When you’re building your business, the one thing you are always having to keep trying to balance is the desire to double down on winners and not putting all your eggs in one basket. It can be quite a challenge to get this balance right, especially when you’re just starting out and you’re seeing your first successes.
Throughout my experience, I’ve seen people get this wrong from both extremes.
On the on hand, you have someone who has some success and immediately they start frantically doing a bunch of different things. They use the proceeds of their success to expand their offerings and grow into new products or services. This expansion distracts them so much that the weight of all the things going on crushes their nascent success and sets them back significantly.
This kind of diversification is in my opinion, ultimately the best strategy, but it needs to be tempered. You need to get your “sea legs” under you before you start taking on the world and spreading yourself too thinly.
The alternative though is worse and that’s building the one-legged stool.
The one-legged stool is the person who builds a business that does one thing. They see themselves having success and they decide to invest significantly in that and block out distractions. They’ll often pass up golden opportunities for expansion just to keep their singular focus on their bread and butter.
Then when something goes wrong, the entire thing collapses – they’ve been delicately perched atop the one-legged stool and something has come along and disturbed their balance.
This can even be worse when the person is a digital sharecropper and have built their “business” on someone else’s platform. In this scenario, you’ve compounded your risks because not only are you single source dependent for your income and customers but the terms of engagement with those customers are almost entirely at the leisure of an external party.
I’ve seen this recently with several Udemy instructors that I know. They had built up healthy sized streams of revenue from their Udemy courses and they doubled down on creating more courses to feed the Udemy machine. They ignored the warnings about needing to build their own platforms and diversify their investments in the name of “sticking with what’s working.”
In essence, these folks had a fully “at risk” job working for Udemy making content.
Then in April, Udemy made a seismic shift in their pricing and discounting strategy. This change has resulted in a significant drop in earnings for the majority of Udemy instructors, with many people seeing a 40% decline and some with as much as 80%.
The people who’ve suffered the most are the ones who’ve built the classic one-legged stool type of business. They took shortcuts and rather than building a proper business, they focused solely on maximising their return from Udemy trying to wring every penny out of that environment.
It’s been fascinating to watch the way people have responded. The smart people have sensibly diversified their offerings and gone towards taking back some control. They realised that they needed to put some more effort into developing their marketing, building their own audience and driving traffic to properties that they own. This is a long journey for these people, but long term, the results will be more stable.
Others have taken a wait and see approach which also makes some sense. When there’s an unexpected downward shift in your business, it’s never a bad idea to take a deep breath and survey the damage thoroughly before trying to fix the problems.
The people who always lose though, are the ones firmly perched atop the one-legged stool because their position is the most precarious. Everything destabilises them and they become so obsessed with maintaining balance that they forget to start building out other legs for the stool.
So what’s the right answer?
Well, like most things in life, the key is moderation. When you have some success it is important to dial that success in and make it a stable part of your business. That’s like adding a second leg to the stool. Make sure that you identify things that could upset your success and put in countermeasures to shore those weak parts up.
The other element is considering carefully how you can leverage your success into other areas of potential growth without spreading yourself too thin. In today’s world, unless you are growing, you’re shrinking, so your business has to be able to take advantage of its wins to grow and be stronger. Every success you have is like a lever that you can use to move bigger and heavier obstacles in your path to open your road to greater success.
That’s the third leg of your stool.
The final thing you need to do is, get control over the ground that your stool sits on so that you can level it out and make it safer for your stool to stand on. This is where you need to look at whether you own the platforms you’re resting your stool on. In an online business, this is about not being a digital sharecropper. You MUST be in control of the platforms where you send your customers – this should be one of your most important strategic undertakings!
The next time you’re thinking about your business, consider the type of stool that you’re sitting on. How many legs does it have? Is the ground it’s sitting atop of level and firm? If you’re too heavily invested in one source of income or worse, you’re dependent on a third party to feed you sales, then you have a less than optimal stool and you have some work to do to get some stability into your situation.