Your top customer is worth 40% of turnover: the right question is not how much it buys
20 September 2026, 18:46
Confapi Taranto, the local association of small and medium-sized manufacturers, after the summit at the Ministry of Labour on the firms supplying the former Ilva steelworks, said something that holds well beyond Taranto: the crisis does not only affect the supply chain, it is spreading to every sector. Whoever supplies the supplier, whoever rents out the industrial buildings, whoever does the maintenance, whoever sells meals and transport. The whole chain moves together.
Let us set the specific case aside. The point of method is a different one, and it concerns any SME: how much of your business depends on a single decision taken by someone else.
The top customer's share of turnover is the wrong number
Almost every business owner can answer the question "how much does your main customer weigh?". They answer in turnover. It is the least useful answer.
Take an invented example, just to do the maths. An engineering workshop has a turnover of €4 million. Its main customer accounts for €1.6 million of it, or 40%. The other €2.4 million is spread across forty customers. It looks like a high but manageable concentration.
Now look at the contribution margin, that is, what is left of each invoice after deducting the costs that exist only because that job order exists: materials, outsourced processing, transport, commissions. On the large customer the margin is 18%, because the customer set the price three years ago and since then it has only ever been renegotiated downwards. On the others it is 32%.
The large customer brings in €288,000 of margin. The other forty bring in €768,000. The top customer is worth 40% of turnover but 27% of margin. It is a different piece of information, and it changes the decisions: that customer is not the engine of the business, it is the reason the business is the size it is.
The reverse happens just as often. A customer worth 25% of volume and 45% of margin is a real dependency, and nobody notices as long as they look only at revenue.
Non-reducible costs are what tell you how many weeks you have
If that customer stops tomorrow, the question is not "how much turnover do I lose". It is: how long can I hold out before the cash goes into the red.
You need to split costs into two groups. Non-reducible: rent, leases, loan repayments, permanent staff, insurance, minimum utilities. These are the ones that carry on even with the plant standing idle. Reducible: agency labour, overtime, on-call consultants, travel, maintenance that can be postponed, purchases not yet ordered.
Back to the example. Say the workshop has €1,056,000 of total contribution margin and €900,000 of fixed overheads, of which €640,000 are non-reducible. The break even point, that is, the minimum turnover that covers all costs, sits at around €3.4 million. Losing €1.6 million takes turnover down to €2.4 million: €1 million below the threshold. Once things settle, the monthly loss, after cutting the reducible items, is in the order of €30,000 a month. With €200,000 of available cash and no other action, the runway is about six months. It is not an abstract drama: it is a number of weeks, and that number is what decisions are made on.
The same reasoning has to be applied to debt. The DSCR measures how far operating cash covers the year's loan instalments: banks normally ask for at least 1.2, and below 1 the situation is critical. As for the ratio of net financial position to EBITDA, below 2 times is a comfortable position, between 2 and 4 is manageable, and above 4 the room for manoeuvre narrows. If losing the main customer pushes the DSCR below 1, that conversation with the bank should be brought forward, not endured.
This calculation is redone every month, not once
A concentration analysis done in January on the previous year's accounts describes a company that no longer exists. The mix changes, prices are renegotiated, a customer grows without anyone deciding it should.
That is what a rolling forecast is for: every month the next twelve months are updated with the real figures just closed. That way you see concentration rising while it rises, not once it has already happened.
What to look at tomorrow morning
Open the last twelve months' turnover, rank customers from largest to smallest and put the contribution margin in euros next to each row. Then work out a single percentage: how much the top customer weighs on total margin, not on turnover. If that number is above 30%, you have a structural issue to put on the agenda this month.
This article was prompted by a news item published in ANSA.