I’ve had too many eggs in one basket. And with disruption in the industry I serve, the eggs are crackin’ and my most stable income stream has suddenly become my least stable. Yikes!
Why did I allow myself to think I was diversified enough? My biggest client company is a franchise model business. And I have separate, and positive, relationships with a number of different regional offices. If one region made changes to their training approach, another region wanted more of what I was offering. Diversification!
Yes, I know. You can all see the problem. Me too, but I got busy and comfortable and didn’t take action. This client has had to be aggressive and nimble to respond to market forces. They are doing exactly what they should be doing – on a national level, which affects every one of my regional clients. The fallout means far less work for my company until the dust settles.
So – not diversified. Eggs and baskets…
Take a look at your practice. You probably have a handful of clients who provide most of your business. The 80-20 rule applies. It’s worth stress-testing. Worth scaring yourself a little with a couple of ‘what-if’ scenarios.
What if you lost your biggest client? Or your biggest 3 clients?
I can hear you saying ‘that would never happen because…’
- I’ve been looking after their family for 20 years
- They love me! They rave about me and recommend me to their colleagues
- He’s my best friend. He trusts me implicitly – would never change advisors
Okay yes, but in a ‘wake-up call’ scenario…
The 3rd generation contact makes it big in Silicon Valley and takes all his business to a hot-shot Advisor connected to a venture capitalist. Poof, gone.
The person who raves about you moves to Australia. Poof, gone.
Your best friend suffers a catastrophic financial loss and liquidates everything just to survive. Poof, gone.
Notice that none of these scenarios have anything to do with a mistake you made. We can assume excellent service on your part and still have vulnerabilities that are out of your control.
Challenges can also come from product or distribution issues. The product where you have the deepest expertise suddenly changes comp structure and your income is cut in half. Or your favourite social media platform for lead generation abruptly changes their policy and your connections are wiped out.
I’m not a doom and gloom gal by any stretch. But every one of these scenarios has happened for people. And taking a bit of time for prevention means that your business – and your income – will be built to weather any storm.
Stress-test your diversification. Check your eggs and your baskets.
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