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It’s important to diversify October 7, 2009

Posted by Jill (@bonnjill) in Business practices, Marketing ideas.

All the financial experts talk about the importance of diversifying when it comes to investments, but it is also very important to diversify your client base.

When I first started in the translation industry I witnessed first-hand the importance of not relying on a single client. The agency I worked for back then did a lot of work (80-90%) for Microsoft. They localized all of the Microsoft programs for the German market at that time. Business was booming. The company was flush with cash. Then at some point Microsoft started delaying payment. The agency started delaying payment to their vendors and then to their employees.  The owner ended up selling the company, which was then sold again to another big agency and moved to a completely different city. There are probably only one or two people I worked with who are still working for the company.

It is so important to ensure you have a wide and diverse client base. Do not rely on just one or two clients for your income. One valuable piece of advice I received early on is to have at least seven clients. If you have seven clients you can be assured that you will be kept busy on a regular basis. Of course, you can strive to have even more than seven clients. It isn’t a hard and fast rule.

It is also a good idea to have both agency and direct clients. I have noticed many agencies are haggling on price recently (for whatever reason, be it the economy, customer demands or something more insidious), so I am glad that I have several direct clients in my arsenal on whom I can rely. I plan on adding more in the future.

It’s also a nice idea to diversify clients by location. I am so glad I have clients in Germany and other European countries, where the euro is strong. I particularly like it when I transfer the money to my U.S. account, because I get more dollars for my money. I intend to focus on adding more European clients in the future for this very reason.

Even if you have a lot of clients, it is important to keep marketing yourself. Work from my best client (which has been 30% of my income in the past) has dried up recently. It isn’t because they don’t appreciate my work. I consistently receive good feedback for the work I do for them, and they recently featured me in their company newsletter. When I called to ask what had happened they explained to me that their big client had not been sending them German-English work. The client had hired someone in-house to translate their German to save money. Oh well, it was nice while it lasted…

Things can happen that are beyond your (and your client’s) control. Clients can go out of business due to death of the owner or go bankrupt when one or more of their customers go bankrupt. The client’s office could be destroyed due to flooding, fire or a hurricane, etc. It’s important to continually market yourself. I read a recent blog post on The Wealthy Freelancer that advocated spending 10% of your time on marketing, even when you are busy. Corinne also wrote about this in her most recent post, Avoiding feast or famine by marketing consistently.

Do you have any other suggestions on diversifying your client base? Feel free to add them in the comments.



1. Kevin Lossner - October 7, 2009

Seven clients won’t do you any good if the distribution of work is seriously lopsided. A rule of thumb I use is to let no client account for more than 20% of your volume, preferably 15% or less. And have the top ten constitute about 70% of your business with 30% coming from a pool that can be promoted if one of the ten select fall out. Work toward a client base structure like this with a reasonable mix of direct clients and intermediates and you’ll never see a quiet day unless you shut off the phones and stay off your e-mail client. At least in your pair that is the case.

2. Anke W. - October 8, 2009

This is great advice, but much more easily said than done! *sigh*
I am still struggling to get more clients, especially direct ones (I haven’t got any), and I’m not really sure how to go about it. I’ve been attending business meetings, talking and handing out business cards, I spruced up my website… Considering I’ve only been self-employed a year, things are going fairly well, but still, I would love to really establish my business! Any tips/thoughts?

3. Olivia - October 8, 2009

Anke, you are doing well! I’ve only been in business a few months but I’m struggling to get work with agencies, even though I get great feedback on the work I do. I won’t give up though because I believe that success boils down to one thing: persistance. Don’t let yourself be defeated when the going gets tough. Grab the bull by the horns – dare to talk to people you wouldn’t normally approach (e.g. top management), expect to contact potential clients at least 5 times before getting a contract (I used to work in sales…). Moreover, it is important to be patient (easier said than done). We want our efforts to pay off straight away, and it usually takes a lot longer than we expect (which is why most of us give up). You’re doing well. Keep up the good work!

Kevin: I agree. I think Jill implicitly meant an even share of work between the seven clients, but your breakdown is a useful indicator of what I should be aiming for and will be added to the business plan for 2010.

Right, I’ll take my own advice and get back to marketing…

4. Ryan Ginstrom - October 8, 2009

I agree completely. I got burned once when a client providing the majority of my work went out of business. Luckily, some of the people I worked with at that company got new jobs, and started calling me with work from there.

After that experience, I always try to diversify my sources of income.

5. Kate Lambert - October 8, 2009

Another thing that’s affected my agency client base is mergers and buy-outs within the industry. Over the years I’ve been working, some of my clients have bought each other out and others have been bought by bigger international agencies. What looks like a healthy portfolio of agency clients can suddenly shrink overnight. Often PMs leave in the process and their replacements may have their own pet translators they’re used to using rather than you.

I put all my sales in an Excel spreadsheet and create pretty bar charts and pie charts to keep an eye on the spread to make sure no one client is becoming overly important to my income, see Kevin’s good advice above. I’ve also had one client’s UK office close, one owner retire and another die. If you’re in it for the long haul, you can’t assume all your clients are going to keep going longer than you are.

6. Corinne McKay - October 8, 2009

Great post! I also think that if you can do it, it’s helpful to diversify outside of directly doing translations. How about writing books, articles, glossaries, providing software training to other translators, etc? As long as you concentrate on what you’re good at, it can really help to have a couple of pots on the stove so that when one’s simmering, another is boiling (so to speak!).

7. Judy Jenner - October 15, 2009

I completely agree – diversification really is key, and as Corinne mentioned, it can be in translation-related areas. For instance, we do a lot of copywriting and have gotten called upon to do a lot of multicultural marketing, which we love. It also keeps things fresh and interesting.

One of our largest — and favorite — clients got laid off from his company earlier this year. While it was very sad and we felt the impact immediately (plus we were sad he lost his position), he’s already indicated he want to work with us again in whatever new position he takes. Talk about repeat business! And we are giving him a generous discount for translating his résumé.

8. delightedscribbler - October 16, 2009

Diversification is definitely the better route. Kevin has a great formula. And I’m with Corinne on offering a variety of services. It gives you a broader base and keeps work days more interesting.

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