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The more clients, the more chances that any will leave. That's called variance, aka, risk.

Economies of scale reduce or help the amortization fixed costs, not variable costs.

Economies of scale have more risk. The right approach is to diversify the risks.

discuss

> The more clients, the more chances that any will leave. That's called variance, aka, risk.

The less clients you have, the worse impact it can have if you lose the contract with one of them or the client downsizes.

Say you run an agency that has only a few clients, and (almost) all of them are automotive... and then covid hits, leading to budget cuts in the entire sector as the carmakers can't sell cars because they don't have chips to make them with. Now, you're fucked unless you have iron-clad contracts with fixed minimal spending amounts or retainers which is a rarity in the business. This happened here in Germany and it was an awful time.

And now you run the same agency, but have a multitude of small, medium and large clients, among different industries... so what if your 1, 2 automotive clients cut their budget, you just call up the other clients and ask them "hey, we have a bit of capacity left, wanna do <X>?".

frankreyes|2 years ago

> This happened here in Germany and it was an awful time.

Because you didn't diversify your economy. Just like my last sentence said.

Sorry about your country but my ex wife is German and... yeah, sorry. You didn't learn your own history.

It's funny because I'm argentinian and we don't diversity our risks either. And now Germany is comparing themselves with Argentina:

https://www.thetimes.co.uk/article/germany-sick-man-europe-e...

>> This year Germany’s GDP is forecast to shrink by about 0.4 per cent, the worst performance of any large country in the eurozone and any member of the G20, with the exception of Argentina.