Are all your eggs in one basket? Or are you well-diversified with optionality?
I frequently hear alarming strategies that hinge entirely on one primary customer, one business line, one niche product or service, or one small target customer group. Knowing your target market or your minimum viable customer is critically important to business success, but doubling down on placing all your eggs in only one basket is a recipe for eventual failure.
Think back to spring 2020. What businesses and industries struggled and failed the most? Easy to say it was this or that, but the truth is, there were exceptions in even the hardest-hit industries. What was the commonality in the exceptions? Diversification and/or pivoting to other options.
Some of those pivots were to completely unrelated opportunities and diversified offerings. But liquid assets, rainy day funds, and the presence of mind to make a change are also forms of optionality that not only kept many businesses open but also led to extremely successful new ventures for many businesses.
Too heavy a dependence on any one thing is unhealthy. Any good therapist will tell you that. The same applies to business.
Look for the areas where you need more diversification or optionality. Check your liquid assets and the time to depletion. Think about where things could go wrong, how you can proactively shore up those spots, and how you would adapt if needed. Plan in the good times, but plan for the plan to fail.
If you lose your options, you die, and if you lose all your lives, you’re out of the game forever.
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