all your eggs in one basket

[greenoak]

this old saw has always been very dear to my heart!!!! we have always had at least 2 or 3 big streams of income coming in.....mall booths, our picture business, shows, , a big customer or 2.......thats been our whole business life...the store plus some stream bringing in over 50,000 a year.....
the last 2 years we have been without any other healthy stream....and the whole thing has depended on the physical store.....very scary to me!!!! and over the last 10 yrs we have lost most of our wholesale which used to be 80% of our business...

the different baskets idea has helped us survive....as one part went down in our field we stayed ahead becasue we were aware and networking and active in different parts or our market....and it was so good because our original recipe just couldnt work now.the people who made it work are 90% closed ...our whole antique world has changed drastically...and we have survived...and even grown....


so imho , it sounds trite , but ... dont put all your eggs in one basket.... is very good business advice.....its sure helped us and has been our saftey net ...several times...as our market twists and turns.....
and im very edgy and looking for more baskets...when the next basket pops up i hope i can see it.....and not squish it before it gets on its feet.... that would be so wrong!!!!

[vangogh]

I absolutely agree. I think most new businesses start by generating one revenue stream, but as soon as they have one, they should start building others. You never want to be dependent on one source of revenue for your income. The more revenue streams you have the more you can weather the loss of any one of them.

[KristineS]

That's very good advice. You have to diversify. Markets change and grow and then shrink. An item's popularity can change rapidly as well. The companies that survive are the ones that can adapt and change.

[Dan Furman]

I devoted a chapter in my home based business book about this - it's one of the worst things you can do (the "one big client" syndrome). Things change in business, and not just the usual way you think of them - say your biggest client, the one that is 80% of your business, has a bad fire. Or perhaps the bosses son takes over. Or locusts ate the crops.. whatever. Uh oh.

I've actually turned down work rather than block out my entire schedule for any one client (one guy wanted all of my time for about 6 months... but then what do I do after that 6 months?)

[orion_joel]

I have had pretty much this exact problem, one client was 97% of my business, the orders dried up over abour 2 years, and i went from turned over of Over $300,000 one year to projection for this year of less then $15,000. However that i have the potential to change depending on how i decide to market things.

I think ideally the optimal number of income streams would be 5 or 6 with no one stream contributing more then 30%. Because lets face it most people unless they are living week to week and not saving anything, could live on 70% of their income. In addition it would probably be good not to let any additional stream mirror time to income as close as possible. Because what is the point in adding only 10% more to your income but spending 40% of your time to do so.

I personally believe that multiple streams of income is the best way to make the sort of money that can be a dream to some people.

[greenoak]

believing in this idea is the easy part....

i really need a new stream and am all for the idea.....just cant quite find it.....before , an obvious need seem ed to appear and we reacted and built a new thing.......
we get encouraged a lot to do online selling, an ecommerce thing for our shippble little stuff.......but i have seen it work for so few people, im pretty realistic about my chances there and not too interested...
..so right now im leaning towards a greenoak version of an e commerce site but for our big stuff.......a picture site with no site;;;; rather a blog, no shopping cart and no delivery!!! kind of an outside the box thing......
im all for getting another basket....but finding a viable one isnt that easy.one that fits the actual market you are in.....especially one that has to really produce to warrant the effort...what helps me think it thru is thinking about a common business idea....that to grow you need to sell more to old customers or find new ones.....in my new project, im focusing on finding new ones.... and hope we can keep our old ones at the level weve become accustomed to!
ann

[orion_joel]

Oh, no doubt the idea is the good part, and finding the extra baskets/eggs, is to some extent kind of difficult. However, i think for the most part it does come own to being the one that notices the need and fulfilling it, now it does not always need to be a big stream it could be a number of smaller streams that just add that 50-100 a week extra income, overtime these build up.

The problem is when you already have one large source, that gives you 5, 10 or 20 thousand a week it is hard to accept a small opportunity. At the moment for me i am happy for anything that i can add as another income stream. However if i was in the position where i was turning over $5000 a week profit, i would be looking at very different opportunities to if i was starting from where i am now.

By no means do i wish to discredit any ideas, or make it appear that another income stream shouldn't be accepted if it becomes available just because it is to small or for that matter to big. But it is easy to over commit yourself and have many more income sources and not enough time to make any of them more then 3 or 4 % of your income.

[greenoak]

i sure agree on over comitting yourself..but in a way you can be more nimble than a bigger business......i couldnt deal with a real small opportunity that took the kind of committment a major stream takes.... but i hope i have lots of feelers out there to tell me what way i should look... i want to be open to the next good idea.....its a fine line.... for us the customer feedback is usually the key...
.weve accepted, in the past, a stream that really wasnt good enough....it was a100,000 a year idea, in income not profit,,....but the profit margin wasnt right and we should have known that, and the margin got worse ,,,......but it was exciting and we needed it and didnt turn it down...and things fell into place and we comitted time and money and it worked.....but really it was one of the worst profit things we have had.... and when it waned, after about 6 yrs, i was kind of glad....
i have to respect our time and payroll and abilities and have a very critical eye on the market before really jumping into the new idea.....
now a couple of years after that last idea ....we still havent figured out another good one.......working on it tho....
a good inspiration for me is always to look at other businesses in my field....and see how they look at the market......then you have to think you are looking at successful businesses not just famose ones....
..

