According to Statistics Portugal (INE), up to November 2025 goods exports grew by just 0.6%, while imports rose 4.3%. In the same year GDP grew 1.9%, ahead of the euro area's 1.3%. The economy moved forward, but not on the back of selling goods abroad. For anyone running a manufacturing or distribution business, that figure is a warning: the usual markets are not pulling the way they used to.
I often see owners respond to a drop in orders with the same recipe: one more trade fair, an agent in a new country, and a hope that something will happen. Sometimes it works. Most of the time it burns time and money without a method. Diversifying markets is a project like any other, with goals, metrics and a deadline for deciding whether to carry on or stop.
The risk that does not show on the balance sheet
Before thinking about new markets, measure how dependent you are today. There are two numbers every owner should know by heart:
- The share of your largest customer in turnover over the last 12 months.
- The share of your largest market (country or sector) over the same period.
Picture a hypothetical business turning over 3 million euros, with a single customer accounting for 40% of sales. If that customer halves its orders, the business loses 600 thousand euros of revenue almost overnight. With fixed costs that will not flex, that can turn a good year into a loss making one. The risk is not on the balance sheet, but it is real.
There is no magic threshold, but as a rule of thumb, once a customer passes 20% to 25% of sales, or a market passes half, it belongs on the management agenda.
What the context tells us
In its December 2025 Economic Bulletin, the Banco de Portugal projected growth of 2.3% for 2026. That is a reasonable outlook, but it does nothing to remove any one company's dependence on its customers. And one figure strikes me as telling: according to the 2026 Eurobarometer, 71% of Portuguese companies have never tried to hire from abroad. That is not the same as selling abroad, but it reveals a mindset. Many SMEs see foreign markets as distant and risky, rather than as a set of markets that can be studied and tested.
In the ActionCOACH model, strategy starts with Niche: knowing exactly who the business is the best choice for. Diversifying does not mean selling to everyone everywhere. It means finding other niches, in other markets, where the same value proposition works.
A six step method for diversifying
This is the route I take with owners who want to reduce dependence without scattering the business:
- 1. Diagnosis. Work out the share of your five largest customers and three largest markets. Look at the margin on each too: sometimes the biggest customer is the least profitable.
- 2. Ideal customer profile. Using your best current customers, describe the kind of company that most values what you do: sector, size, need, buying process.
- 3. A short list of markets. Choose two or three markets or sectors where that profile exists in sufficient numbers. Criteria: proximity, language, regulation, competition, ease of logistics.
- 4. A capped test. Set a maximum budget and a time limit, say six months, for testing each market. Without that, the test never ends.
- 5. Funnel metrics. Track qualified contacts, meetings, proposals, first orders and repeat orders. The same 5 ways to profit apply to each market: leads, conversion, transactions, average sale and margin.
- 6. Decision. When time is up, decide on the numbers: invest more, adjust or withdraw. Pulling out of a market that is not working is a good decision, not a failure.
Common mistakes to avoid
In my years of coaching, the same mistakes keep coming back:
- Opening several markets at once, with neither the people nor the time to follow them up.
- Handing everything to an agent or distributor with no targets and no regular reporting.
- Copying the home market price and ignoring freight, commissions and payment terms.
- Forgetting that diversification can also happen within Portugal, in another sector or with another type of customer.
- Having nobody in charge. If the project belongs to everyone, it belongs to no one.
Accountability is decisive here. A diversification project needs a named owner, a target with a number on it and a monthly review with management.
One action for this week
Open your invoicing for the last 12 months and work out two percentages: the share of your largest customer and the share of your largest market. Write both numbers somewhere you will see them. If either one makes you uneasy, book a one hour meeting with your team straight away to list three alternative markets or sectors and choose one to test over the next 90 days.
If you would like to structure that test with a clear method, the ActionCOACH Porto team would be glad to talk. The 90 Day Planning Workshop is a good place to start turning intention into a plan with owners and deadlines.