Dominant clients: A good thing, or a bad thing?

Our master classes and challenge groups for this “school year” have now wrapped up and are on hiatus until September, but my weekly newsletter articles and blog posts will still be coming out. In addition to this week’s post, you can check out a bonus post on my recent trip to Iceland if you’d like to!

This week’s topic: Are dominant clients a good thing, or a bad thing?

Many of us face this situation: we have a good client that sends us a lot of work; we keep accepting their work; and then one day we run our numbers and realize that this client accounts for 50%-75% of our work volume and income. Is this a good thing or a bad thing? Let’s take a look!

The great thing about dominant clients is that they greatly decrease your administrative overhead and non-billable time. You’re not spending hours going back and forth about rates, TM tool usage, project specifications, interpreting platforms, and everything else that you negotiate with a new or one-off client. You know that they like you (otherwise they wouldn’t send you so much work!), and you know how to work to their specifications.

The hard thing about dominant clients is that they represent a risk. I’ve lost good clients literally overnight: several years ago, a five-figure client e-mailed me to say that in hiring a half-time marketing person, they found someone who had previously been a translator, and decided to bring that person on full time and stop outsourcing their translation work. I never worked for them again, after receiving assignments worth several thousand euros, several times a year, for many years in a row. Clients’ own workflows go up and down, and as a freelancer, you have zero guarantee that a dominant client will continue using you. 

There are a few ways to look at this:
-In one sense, your safest bet is to diversify, and to avoid having any one client represent too much of your work volume. “Too much” is open to debate: I generally say, “not more than you can afford to lose overnight,” but I’ve read various articles recommending that you try to keep all clients below 25% of your work volume. Once a client starts pushing past one quarter of your income, you ideally want to branch out.

-On the flip side, everyone in the world who has a salaried job, essentially has a “dominant client” that in fact provides 100% of their work volume and income. And in the US, you can be let go from a salaried job without much advance notice or severance benefits; the legal guideline is typically one week of pay for each year of service, which doesn’t amount to much. 

I think that the best course of action is:
–Keep accepting the dominant client’s work, if you like them, they pay well, they treat you well, and their work is interesting.
–But at the same time, cover your bases, in two ways. First, use some of your income from the dominant client to increase your cash reserves. If the dominant client dropped you tomorrow, it could take…I’m guessing…three to six months for your work volume to rebound. Thus, it makes sense to have that much cash in reserve, so that you’re not left scrambling to pay the bills if the dominant client disappears. Second, at least think about what you would do without the dominant client in your portfolio. Would you look for other clients like them? Look for different clients? Are there other clients like them, and could you start marketing to them now, or at least have them on your radar screen (connect with them on LinkedIn, follow their website or blog, etc.).
-I also think it’s important to acknowledge the reality of the situation. Force yourself to say, at least in your own head, “My income right now is great, but that’s partially because I’m getting 60% of my work from one client.” Just saying that to yourself forces you to be honest about why your business is going well, rather than just saying, “Things are great!!”

Corinne McKay (classes@trainingfortranslators.com) is the founder of Training for Translators, and has been a full-time freelancer since 2002. An ATA-certified French to English translator and Colorado court-certified interpreter, she also holds a Master of Conference Interpreting from Glendon College. For more tips and insights, join the Training for Translators mailing list!