Having many clients does not necessarily mean your risk is well spread. At Brath, we have both lost a client that accounted for 40 percent of our revenue and come under severe pressure when the pandemic hit several of our major clients at once. We made it through both situations, but it took an enormous amount of effort. In one case, we depended on a single large client. In the other, several of our clients depended on the same thing.
When the pandemic hit our travel clients
Before the pandemic, we were very strong in the travel sector. Our clients included several major travel companies, a large hotel chain and a group of leading ski resorts. They represented a significant part of our business, spread across different companies and separate accounts. When the pandemic hit and knocked the wind out of their businesses, it nearly did the same to ours.
A travel company and a ski resort sell different things, but both need people who are able and willing to travel. The hotel chain fell into the same category, even though it had its own line on our client list. We had several separate client relationships, but much of what their businesses depended on was outside both their control and ours.
When I compare that experience with losing a large client, it is the client list I keep coming back to. A large client stands out immediately. The risk we faced before the pandemic was nowhere near as clear to me. We came through okay, but it took a great deal out of us. That is an important part of the story. The fact that the company is still here says very little about what it took to get through.
Betsson accounted for 40 percent of our revenue
A few years before the pandemic, we had lost Betsson as a client. The account represented around 40 percent of our revenue. They built their own SEO department, and the relationship ended despite the excellent results we had delivered.
We had recognized the risk and built up reserves, which helped us through the first difficult months, but those reserves did not replace the account. We still had to deliver for the clients who remained and bring in new ones. We did not have to lay anyone off during that financial year, but our expansion plans had to wait. So did larger offices in Stockholm. Our money and effort had to go toward things other than what we had planned.
I’ve never worked so hard as an entrepreneur as when we lost Betsson as a client.
Betsson is the easier example to explain. Forty percent of revenue coming from one client makes the dependency obvious without much explanation. The pandemic is harder to capture in a number like that, but for me it is part of the same experience. We thought we had a broader client base because there were so many companies. I also think there is a risk of something similar happening again because of AI. I suspect you have also thought about which industries AI will affect most. Even if you think your own business will be fine, your clients might not be.
What the revenue figures do not show
In my review of Brath’s fourth year, I was eventually able to report revenue slightly higher than the year before. We had brought in new clients and replaced much of the business we had lost. Losing Betsson, which accounted for 40 percent of our revenue, did not translate into an equivalent drop for the financial year as a whole. If you only look at the annual figures, it is easy to miss the scale of the change we had to deal with.
