Our organisations all desire to achieve a big and profitable source of income from a friendly client, funder or investment. It helps to stabilise their financial situation and creates a foundation for growth.
However, these situations all carry a hidden risk – that our organisations become too dependent on this income stream and too distracted or complacent to do anything about it. I can tell many stories of organisations blindsided by the loss of this income for a multitude of reasons. While some organisations recovered, many closed down or became a shadow of their former selves.
Organisations must therefore be mindful of the risks of having a single large contract or income stream. This risk is higher where this income accounts for a significant proportion of overall income, seems reliable, and when you must shift how your organisation operates to accommodate a client or funder.
This article will explore the advantages and disadvantages of a good single source of income. It also provides some ideas for how you might mitigate the risks associated with this favourable situation.