I wrote a tweet recently that gained some attention:
Additional points were raised in the ensuing discussion and further explanation was requested, so here’s a deeper dive (pun intended) into why having a single “whale” client should scare you as a freelancer.
Firstly, you need to know how to tell if you have a whale client.
A whale client can be defined as a client that accounts for a large part of your business’ revenue. Often well over half.
In freelancing terms, a whale client might even be the only client you’re working with; accounting for every penny that you’re earning.
It’s easy to think that you’ve arrived as a freelancer when you land such a big engagement, but in truth, it’s a false sense of security.
I went through this exact scenario with my first freelancing client.
Working solely for one client was great, until they decided to move on.
Others divulged similar experiences too:
The main thing that’s scary about the whale client setup is that clients can stop giving you work whenever they please.
Often with zero notice (unless you have a notice period detailed within your agreement).
Although you should always try to mitigate risk as a freelancer (more on this later), going from all to nothing without warning is frightening.
When you have a whale client you remove a level of control from yourself.
Your business’s success becomes reliant on one other business’s success born from other people’s decisions.
It’s an incredible risk to take as a freelancer to relinquish such a large amount of control.
A bad decision from the CEO at your whale client could be the difference between you being able to continue to live in the manner that you are accustomed to, or not.
At the end of the day, if your client starts struggling, they will pay themselves first.
Plus in circumstances like these, freelancers are commonly the first ones out of the door.
Are you a freelancer at all if you have a single whale client?
A key benefit of freelancing is the agility and flexibility it affords. You rob yourself of this a little by going all in on a whale client.
It’s another forfeit of control.
Another reason to be scared is that you’ll likely be so busy with your whale client that your business becomes paralysed.
Whale clients can keep you so tied up that you have no time, or energy, to continue marketing and moving your business forward.
Alongside those that agreed fully with the sentiment of my original tweet, there were people who drew valid attention to some caveats.
While I stand by singular whale clients being a scary prospect for a freelancer, the risk mitigation techniques discussed in the above exchange are important to note.
If you can get a notice period in your contract, by all means take this on board during your analysis of what makes your client a whale.
I’m a proponent of spending less than you earn, so having a “rainy day” fund gets a thumbs up from me.
With that being said, I’d be more comfortable not having to dip into my savings because my whale client ditched me.
All in all, you should always look to manage risk as a freelancer, and whale clients are one of the biggest to be managed.
In short, don’t put all of your eggs in one basket.
What has always stood me in good stead as a freelancer is to have multiple revenue streams and/or opportunities in the works at any one time.
For instance, you might have one large project running alongside a couple of smaller ones, with an iron or two in the fire for more work when your availability next allows.
Or you might work 2 days per week for one client and 2 days for another; as opposed to 4 days for one. (1 day retained for working on your own business’ progress!).
I’m not saying that you need to have multiple engagements running concurrently at all times. I appreciate that this is not always achievable (although it would be beneficial).
Nonetheless, if you’re in a situation where a singular whale client makes up the majority of your income, you need to be cautious.
Look towards the diversification of your client base to prevent the rug from being pulled from under you.
Investigate other revenue streams that can supplement your client work.
At the very least, keep marketing, and thus the opportunities flowing, alongside your whale client in case it swims off.