[Spider]

There is a problem with diversity that doesn't seem to have been addressed. I have experienced quite a few people promoting the "Don't put all your eggs in one basket" philosophy, and they haven't been doing so well. They would have one business that was a florist shop, for example, and another stream of income that was selling jewelry at the weekends and another doing accounting work for other small businesses in the evenings, plus a network marketing plan based on deregulated electricity in their spare time. Four streams of income - sounds like the ticket to success, right?

The propblem is, either they or their prospective clients, didn't seem to have much coinfidence. How confident would you be of a doctor that tried to get you to switch your electricity and join him in selling the idea to others?

I think the power of multiple streams of income comes from keeping those streams of income within a single business concept. Sure, you can treat them as different businesses if you want - that's simply an accounting exercise. But that doctor, if he likes the idea of MLM, should join a program selling vitamins and health products; if he can write, write health-related articles for a magazine, and write a book about medicine, health, or a drug company exposé. There are four streams of income, none of which is questionable for that individual.

For an antique dealer dealing only in furniture, additional streams of income might be derived from antique jewelry, oil paintings and antique prints, and antique army uniforms and memorabilia, sports memorabilia, and do on. Not to mention different sales outlets - high street store, flea-markets and craft shows, and internet sales. These are all different streams of income without detracting from what your core busines is.

That is the way to get the most out of the concept of multiple streams of income, in my opinion.

[vangogh]

That's a good point Frederick. I'm not sure anyone necessarily implied the different revenue streams would be so unrelated, though no one has really discussed it easier.

I agree that multiple revenue streams work best when all of those streams still fall under the same business concept. For example in Ann's case a website selling certain items could make sense as an alternate stream of revenue. The site might not sell the exact same products as are sold in the store, but it would still fit.

Taking the site idea further an ebay like auction focused specifically on antiques could probably be set up in some way. Or maybe an informational site about antiques that ultimately sells advertising could also count as another revenue stream.

Offline a second store would be a new stream of revenue. A mail order catalog could be another revenue stream. A monthly class on the history of furniture could be yet another.

All of the above would be additional revenue streams that fit with the overall business concept. An added bonus to keeping things under the same concept is that success in one stream can usually help some of the other streams as well.

[greenoak]

very good point fredrick...and thats totally what im tryihng for....
.our streams were always related....and interlaced ....and fed each other....the best was when the new stream brought in new buyers who hadnt dealt with us before..new money from other places....
...
within a 5 yr period we had in store retail ,in store wholesale, mall booths, ebay, shows and a great single customer....and thru it all our new futrniture business grew also...we also had a great consignment deal that was a wonderful stream while it lasted....and the big plus was it helped us in volume buying and aslo kept us networking in all those parts of our world......
we arent really mainly antiques anymore...malls, shows, and wholesale all shrank tremendously.... we are one of the few survivors from the good days...
and have a lot fewer eggs...

[orion_joel]

While i do to some extent agree with you fredrick, having multiple streams within a similar strain is of course a benefit, as it can mean they can be interconnected, and feed off each other. I also must disagree that you should not limit yourself either.

It is entirely possible to have multiple different income sources. Four example, My main business is computer and related product sales. There is nothing to stop me on the weekend going to the markets and having a stall selling jewelery. Just as there is nothing to stop me writing articles about a hobby like model railroading for a magazine. Or running a gardening website on the internet. They could all provide different degree's of income, and could all be run independent of each other.

Just like in your example the doctor could do all those different thing's that are not related, as long as they were kept separate, eg when at work he is the doctor people expect him to be, maybe he does an mlm electricity business, but he keeps it separate and does not discuss it with patients. The potential is still there though.

In my opinion it really comes down to two key points.
1. If the businesses are different keep them separate, don't try to sell every business to everyone.
2. Don't limit yourself to the one industry, just because you think you have to keep all the businesses closely related.

Having multiple streams of income in my opinion is about diversifying your sources of income to protect yourself from losing one. If you go and start adding other streams that closely relate to your business within your business it may make the business a bit stronger but if the business goes under, it is not going to matter how many streams of income you had going into the business you have lost them all if you lose the business.

