Definition
Customer concentration measures how dependent your business is on a small number of customers. The standard way buyers calculate it is the percentage of total revenue from your top customer, your top three, your top five, and your top ten. A business where the top customer is 8% of revenue has low concentration. A business where the top customer is 35% has high concentration. A business where the top three customers are 60%+ of revenue has dangerous concentration — and that's true whether the business does $400K or $40M.
What it means for you
Customer concentration is one of the three things buyers worry about most, alongside owner dependency and earnings quality.
The buyer’s lens
Buyers don't just look at the percentage — they look at how loyal the customer is to the business versus to you personally.