Client Concentration Risk: Why One Big Client is a Red Flag

Earning 60% or more of your income from one client feels great—until they leave. Then you face a cliff-edge income drop that can wipe out your emergency fund in weeks.

This is called client concentration risk, and it's the single biggest factor that multiplies freelancer emergency fund needs.

Why One Big Client is Dangerous

A salaried employee has one "client" (their employer) generating 100% of income. But they also have unemployment benefits, severance, and WARN Act protections. Freelancers with one big client have none of these safety nets.

When your biggest client leaves:

• Income drops 50–80% overnight
• No unemployment benefits
• No severance package
• Replacement takes 6–18 months (not 3–6 weeks)

How to Calculate Your Concentration Risk

Calculate the percentage of income from your top client over the past 12 months:

• Low risk: Top client < 30% of income → Standard emergency fund
• Medium risk: Top client 30–50% → Add 3–6 months buffer
• High risk: Top client > 50% → Add 6–12 months buffer

If one client is 70% of your income, your emergency fund needs to be 2–3x larger than a diversified freelancer.

The Bottom Line

One big client is a single point of failure. Your emergency fund needs to bridge the gap while you rebuild a diversified client base—and that takes time.

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