[greenoak]

there are so many plusses to the interrealated streams....your buying power, increased knowledge in your market, knowing the trends, building reputation, networking.........

also i wouldnt have time to really comitt to another area....my core interest is making the store work.. its varieties seem endless and interesting......
on the other hand the best money we might be making this year might come from a real estate investment made a few years ago....

what i could see as a related stream for a computer sales company starting out is getting real focussed and good at one big group of people..specialize a little......dog people, hairdressers , truckers whatever...get good and knowledgeable at some target group.........and make some wonderful package for them that used what you are selling in your main business......lots of folks are like me and need stuff but dont exactly know what....the key being reliable and not too hard.... or just a guy to call .
...i like throwing this idea out....i think it could be a good one...

and on the pr front, if a guy came to me with a whole ad program,, ideas that showed he knew his way around the colors and words of my business, , from sign blanks to tags to a calendar idea i would love it... if i could see a well done sample and touch it and heard a price, it would be great....... kind of a package...

[Patrysha]

and on the pr front, if a guy came to me with a whole ad program,, ideas that showed he knew his way around the colors and words of my business, , from sign blanks to tags to a calendar idea i would love it... if i could see a well done sample and touch it and heard a price, it would be great....... kind of a package...

That's exactly what I've been working on at a local level with the new Chamber of Commerce Holiday promotion...a program that provides participating sponsors with everything they need to have the promotion work for their business - local advertising, online components and all the signage and paperwork. The really aggravating thing is that I've had this ready to go since June and they've only now approved it so I'm running on a much shorter timeline to get all the elements in place than I'd consider ideal.

[vangogh]

I think Ann described it well


there are so many plusses to the interrealated streams....your buying power, increased knowledge in your market, knowing the trends, building reputation, networking...

When the revenue streams are all related they each help reinforce the others. Overall it saves a certain amount of time as well as one stream can be seen as helping market the other stream.

That's not to say you can't start a new revenue stream on something unrelated, but you end up doing extra work since neither stream really helps the other.

[billbenson]

The point throughout this thread is if one stream of income dries up un an economy like this, can you still make a living. I came out of college with an electronics engineering degree and sold telecom equipment for 20 plus years. It was the hot industry of the time. Along came the dot.com crash in 98 and internet sales changed how sales was done and I couldn't get a job. In one sense I was diversified (international sales, telecom knowledge, technical knowledge); but what hit me is sales methodologies, and technology all changed at the same time.

Diversification doesn't necessarily mean you need to do it. It could mean that you just need to study it. Had I been studying web design in the mid 90's, I would have had a jump start on adapting to the change. Part of it is never stop educating yourself.

[vangogh]

I don't think it's specifically geared toward the current economy. I think the idea is good under any economy. Things change. People's tastes change. There's a history of products that did very well only to see their industry disappear with a change in technology.

If all your revenue comes from one source you're at the mercy of that one source. That may not be an issue most of the time, but it can be. Setting up multiple revenue streams means you aren't dependent on any one of of them and so can deal with a temporary or permanent loss of income from any given stream.

[mr.ro]

wow this is a great topic, I think if your starting out like many of us on here you should open more revenue streams within your industry that do relate and help diversify your income while at the same time building your brand and knowledge.

once those business or ventures are up and running and making enough money to run on there own maybe you can bring other people in to manage it while you work on your next unrelated business while overseeing that the other business is still doing what you want it to do.

At the end of the day it is going to be better to venture out and do something else that you have an interest in that can make you money as well. In my case i make promotional items and im also an artist as well im working on putting my art on my stuff that I make that people will buy of course it will be in the same industry so im not venturing out to much to where I have to learn a new way of doing things, but it will allow me to make money from a different source.

[orion_joel]

mr.ro one thing you may notice with this approach you are taking is that while just promotional products themselves have a market, you art, or the people that buy your promotional products with your art on are maybe a completely different market. You may find a day comes when nobody wants the promotional items you sell, however those same products with your art on my sell very well.

While you are going along the similar path, you are effectively building a bit of a buffer in to protect your sales. So while businesses may want promotional items in bulk at good prices, others may be willing to pay a premium for a unique or low run promotional item with your art on it.

[greenoak]

lots of the big changes we had to make were in good times....like van gogh says.... for our industry it was a bigtime style change , taste change, plus china imports....having more than one stream of income going on sure saved our company..... we went from pure antiques and 80% wholesale ....to about 40% antiques and 30% wholesale in about 10 yrs. that actually means we lost way over half of our income and customers...and as antique businesses and malls all around us closed and went under we survived..... i think it was because we were always a little ahead of the market becasue we were out there in our different streams......
id hate to list all the phases we have gone thru.... in a way we are a pretty new company.... but in another way we are close to our core ideals....do our own thing and make a good living doing it...

[KristineS]

Diversification doesn't necessarily mean you need to do it. It could mean that you just need to study it. Had I been studying web design in the mid 90's, I would have had a jump start on adapting to the change. Part of it is never stop educating yourself.

I think this is vital. Things can change quickly. You have to be alert to the trends and you have to keep learning. The days of doing just one thing your entire career are pretty much over for most people. You have to be able to adapt and pick up new skills relatively quickly.