“I lost my biggest client” — what to do when they were most of my revenue

Losing a client worth 40% of revenue does not cut your income by 40%. On a 15% net margin it converts a profit into a loss of roughly 25% of a normal month’s billings, every month, until you cut cost or replace the work. Cut the cost base in week one — it is the only lever that moves inside 30 days.

• The arithmetic: monthly cash gap = (client’s share of revenue − your net margin) × monthly revenue. At 40% and 15%, that is 25% of billings a month.
• Why it feels delayed: final invoices keep landing for weeks after the work stops. The pain arrives in month three.
• Free triage, days 1–14: stand down attributable cost, chase receivables, go back to the client — notice is a negotiation, not a verdict.
• The structural fix: the 40/6 rule — above 40% of revenue from one client you need six months of contracted notice or six months of the cash gap in the bank; above 60%, both.
• When it is not an emergency: under 20% of revenue, with a month of cash and no other client on notice, this is a bad quarter, not a crisis.

What losing my biggest client actually does to the numbers

Revenue falls by their share. Cost does not. Take a practice billing $100 a month at a 15% net margin: cost base $85, profit $15. Remove a client worth 40% of revenue and you bill $60 against an unchanged $85 — a loss of $25 a month, or minus 42% on the new revenue base. A 40% client does not take 40% of your business; it takes all of your profit and 25% of your billings on top.

The formula to keep: monthly cash gap = (their share of revenue − your net margin) × monthly revenue. Everything below shrinks one of those two terms.

Is it as urgent as it feels? Three questions

1. When does the money actually stop? Work already delivered is still in receivables. For large businesses covered by Australia’s Payment Times Reporting Scheme, the regulator’s January 2026 update reported that the 95th percentile payment time — the days taken to pay 95% of small business invoices — rose to 64 days from 58, for the period 1 January to 30 June 2025, while average payment times stayed broadly stable. That is the slow tail rather than the typical invoice — but the tail is what decides whether your final invoices land in month two or month three, and it is why month three hurts most.

2. How much of the cost base was theirs? Contractors, licences and subscriptions bought for that account are cuttable in 30 days. Salaried staff are not, and they carry statutory obligations — read the Fair Work Ombudsman’s redundancy guidance before any decision about people.

3. Is anyone else on notice? One client leaving is an event. Two inside a quarter is a pattern, and the diagnosis moves from concentration to delivery or positioning.

Under 20% of revenue, with a month of cash and nobody else wobbling, this is a bad quarter rather than a crisis — say that out loud before you discount your way out of it.

The first 14 days — the parts that cost nothing

You have no budget to fix this. Correct — the first fortnight does not need one.

1. Freeze attributable cost the same week. Cancel or pause every contractor, seat and tool bought for that account. The only lever with a 30-day effect.
2. Call the receivables ledger, not the sales list. Unpaid invoices are revenue you have already earned. Chase them before chasing anything new.
3. Have the second conversation with the client. Ask what changed, what a smaller retained scope would need to look like, and who inside their business now owns the work. A 40% client reduced to a 15% client is a very different year.
4. Ask them for two introductions. Departing clients are unusually willing, and unusually rarely asked. The window is the length of the notice period.
5. Write down the concentration number. Largest client as a share of trailing twelve-month revenue, then the second and third. You cannot manage client concentration risk you have never measured.

None of the five costs money; the first four move cash inside a fortnight, and the fifth is what stops you being here again.

How much of my revenue can one client safely be?

Australian accounting standard AASB 8 Operating Segments requires, at paragraph 34, that where “revenues from transactions with a single external customer amount to 10 per cent or more of an entity’s revenues”, the entity must disclose that fact. That is a financial-reporting disclosure trigger, not a private-practice safety limit — plenty of consultancies run well above it and call it a good year.

The table below prices the exposure at a 15% net margin and six months to replace the work. Both are assumptions, not findings — substitute your own margin and your own replacement time and the formula does not change. The first three columns are arithmetic from that formula; the last column is our prescription at each level, not an accounting standard or a measured benchmark.

The row that matters is 40%: one client’s renewal decision is then larger than your entire annual profit, which makes it a solvency question rather than a sales one.

The 40/6 rule for anchor clients

The 40/6 rule: once a single client passes 40% of trailing revenue, you need either six months of contracted notice or six months of the monthly cash gap in the bank. Above 60%, you need both. It is our rule and a planning threshold, not a measured finding or a regulatory requirement — the only externally set number on this page is the 10% AASB 8 disclosure floor above. Move the 40 and the 6 if your replacement cycle is genuinely shorter.

Notice and cash are interchangeable: both buy time to replace revenue without discounting. Notice is usually cheaper — it is a clause negotiated at renewal when nobody is upset, and the ask itself tells you how the relationship is really priced. If you cannot raise the notice period, raise the reserve. Terms are the cheapest insurance a consultancy can buy, which is why they belong in how you price and structure the engagement rather than in a panic six months later.

