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70% of SMEs rely on a surprisingly small group of customers, leaving them vulnerable

Research by dedicated small business lender OnDeck Australia reveals that many of the nation’s small businesses have a surprisingly limited customer base, thereby putting the stability of the enterprise at risk.

Key Findings:

  • Over seven out of 10 (71%) small businesses in Australia say the stability of the enterprise is at risk because of dependence on a small number of customers.
  • More than one in ten (10.2%) small business owners say their enterprise is at ‘extreme risk’ of instability due to a small customer base.
  • Only 12% of small businesses report ‘no risk at all’.

According to OnDeck’s survey, over seven out of 10 (71%) small business owners say they face some level of risk arising from a small customer base.

More than one in 10 (10.2%) business owners believe this risk is ‘extreme’ owing to dependence on a small number of customers.

Only 12% of small business owners see no risk at all associated with the scale of their customer base.

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Mr Cameron Poolman, CEO of OnDeck Australia, said, “Our survey results highlight how common it is for small businesses across Australia to rely on a small number of customers. This phenomenon is referred to in the industry as “concentration risk” and brings inherent challenges, particularly if, for whatever reason, an enterprise loses one or more key customers.

“I appreciate that not all small business owners want to scale their enterprise. However, by growing a customer base, a business can significantly reduce the risk of instability that tends to go hand-in-hand with a restricted customer base.”

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