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This is where entrepreneurs, business owners, traders, and people in general go wrong.
This is where I went wrong for years. You find something that works, you go all in on it. We give it 110% of ourselves to the point, we can't even think about anything else.
Michael Gerber's book - "The E-Myth Revisited," is one of the most popular books that veteran entrepreneurs will recommend you read. It's a explanation for how business owners can get caught up trying to wear all the hats and do all the tasks. How tunnel vision on tackling the main task ahead can blind us. How diversifying our role in the business is one of the main components to success.
I started a catering company in 2017 called "Stuff and Things Food Services LLC." Loved it, working events and profiting in one weekend what used to take weeks. There was so much freedom and working for myself was liberating. The reassurance that I can trust myself more than former bosses perceptions on what's possible for me. When Covid hit in 2020, I changed to a food truck called Seoul Foods BBQ that remained event only. Loved that even more than the catering, worked a few events per month and usually profited around $1,000 per event. In 2022 I upgraded to a bigger truck and decided to run a permanent location, full time with a staff. Loved it at first but eventually it killed my joy for the food industry. Surprisingly, I made more profit the prior years - even with a smaller truck and just a catering tent.
They always say your first year of business, you won't make anything. While that's often true, couldn't have imagined it would've applied so much to a full time food operation with all the prior experience and upward scale. I put all my eggs in one basket. Prior to full time food I was also freelancing, day trading, flipping vehicles, and open to new avenues in general. The full time food operation didn't allow me to focus on anything else. What I once loved, wound up wanting to get out of by the end of 2022. Coincidentally I borrowed a friends vehicle to do a catering December 1st and got into an auto accident in the process. Those friends lent me their vehicle because they wanted to get involved in food trucking in the first place. I had been wanted to get out of my full time food truck and now it felt like I was dragging others down with me. After wrecking their car and insurances being dodgy to cover their vehicle damages - I gave them the food truck. This allowed me to exit and diversify while staying on board as a partner. This allowed my friends (a couple) to start the business they wanted.
Seoul Foods BBQ is now Beachy Queen. My friends, one of them was able to leave a job that was more physically demanding and less financially rewarding. A full time food truck with two owner operators and a partner advisor, is far more efficient than just one owner operator. I was able to focus on growing Business Goals Group and go back to the variety of diversification I enjoyed - obtaining website development contracts, SEO content writing, affiliate marketing, the time to start studying for a financial advisors license, building a portfolio, and figuring out a retirement plan.
Diversify your income, this is the opposite of burning your ships
You often hear the moniker that to be successful in anything you have to solely focus on it and nothing else. That you have to destroy all other options and cease any brain power that might pursue other thoughts. "Quit your job, start an LLC," you've probably heard. Listen, there definitely comes times when burning your ships is the way to go. More often than not however, you'd benefit more in financial stability from just having a decent job that gets you by until the business or side hustle pays more. Starting a business is expensive and expecting a new venture to fully fund itself is why most businesses fail the first few years. Burning your ships is definitely an integral part of success, but knowing how to time it is everything. You should acquire a diverse catalogue of company & personal metrics before you ever go all in on anything.
Diversifying your role, is the difference between working on your business or inside of it.
There's many ways to diversify your business.
Hire staff : No brainer! You can't do everything yourself. Hiring staff is the easy part however. Managing the staff and making sure they're increasing production is where it gets tricky. You'll find "The E-Myth Revisited" talks a lot about organizing the structure of your staff and where you fit in the equation.
Service & Product Expansion : One of the more obvious methods. Adding a new product or service to the current ones you're already doing. This is often an overlooked procedure like a caterer adding an upsell to their contracts by adding a sauce or drink menu.
Market Expansion : Easier said than done, acquiring a new audience takes serious effort but can be very rewarding. An example of this would be an apparel company advertising in a different region.
Partnerships : This is an often overlooked strategy, whether it's with a company in a different industry or even your competition. This would be like a towing company partnering with a restaurant to keep their parking lot spaces designated for customers only. A partnership with competition would be like wedding planners giving referrals for a percentage when they're too over booked to schedule on new clients.
Franchising : This one is almost a gold standard. Everyone wants their business to be turn key and on a national scale. To actually pull this off however requires creating a proven model and serious culture that will entice investment capital. This would be like the Tops Burgers franchise to my local area.
Leasing Assets : Don't forget this is always an option. You likely have equipment, building space, vehicles, and skills in your business that aren't always being used. You can lease these out under your business and increase new revenue streams. Maybe the landscaping company has 3 dump trailers and one is usually not in use - time to lease that equipment out for daily and weekly rentals.
Aside from diversifying your business, also strive to diversify your future self.
If you want to establish a financial portfolio that allows for retirement, best to start preparing early. This can be done multiple ways
Employer retirement plans (401k & 403 b) : These are tax deductible and usually entail allocating part of your pay into an account that your employer matches contributions on. This is a win-win for both parties. The employer provides the assurance that you'll not have to work forever, the employee provides assurance they'll provide quality work for a significant amount of time.
Individual retirement plans (IRA's) : These are tax deductible unless you do a Roth IRA. The Roth IRA isn't tax deductible however, when you pull the retirement funds out they are tax exempt. These are retirement plans you pay by yourself, not price matched through your employer. This allows you to have the freedom of a retirement plan without having to commit to one job.
Real Estate, a classic way to diversify.
For the longest time it created the most millionaires in America and today still holds the second spot for that title. You can do a lot with land and structures.
Rental properties : these allow you to own an asset that pays for itself while it appreciates value. A string of apartments for permanent renters, a big empty lot for RV's, or one big house that Airbnb's a few spare bedrooms, you can create additional income with rental properties.