Days 15 to 90 — where the replacement revenue comes from

Order by warmth, not ambition. Cold outbound to a market that has never heard of you is the slowest option, and it is where most people start because it feels like action.

The dormant-client row is the one people skip, and it is the one with evidence behind it. In our own database reactivation work with Colliers a dormant database converted at 4.4% on average with an 8.9% peak campaign — LeadsNow’s own record on our own campaigns, not an industry benchmark, and a professional-services list will behave differently. A past client who already paid you once is a warmer starting position than any cold list you can buy. Past those five sources you are into paid pipeline, and the channels open to a consultancy are ranked in how consultants actually get new clients in Australia.

A worked example: a $640,000 practice that lost a $260,000 client

Trailing revenue $640,000 at a 15% net margin: $53,333 a month, $8,000 profit. The anchor client bills $260,000 a year — 40.6% of revenue, $21,667 a month.

• Day 1 gap: (40.6% − 15%) × $53,333 = $13,667 a month. Six months of that is $82,000, against an annual profit of $96,000 — most of a year’s profit gone, on the current cost base.
• After cuts: 1.5 contractors and three tool licences were attributable to that account, $11,000 a month, stood down inside 30 days. The gap falls to $2,667 a month, or $16,000 over six months.
• Replacement maths: $21,667 a month, at an average engagement of $60,000 over 9 months ($6,667 a month), is 3.25 new engagements. At a 25% proposal win rate that is 13 proposals; at one proposal per three qualified meetings, 39 meetings.

Cutting $11,000 of attributable cost took the six-month cost of the gap from $82,000 to $16,000 — the same cash now lasts about five times as long — and it was done inside a fortnight; the 39 meetings were always going to take two quarters. Reversing that order is the most common way a recoverable year becomes a fatal one. The three inputs are engagement value, win rate and meetings-per-proposal — if you do not know them, that is the first thing this event should fix.

What running the replacement plan yourself actually costs

The method above is complete: someone can follow it and succeed, and below roughly 200 dormant records, hand-working the list beats any system.

Thirty-nine qualified meetings in two quarters is not a task, it is a role — list building, a sequence that survives no-replies, someone able to answer within minutes rather than days, and a calendar filled while the principal delivers the work that still pays the bills. The failure mode is not the plan; it is that the person executing it is also the person delivering, and delivery always wins. Our benchmarks for what a booked meeting costs a consultancy let you put a number on that trade.

An outside team makes sense when meeting volume is the constraint and missing it is a solvency number rather than a growth number. LeadsNow runs lead generation and appointment setting for consultants on a pay-per-result basis — you pay on booked qualified appointments, not a retainer or a seat — which suits a practice trying to shrink fixed cost rather than add it. It does not, if the real problem is that your positioning stopped working — more meetings then only produce more of the same “no”.

Questions people ask after losing an anchor client

What percentage of revenue from one client is too much?

Ten per cent is where a single customer becomes disclosable: AASB 8 Operating Segments, paragraph 34, requires disclosure where revenues from a single external customer reach 10 per cent or more of an entity’s revenues. The practical private-practice thresholds are higher: 30% is where you stop taking new scope from that client, and 40% is where their renewal decision exceeds your annual profit.

How long will it take to replace the revenue?

Work it out rather than guess. Divide the lost monthly revenue by your average engagement value per month to get engagements, divide by your proposal win rate to get proposals, then multiply by meetings-per-proposal. In the worked example above that chain gives 39 qualified meetings. If you do not know your win rate, you cannot forecast this yet — and that is the first gap to close.

Should I cut staff straight away?

Cut contractors, licences and subscriptions attributable to the lost account first — those move inside 30 days and carry no statutory obligations. Decisions about employees involve notice, redundancy pay and consultation requirements set out by the Fair Work Ombudsman, and you should take advice specific to your situation before acting. This page is general information, not legal or financial advice.

How do I keep paying the bills while the pipeline rebuilds?

Receivables first. Under Australia’s Payment Times Reporting Scheme, the regulator’s January 2026 update reported the 95th percentile payment time for large reporting businesses rose to 64 days from 58 for the period 1 January to 30 June 2025. That figure describes the slowest-paying tail rather than the typical invoice, but it is the tail your final invoices sit in, so expect some of them weeks away from landing. If you cannot meet obligations, speak to your accountant early and see the Australian Small Business and Family Enterprise Ombudsman for support services — that conversation is easier at week two than at week ten.

Will the client that left ever come back?

Some do, usually when the person who replaced you leaves or the in-house team under-delivers. Keep it warm at zero cost: a quarterly note with something genuinely useful in it, no pitch. Treat them as the top entry on your dormant list, not a closed file.