Should I be concerned if one customer represents a large percentage of revenue?

Customer concentration is an important factor to evaluate. When a significant portion of revenue comes from one customer, the loss of that relationship could have a substantial impact on the business.

That doesn’t automatically make the business a poor investment, but it does mean buyers should understand the nature of the relationship, any contractual commitments, and the potential risks involved.

Diversified revenue sources often contribute to greater long-term stability.