is customer concentration for a contractor?
How much of my revenue should come from one customer?
How do I find new customers when I am busy with one big one?
Should I turn down work from my biggest customer?
Does customer concentration affect getting a loan or bond?
Start with the book. Call when you want help building your customer plan.
Keep Going
Related Construction Guides
Customer mix connects to competition, public work, bidding, cash, and lenders.
Competing With Bigger Contractors
The too-low test, what to sell besides price, and how to pick a lane.
Government Work
Registrations, set-asides, bonds, and wage rules before your first public bid.
How to Bid a Construction Job
The 8-step bid check, markup versus margin, and a walk-away number.
Why Profitable Contractors Run Out of Cash
The 90-day cash calendar and seven fixes for the gap between payroll and payment.
What Lenders Want
The reports to bring, the SBA loan fit, and a plan that proves it.
Business Plan Writer for Contractors
Put your customer plan in writing for lenders and partners.
Sources
Where These Numbers and Rules Come From
Every figure on this page comes from a source below. Dollar examples labeled as examples are illustrations, not projections for your business.
- Brady Ware: Subcontractor Valuation and GC Dependency (Sept 4, 2026) CPA firm; cites no underlying dataset.
- Into the Lender’s Mind #11: The Risk of Customer Concentration Newsletter by a former bank relationship manager; undated. Not lender policy.
- Trucordia: How Contractors Increase Their Bonding Capacity (Aug 5, 2026) Says sureties review work-in-progress and backlog schedules.
- Top 5 Reasons Construction Companies Fail, by Dr. Paul Borosky Risk #9 and Success #2. Maria and Harborline Builders are fictional.
Dr. Paul Borosky, DBA, MBA
Business Consultant, Author & Educator | 14+ Years | 1,000+ Clients Served
Dr. Paul Borosky, DBA, MBA is a business consultant, author, and educator, and the founder of Quality Business Plan. He helps small business owners across the United States and Canada, including contractors and specialty trades, with business planning, financial modeling, fractional CFO services, and the everyday problems of businesses that depend too much on their owners. He is the creator of Dr. Paul’s Organize-Plan-Grow™ Strategy, author of numerous published books on Amazon including Top 5 Reasons Construction Companies Fail, and publisher of over 1,000 business-focused videos on YouTube.
This page is for general educational purposes only. It is not legal, financial, tax, accounting, insurance, or other professional advice. Construction laws, licensing rules, and tax rules vary by state and change over time. Dollar examples are illustrations, not projections for your business. Shiny Nail Remodeling, Square-Up Contractors, and the people in them are fictional. For decisions about your own business, consult a qualified professional.