Diversify. Reduce your risk. Increase your profit.

Written by Marc on April 12th, 2007

Now, when I hear the word diversify, I think mutual funds.  I don’t know if there is any other word used so much as diversify in their industry.  Diversification is a result of the old saying: “Don’t put all your eggs in one basket.”  Now, where might you ask, does diversification fit into business opportunities.

Diversifying your portfolio of businesses, income properties, and websites helps you in a few ways.  Some examples are:

  1. Protection from changing trends

    If all your rental properties are located in a town whose workforce depends on a particular industry (for example lumber) and suddenly the demand for that product drops, people may lose jobs and move out of the area.  This recently happened to a friend in Hudson’s Bay.  Protect yourself by purchasing in different regions – if you invested properly, changing trends should not affect you.

  2. Multiple Income Streams

    Most companies rely on their own store sales for the income of the business.  If you diversify from just owning a single store you can come up with other income streams so that your business is not solely dependant on a single element.  A good example is a franchise.  Not only does the franchisor have corporate run stores, but also would have franchisees that pay franchise fees (another income stream).  As the number of income streams increases, the risk involved in running your business decreases (basically it is less likely that all of your income will suddenly disappear). 

  3. Use your services to profit from your own business

    In the case of income properties, if you have a larger property (for example an apartment block), chances are that you are using a property management company.  Instead of paying fees to another property management company, you could create your own.  Now, the expenses from some of your businesses (or properties) become the income of another.  Not only would you have a large client (yourself) but you could pick up other clients (think more income) as well. 

Read more articles on Business Ideas and Business Opportunities and Entrepreneur and Online Opportunities and Real Estate Investing.

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