The Importance of Diversification

Diversification isn't just a term for investments. As a matter of fact, the term extends into all areas of life - including business. As a freelancer, you've no doubt heard someone tell you that you "shouldn't put all of your eggs in one basket". Even if you aren't a freelancer, you've probably heard that saying before. As you begin to grow your business, it's important to introduce a variety of streams of income. Being too reliant on any one stream can be detrimental to your financial health.

Say for instance you are working with a particular client and are earning enough to maintain a decent living. That's great! But, what happens when things start to go south for that client and they need to cut back on the services they have hired your for or worse yet - they FIRE you?

If you've been keeping all of your eggs in a single basket, you won't be prepared for such a change. Your world will be turned upside down and your financial status will plummet. Dramatic changes, such as this, can send you right back on the job hunt, and we already discussed that you don't want to quit freelancing and go back to slave labor, so that won't work - at least not in terms of your long-term goals. So, what's the solution?

Since you can't rewind time (wouldn't it be neat if you could?), you have to refocus on the future, which can me getting a "real" job for just a bit as you sort out your finances and gradually bridge the gap back into freelancing. If you have a nest egg/emergency fund saved and can stay afloat for a little bit, it would be best to continue on in your search for additional clients.

The emphasis here is on the "s" at the end of that word. You must not settle for only one client, but should focus on having multiple clients. That way, you can be sure that you aren't as affected in the future. Again, let's not put all of our eggs in one basket. Diversify - have several clients in differing industries. That way, there's less opportunity for your work to become mundane and your make sure that if one industry "folds", you still have other clients that are still staying "afloat".

Do you have a diverse book of business or are you putting all of your eggs in one basket?

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