REIT's (Real estate investment trusts) : these allow you to own shares of an organization that has at least 75% of its holdings in real estate where you get dividends just like a stock.
Land : this is mainly for hedging as the cost of goods & labor dictates housing prices. Land doesn't go down, but it doesn't go up fast either.
Financial Portfolios, for the seasoned investors.
You don't have build a financial portfolio to be an accredited investor (Person with over annual income of 200k that has ability to trade non registered securities and perform higher risk financial moves.) Although having a portfolio can turn you into an accredited investor faster, but you'll want to consult a financial advisor on how to get there with your portfolio.
Stocks : Shares of public company, they come in all shapes and sizes in terms of market cap or dividend payout. There's different kinds of trading strategies, different industry projections, and different risks you'll want to weigh out with each individual stock. You can even diversify your stocks further with a mutual index fund like the S&P 500 which spreads your investment out among the current top 500 stocks.
Bonds : Bonds are loans issued most often to government or financial institutions. They have consistent time sensitive accruals meaning you know exactly how much profit you can redeem the bond for at different lengths of time and they usually cap interest after 10 or 20 years.
Raw Materials : This is a broad category that can range from physical gold or silver bouillon you hold in your hands, all the way to shares on mineral company exchanges that have majority of their holdings in raw materials. Much like real estate and REIT's.
Don't limit yourself to just one income
Learn from my mistakes and don't ever limit yourself to just one income. If all your eggs are in one basket that consumes all your time, you'll never recognize other opportunities that could be even more fruitful. Stay ready to learn and open to new avenues of income. You can do all kinds of side hustles online or in person locally. Side hustles are great because you can balance them with a 40 hour week job, and continue to do both until the side hustle pays more. Here's some low cost - easy market entry side hustles to diversify with.
Local
Lawncare : Fairly self explanatory. One of the simplest most proven models. Grass and weeds grow, we need people to maintain it. New apartment complex appears, new need for landscaping. Your customers make themselves known with unkempt yards. The hard part is working those long hours in the sun and finding others to do that hard work with you.
Cleaning : There is a huge demand for cleaners. Residential, commercial, construction site cleanups are all services that perform well anywhere. Especially areas that are growing fast or have retiring populations.
Review Service : Anybody can do this, it costs next to nothing, you don't even need a staff. If you're good at explaining things you can just record videos or write blogs for reviews. If you get enough traffic and generate enough influence, you can get paid to leave reviews!
Online
E-Commerce : In todays world it's easy to make your own online store. With Shopify or Etsy, you can sell anything. If you look deeper into strategies like drop shipping or private label products. You can virtually take away all of your overhead. Drop shipping allows you to just be the marketing component, the manufacturing and shipping is left up to the parent company. If it's private label, you can just put your own label on it too! This is possible for everything ranging from clothes to vitamins.
Affiliate Marketing : Earn commission just by selling other already established companies products. You can run advertisements for some of your favorite brands, and get a % of all sales you bring them. You can be a Amazon Associate, and just share links or review products with a blog and get a commission from every product purchased through your link.
Freelancing : You can turn your favorite hobby into a side hustle with freelancing. Photography, skateboarding, kayaking, mushroom foraging, the possibilities are endless. Freelance out things you like to do. You can also freelance out your skills such as drawing or voice recording. You have the freedom to learn any new skill as well. Freelance all your skills locally by being a guide on TripAdvisor or remotely on Fiverr.
Diversify your skills
It's not hard to learn a new skill or even build onto one you already have. In the age of information you can find free workshops and bootcamps that will train you in almost any skill. Your limitations are only bound to what you're willing to do.
Design : Graphics are always in need. There's always new businesses opening up that need a logo and website along with veteran businesses trying to upgrade theirs. Anybody can be a graphic designer. If you learn to use Canva and Photoshop, you can do anything with graphic design.
Programming : Software engineers are one of the highest paying field and there is no shortage of work. You can be entirely self taught or finish a 3 month bootcamp to find work right away. You can do this all entirely from home as well.
Marketing : Advertising is a huge industry, we will always need marketers. Whether you help people create the content for the advertisement or setup the advertisements targeting. If you write Search Engine Optimization blogs or Public Relations press releases for a company. There's a wide variety of marketing specialties and they all pay very well.
General Education : You can learn about anything with programs like Udemy or Khan Academy for free. From Quantum Physics to Hospitality, there's ivy league school courses for free online now. You can become a consultant in any field, if you're willing to learn enough about it. You can learn a multitude of skills pertaining to commerce psychology and employee management that will translate to you being a better business owner.
Licensed Skill : The number one job for creating millionaires is actually a licensed skill. Financial Advisors sell insurance and financial services. It only takes a few months to get your license there, as there's a few different FA licenses within the state level. However you'll want good credit to get picked up by a financial services company. Realtors licenses are a little harder to get because they're not broken up into different categories and only by the state, but real estate is the second leading industry for creating millionaires. So the first and second most common ways to become a millionaire in America - is through obtaining a licensed skill.
Diversifying should be one of your main goals.
Hundreds of years ago we called it being a renaissance man. Today we call it being a jack of all trades. Regardless of what light you put it in, diversification provides you with many benefits. It reduces risk by segmenting your net worth into various unrelated projects, this way even with poor market conditions and losses - you may still see some gains elsewhere that offset your losses. This strategy keeps more doors open. It's not a solve all however. By being diversified you will take away the laser focus that helps many projects thrive. The popular saying "burn your ships," so to speak. Don't become so diversified that you lack the time and resources to efficiently oversee everything. Find balance in both focus and expansion.
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