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Embracing Client Diversification: A Key Strategy for Fractional COOs

As a Fractional Chief Operating Officer (COO), managing the ebb and flow of business is more than just a skill—it's an essential strategy for sustainability and growth. The concept of "feast or famine" is well-known among entrepreneurs (myself included 🙋🏻♀️! and consultants, where periods of plenty can often be followed by times of scarcity. Client diversification is vital to navigating this unpredictable landscape, a crucial tactic for maintaining steady growth and financial stability.

The Pitfalls of a Single-Client Focus

Many Fractional COOs might rely heavily on one or two major clients. While this can provide short-term financial comfort, the risks are high should these clients cut back on spending or end their contracts. The impact can be immediate and devastating, thrusting your operations into the famine phase without warning.

Financial Vulnerability

When a large portion of your revenue comes from a single client, your financial stability is directly tied to that client's health and decisions. If they face financial difficulties, decide to change vendors, or choose to reduce their spending, it could dramatically affect your business's bottom line.

  • Example: Imagine a Fractional COO who derives 80% of their income from one prominent tech startup. If that startup decides to bring operations in-house or fails due to market pressures, the COO's business would face immediate and severe revenue loss, potentially leading to layoffs or even business closure.

Limited Business Growth

Focusing on one client often means your business strategies and developments are tailored to meet that specific client's needs rather than considering broader market opportunities. This can limit your business's growth and prevent you from exploring other lucrative avenues.

  • Example: If a Fractional COO spends most of their time managing operations for a single large retail company, they may miss opportunities in emerging markets like e-commerce or global logistics, which could diversify and stabilize their revenue streams.

I love my clients. Client diversification = growth.


Working predominantly with one client can lead to a comfort zone where innovation and proactive business practices diminish. You might neglect necessary activities like marketing, networking, and client acquisition, which are crucial for long-term business survival and competitiveness.

  • Example: The COO becomes so comfortable with the steady workflow and income from a significant client that they stop attending industry networking events and cut back on marketing efforts. When the client unexpectedly cuts their contract, the COO finds their pipeline empty, and their market presence diminishes. Not a good feeling.

Reputation and Market Perception

Heavy reliance on a single client might lead others in the market to view your business as more of a subsidiary to that one client rather than an independent and versatile service provider. This perception can make it challenging to attract new clients.

  • Example: The market perceives a Fractional COO as "the COO for X company" rather than a flexible, independent operator. This branding pigeonholes them into one sector, making it difficult to attract clients from other industries.

Why Diversify?

Client diversification isn't just about risk management—it's about the opportunity. By broadening your client base, you're safeguarding your business against losing a single client and positioning yourself to capture a wider array of opportunities. Different sectors and industries can offer varying workflows and challenges, keeping your operations dynamic and adaptive.

In addition, client diversification allows Fractional COOs to leverage their expertise across a broader spectrum, enhancing their business resilience and providing a buffer against market fluctuations. This strategy ensures that the inevitable slowdown in one area can be compensated by another, maintaining overall business momentum.

Keep moving forward and don't be afraid of anything.

Staying Proactive: Never Taking Your Foot Off the Gas

A common mistake during prosperous times is complacency. When things are going well, reducing networking, marketing, and client acquisition efforts is easy. This approach can be risky. Lows often follow highs, and without new clients in the pipeline, a business can quickly revert to famine mode.

Staying proactive means continuously engaging in marketing efforts, expanding your network, and nurturing new client relationships—even when your current situation feels secure. Think of your business growth activities as ongoing rather than tied to the perceived state of your business.

Strategies for Effective Client Diversification

  1. Explore New Industries: Look beyond your current sectors to industries that might benefit from your expertise but still need to become saturated with Fractional leadership services.

  2. Leverage Networking: Attend industry conferences, participate in relevant webinars, and stay active in professional groups. Networking is a powerful tool for discovering new opportunities. Which groups are out there? Let's connect, and I'll recommend several to you!

  3. Offer Tailored Solutions: Understand the unique challenges of different industries and tailor your services to meet these needs. Customized offerings are often more appealing to prospective clients. But, in the end, stay true to what you do best!

  4. Maintain Client Relationships: Even minor clients can sometimes grow into major ones, or you can be referred to other opportunities. Keep all client relationships warm and productive. This is the greatest tip I can give you.


For Fractional COOs, the goal should be to create a business that thrives on both the highs and the lows. Client diversification is not just a survival tactic; it's a growth strategy that encourages constant engagement and innovation. By continuously driving your business forward and keeping your services dynamic and relevant, you can ensure your survival and ability to thrive regardless of external circumstances.

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