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.