💡 Business Tip - Use Portfolio Thinking (Issue #22)
There is no single guaranteed win
“The mistake we often make is in building a choice set (which we mistakenly call a ‘portfolio’) by trying again and again for one guaranteed ideal choice. That’s not a portfolio. Instead, we should focus on going to the edges, not trying to group everything at some imaginary ‘center’.”
If you’re like most people, you don’t place all your bets on one thing. For example, it would be too risky to have your entire retirement fund invested in one company’s stock. Instead, you probably have a diversified portfolio that ranges from riskier stocks to more stable mutual funds, bonds, etc.
Mature businesses think the same way. They don’t bet the entire future of the company on one product, service, or revenue stream. As they grow, they diversify their portfolio. Look at the earnings reports from Apple, Microsoft, and Google for some examples.
I’m a solopreneur business owner, but even I have a portfolio of businesses and income streams (e.g., corporate clients, one-on-one coaching, group coaching, courses, subscriptions, writing revenue). So, I obviously agree with Godin’s message. You shouldn’t put all your eggs in one basket. Businesses that do that don’t tend to survive massive disruptions (e.g., the recent pandemic).
Think of it like farming or ranching. You wouldn’t plant one apple tree and hope that it would never fail you at harvest time. If you were a rancher, you wouldn’t have a single cow and put all your faith in that one animal. Farmers and ranchers have a “portfolio” of crops and livestock. They spread their bets across hundreds or even thousands of acres and animals.
However, I have one caveat. I prefer to focus on growing one fledgling idea at a time until it’s strong enough not to need my 24x7 care to survive before testing the next new idea.
In my case, I added to my business portfolio in this order (and this is what I often recommend for solopreneurs with a service business):
Start working with clients one-on-one.
Add a group coaching service once the one-on-one coaching is working well.
Leverage your coaching knowledge and process to create self-serve courses.
Document your knowledge and experience in newsletters, articles, and books.
Add paid subscriptions.
Teach live workshops and courses.
All of this evolved gradually over the past six years. I don’t know how anyone can test dozens of new ideas simultaneously every week. That would drive me insane!
This may be part of the way my brain works. My ADHD mind is constantly trying to derail me with shiny new distractions. If I let it run wild and free, I would never commit enough time and energy to one thing to even get it to a stage of survival.
Instead, I capture new ideas in a notebook every morning, so my creative mind is satisfied that the cool concepts won’t be forgotten. If I keep coming back to an idea again and again, I decide it's worth pursuing later. If I quickly forget it and move on, it must not have been that interesting or exciting.
You never know what is going to work. You can’t reliably predict success. You must test a lot of ideas and see if something takes off. I’m always trying new concepts with my businesses.
Later, you decide if it's worth pursuing further or shutting down. You also decide when you feel ready to begin testing the next new idea.
Many successful companies ended up doing something quite different from what they originally thought their product or service would be.
Stewart Butterfield and Caterina Fake, co-founders of Flickr, were originally trying to create an online game.
Instagram was originally called Burbn and allowed users to post location-based check-ins along with photos. It only became a photo-sharing site later.
Play-Doh was first sold as a cleaner that could remove coal residue from wallpaper in the 1930s.
Don’t spread yourself too thin during the early days of your solopreneur business. Explore several ideas, but then settle on something that is working and generating enough revenue to support you.
Later, start expanding your business portfolio to reduce your risk, diversify your income streams, and help you find exciting new ideas you may never have imagined when you first launched your company.
Hi, I’m Larry Cornett, a coach who can work with you 1-on-1 to design, launch, and optimize your business. You might also be interested in my “Employee to Solopreneur” workshop (coming soon). I currently live in Northern California near Lake Tahoe with my wife and our Great Dane while running my businesses 100% remotely.