Ponder the question. Answer yourself honest.
In my case, I think I did in most of my businesses. My off line business relies on several big clients, while my online business relies on several forums, several marketplaces, and one search engine – Google (surprise, surprise!).
Now, let me add one more question that need an honest answer – “If, for somewhat reason, that entity or market you rely on had decided to ‘kick’ you out of the business relationship, what would you do?”
My answer – I’ve thought about that for a while, but I have no concrete plan whatsoever to tackle that. Pathetic – I am.
Consider this – suppose you supply your product solely to WalMart. What happen to your business if due to the recession pressure, they decided to remove your products from their shelves, and put what they think as better potential products, instead?
Another what-if – Suppose you have an online business that rely on Google to bring customers in. All of a sudden, Google penalises you for doing activities that against their Terms of Services, leading to their decision to ban your site from Google search result pages. What would you do?
Diversify, diversify, diversify
In my opinion, as important as location, diversification is key to let your business grow with less dependence on your best clients, customers or markets.
Of course, focusing on the most profitable business and on the most valuable clients are natural and logical things to do. However, investing your resources to acquire new clients and new markets will eventually release your dependence on one or two entities.
Perhaps you have heard about Pareto’s Law – the 80/20 rules – i.e. 20 per cent of your customers bring in 80 per cent revenue to your business, 80 per cent of your resources are exhausted to grow 20 per cent of your business, and so on.
The Law helps you identify what is your business’ weaknesses (as well as strengths), and let you know take action on them as soon as possible.
So, I recommend you to diversify now, especially in today’s tough times.
Focus on diversifying your business