A scary myth we have circulating in the entrepreneur world is that of the diversification. Diversified income gets tied up and dangerously confused with multiple streams of income. One is logical and beneficial, and the other is a misunderstanding of a fundamental concept. Be careful to keep the main thing the main thing, as they say. To diversify the right way, is the most important lesson that cannot be ignored.
Entrepreneurs hear this term about diversification and go wild. There is some truth to the state of diversified income, however it’s really not what you think.
To diversify your income, you’ve got to become a master of sorts.
A master of time management, your industry, your products, your approach, and your crafty skills. If you cannot lay the foundational bricks down, how do you expect to build the empire?
How to (Actually) Diversify Your Income
To really branch out and make multiple streams without doing yourself in, you’ll need to get amazingly good at something. You don’t have to be a complete master, because no one can ever fully master anything.
There is always more to learn. To have multiple streams of income is to pick an industry you can become extremely well versed in, and decide on multiple things to release in it.
You don’t release them all at once, but you will conquer things one at a time. You will smash one set of goals, progress to the next, and still have the first one killing it. You’ll keep building on your forward momentum, always laying the most important brick first.
When you do this, you always have time and room to wiggle. You’ve got the satisfaction and security of knowing that your first product will keep making you money, if you’ve set it up right.
When I say right, I mean a business that is loaded from the front, with the majority of the work being done before sales happen. After this point, it’s a matter of maintenance or growth so it can be making you dollar signs while you’re catching z’s.
If you want it to grow, you grow it; if you want to maintain, you’re still making money.
The “wrong” way to do this would be launching three products at once, none of them profitable, and you’re continually pushing for them all to be successful while in reality not one of them can be.
On top of that, you would have failed to make a passive income stream because you’re constantly trying to grow three separate things that take specific energies for you to make better.
Additionally, you’re not making any dollars and you’re up at night pulling your hair out trying to make them all work.
Take my experience or don’t, but I’ve done both, and let me tell you: You want to do the former option, not the latter.
Passive income streams work well when they’re exactly that, passive. You set them up first, front-load your efforts, then reap the rewards for years to come.
Time-Tested Killers Who’ve Proved This Concept
Rather than just trust my experience on the subject, let me show you three prominent businessmen who’ve proved this concept, destroyed the myth, and made an absolute killing and a mark on society forever.
Buffett doesn’t need an introduction. He is known for being the one that “doesn’t look to jump over seven-foot bars.” He would rather “look around for one-foot bars to step over.”
He’s someone who, contrary to belief, normally does not take huge risks. He makes “base hits” in life and allocates capital accordingly. Pretty intriguing stuff; one of the most prominent and wealthy investors of our time does not take massive risks that could set him up for huge setbacks. Instead, he’s staying in his circles of competence and keeping an appropriate margin of safety.
In his allocation, he’s stuck with five main companies to invest in with Berkshire Hathaway: Coca-Cola, Gillette, Wells Fargo, Procter and Gamble, and American Express.
Do these “diversified” industry-dominating, income-generating cash cows seem like a huge risk? Not really. He advises to “keep all your eggs in one basket, but watch that basket closely.”
Even more importantly than that, he ensures that he’s focused on his main thing. He is an investor. He allocates capital and time. He is always looking for an input today and a return tomorrow.
One of the main proponents of the Industrial Revolution and the steel industry, Carnegie was a master of business and a demigod at making money with Carnegie Steel Company.
He still ranks today as one of the top 10 richest men of all antiquity, even competing with the top kings and queens of old. Having close to a $300 billion dollar net worth, he was one of the most skilled people on the planet at making money. By the way, that’s 300 thousand million dollars.
Addressing a group of college kids on the topic of focus, success and making business wins, he was quoted to say “don’t put all your eggs in one basket is all wrong. Put all your eggs in one basket, and then watch that basket.”
Hmm… surprisingly similar to what Buffett said, am I wrong?
Carnegie pushed others seeking financial success to keep fighting it out down the line and the road that they had already started.
Keep going in the direction that you’ve started, especially before you’re willing to jump ship and simply go elsewhere to make money. Carnegie was not an advocate for extreme diversification, and in order to make money, you shouldn’t be either.
The caveat is that once one thing is successful, you can branch out in the same industry. Be careful not to a jack-of-all-trades.
Cardone is this century’s godfather of sales, master real estate investor, success coach, motivational speaker, millennial-educator, middle-class-eradicator and most importantly, sales trainer.
He’s picked his industry, gotten his finances on point, learned the mastery habits and proclaimed them to the world, targeting millennials with the Young Hustler Podcast. Grant challenges big savers to become big earners, he busts the myths of diversification, and he shows people what’s necessary to actually win in life and business.
He has destroyed the work life balance, he’s written five books with more on the way, (including a 17-chapter book in one sitting) and has shown people the single reason that you’re obsolete in the market.
Grant says diversification is bull here, but does not shy away from keeping the pipeline full, and branching out once you’ve got something working. Like the others, he agrees to keep your eggs in the same basket and keep a close eye on it. “This is not diversification it is fortifying it.”
Keeping the Main Thing the Main Thing
I see so many entrepreneurs doing the same thing these days, which is… well, everything.
They are trying to spread themselves a hundred ways as if there were a hundred of them! This needs to stop. I propose a better way – focusing down on the main, most important, results-producing thing that will actually get you what you want, and faster!
By having a ton of different goals and diversified streams across separate industries, you are really doing yourself more harm than good.
Wise up and stick to your circle of competence, then seek multiple streams of income in that circle. If it’s good enough for Buffett, Carnegie, Cardone, Cuban, and other financial masters, it’s good enough for you.
Truly a “secret” of success: focusing on the main thing and keeping it there.
It’s only a secret because it’s hiding in plain sight, while people fail to utilize it. Following your main thing in the arena you want to be in, and never having excuses or quitting that thing, is what will get you the win.
Obviously, if what you’re doing no longer serves a purpose, or it isn’t leading you where you want to go, change the trajectory. You don’t want to actually work your way in the opposite direction of your ideal life.
If what you’re doing right now will lead you to where you want to be, you’re growing and learning every day, and you want to keep pursuing it because you feel it’s an obsession of yours, then keep it up and double down.
Focus on the main thing and win.