The danger when one client is 80% of sales

November 22, 2013: 6:30 AM ET
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NEW YORK (CNNMoney)

If your business has landed a steady, lucrative customer, great! But beware of devoting so much attention to that one client that you stop looking for new ones.

It's a lesson Marsha Friedman learned the hard way. Shortly after she founded her Florida PR firm, EMSI Public Relations, a large publishing house signed on as a client.

"The first few publicity campaigns we did for them were so successful that they kept a steady stream of clients flowing to us, to the point where that publisher accounted for about 80% of our sales," she said.

For a while, that was fine, except for one little thing: EMSI all but quit trying to drum up new business.

"We became so focused on delivering for these authors that we slowly stopped marketing. Our newsletters ground to a halt. We didn't 'waste time' networking," Friedman said.

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That went on for about two years -- and then the ball dropped. The publisher suddenly went out of business. "We had absolutely no warning whatsoever," Friedman recalled. Her firm was forced to basically start from scratch.

Determined not to lay anyone off, Friedman kept her four employees (the firm now has 18), and started working 14-hour days and weekends to hustle up new business. She took a pay cut and slashed expenses so deeply that even free coffee, formerly an office staple, fell by the wayside.

Lining up enough new clients to keep the business afloat took seven or eight months, which Friedman said easily could have killed the company. She built a new client base in three ways.

First, since she and her staff had learned that they liked working with authors, Friedman launched a letter-writing campaign, contacting new authors mentioned in Publishers Weekly.

"I worked hard on developing a clear, engaging letter about publicizing their book, and sent the letters via their publishers," Friedman said. At one point, she was mailing 100 letters each week.

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At the same time, Friedman got in touch with "everyone I knew in the business world -- including family members, former colleagues and friends -- and asked them for referrals," she said. "It helped that I had all those relationships to call on in this crisis."

Third, and most important, she revived the firm's newsletter, which still goes out twice a week to current and prospective customers.

"The newsletter isn't a sales pitch," Friedman said. "Instead, it gives expert tips on things like how to write a press release, or how to get on talk radio."

She noted that this strategy isn't new, and in fact is the basis of social media marketing. "But many entrepreneurs hesitate to do it, because it seems like giving away the store."

In her experience, the opposite is true: "Becoming known as a source of helpful advice gets your name out there and builds trust. And, no matter how much free information you give out, most people would still rather hire a pro than try to do your job themselves."

Giving away helpful tips has worked for EMSI. The firm now has over 100 regular clients and, these days, is always on the lookout for more.

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