When it comes to business and your income, it is not wise put all of your eggs in one basket. This occurs when you have most or all of your time, energy and money vested into one business or way to make money. I continually read these sob stories about people that lost their livelihood (and got their feelings hurt) because, for whatever reasons, an income stream dried up on them.
Examples of things that could go awry when you put all of your eggs in one basket:
- Your Squidoo account is banned or your lenses are locked.
- A writing platform decides that your posts aren’t high quality and they end up getting deleted without you being notified.
- A free blogging website determines that you have violated their terms of service agreement in some way and takes down your blog. There goes your content, the ads, and your readership.
- Your eBay account is suspended, because too many buyers complained that you sold items “significantly not as described”.
- PayPal freezes the funds in your account due to “suspicious” activity or just because they want to.
- Your AdSense account is shut down because of suspected “click fraud”.
- A major affiliate network that you are a member of changes their terms of service agreement and you are no longer eligible to participate in the program.
- Amazon Associates eliminates their affiliate program in your state.
- And, worst of all: The FTC and attorney general in your state have determined the MLM that you are “affiliated” with is making false claims about their products and defrauding investors and consumers out of their hard earned money. The government shuts the company down, seizes the company’s assets and the company files for bankruptcy.
Just in case you haven’t figured it out yet, the laws in the United States are fickle. They can change from one moment to the next. Something that is completely legal today, may become a criminal offense a week from now. What will you do if your state or federal government suddenly determines that your business model is based on “illegal activity”?
Did you notice the trend with that list? Some of those companies can get rid of you and leave you with very little or no recourse. What it all boils down to, is that you don’t have ownership in those systems, so you actually work as an independent contractor for them (i.e. eBay, Amazon, Etsy, Squidoo, Google). Don’t let this happen to you! These scenarios seem very pessimistic and far-fetched, but I can assure you that these situations occur quite frequently.
These income streams are fine if you are in the beginning- intermediate stages of entrepreneurship or you aren’t sure where or how to start out. Many of the companies that I mentioned above are awesome places to earn some money to supplement your income and to learn some new ideas that you can implement and then later expand on.
I am not knocking them; What I am doing here is “keeping it real”. You shouldn’t get hooked on them like crack. I have earned money through some of these venues myself. I have learned over the years that creating your own products/services and setting up residual income streams should be the endgame.
Income streams coming through third parties aren’t that reliable in the long term. Save your money and reinvest it into something that is yours. As soon as you are in a position to move on then, that is what you ought to do. I read a book by Felix Dennis called “How to Get Rich” (affiliate link). In it he says, “Ownership isn’t the important thing-It’s the only thing”. Much more money, freedom and flexibility come with complete ownership.
It is so much better to OWN YOUR product/service or to develop YOUR OWN business system, where your livelihood is not dependent upon another’s business model. You have more control when you develop your own system for making money, where you call of the shots. You create the rules and you get to keep (or release) your customers if you so choose. You also get to keep more profits, since you’re not splitting your revenues or paying exorbitant fees to a third party company.
When all is said and done, you have the option to sell the business or license your products, when you are ready to retire or move on to bigger and better ventures. An excellent book that I recommend you to read on the topic of diversification is “Multiple Streams of Income” by Robert G. Allen (Yes, it’s an affiliate link and if you buy something through the link, I’ll make a little money off the sale). Enough said.