“Don’t Put Your Eggs In One Basket” is Bad Advice for Internet Marketers

January 17, 2009 - Written by Gyutae Park  

eggs basket“Don’t put all your eggs in one basket.” This is a common piece of business advice that I’m sure you’ve all heard before. Investors and entrepreneurs are frequently told to diversify pretty much everything – from income streams and products to business partners and markets. And it makes sense. Diversifying helps you to manage your risk and create a more stable business model regardless of whether you’re in the finance industry or in Internet marketing. If one thing goes down, you have a whole arsenal of other options to keep you alive. It’s never a good thing to rely on just one thing to be successful.

For example, let’s say that you have a very successful website about the iPhone that is monetized through Google Adsense and gets the majority of its traffic from Google organic search. What happens if Apple suddenly comes out with a new phone and changes the name of the iPhone? What if your account somehow gets terminated from Adsense because of possible click fraud claims or if Google changes its algorithm and you no longer rank for competitive search terms? Your business would be left in the dust and you’d lose your income stream overnight.

You get the point. Diversification is important. Without it, you have a very unstable business that is at risk of falling out.

The Problem with Diversification in Internet Marketing

However, that’s not what I want to talk about in today’s post. Instead, I want to discuss a big misconception about the phrase, “don’t put all your eggs in one basket” that a lot of Internet entrepreneurs have.

What am I talking about?

A lot of smaller Internet entrepreneurs hear the advice about diversification and incorrectly apply it to their time and attention – something that they simply cannot afford to do. They go into a variety of different web projects at the same time in hopes of making money (e.g. PPC affiliate marketing, blogging, membership sites, consulting, and SEO). In essence, they spread themselves too thin and never get to the point of seeing success. Is this you?

The problem with diversification for Internet entrepreneurs just getting started is that time and attention are extremely limited. Without money to outsource common tasks, these people try to do everything themselves working on multiple projects – a recipe for failure.

Take a look at your activities online. Are you spreading yourself too thin? A study done by researchers at the University of Michigan found that multitasking is counterproductive. It takes time to switch tasks and then get warmed up to perform the new job. Quality suffers and time is lost. In fact, it’s impossible to do more than thing one thing simultaneously – the brain simply is not capable of doing so. Instead, you switch from one thing to another, which means a significant loss in time, energy, and quality of work as well as miss opportunities to grow your business.

Below is a graph to illustrate what I mean.

multitasking1

Working on multiple projects and businesses at the same time stunts the growth of all of them. The progression is much slower compared to working on one at a time and it takes a much longer time to generate traffic and make any sort of money because you spread yourself too thin.

On the other hand, here’s a graph to show the growth model when you don’t multitask and focus on one business at a time.

It takes you less time to see success in your business if you put all of your time and resources into it. Once you start making money you can then outsource tasks or sell the business entirely to free up your time for new projects. The valuable knowledge that you learn from previous experiences will also increase your income potential in future ventures.

So what’s the lesson here?

Diversification is a key to business success, especially when it comes to things like investing and income sources. However, time and attention are two things that cannot be diversified when starting an Internet business. Multitasking is not an option.

Focus on one thing at a time and ride it out until you give it a full shot to succeed. You’ll save more time and make more money, both long term and short term.

Is multitasking killing your chances at success?  Maybe it’s time you put your eggs in one basket and focus on one business. Stick with it and don’t be distracted by the latest hyped-up fads on making money online.

What are your thoughts on this? Can you use this strategy to start making money and take your business to the next level?

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Comments

53 Responses to ““Don’t Put Your Eggs In One Basket” is Bad Advice for Internet Marketers”

jeremy on January 18th, 2009 Subscribed to comments via email

this is a beautiful post. described me almost perfecttly. thanks for your valuable insight.

Gyutae Park on January 22nd, 2009

Thanks Jeremy. Does that mean you’re spreading yourself too thin and multitasking with your projects? What are you going to do to solve your issue? I’d love to learn more about your situation.

 
 
Frank Silvestre on January 18th, 2009 Subscribed to comments via email

If you indeed diversify, there are pitfalls but at least you minimize the risk. Unlike it you place all your ‘eggs’ one just one basket, when there’s a downhill, you go down the drain as well.

Thanks for a very insightful and enlightening post, reminds me to diversify myself. 🙂

Gyutae Park on January 22nd, 2009

Hey Frank,
If you read my post carefully, you’ll see that I actually advise against diversification for small Internet marketers and entrepreneurs. Time and attention are scarce resources and multitasking between projects can severely limit productivity.

 
 
Dennis Edell on January 18th, 2009

Oh man, not just Internet marketers! I’ve talked myself blue countless times with direct sales consultants that join 15 different companies “because it’s free” and think they will make a killing.

They make 10 bucks each and wonder why they’re sick all the time. OY.

Gyutae Park on January 22nd, 2009

Haha good point. It’s relevant advice for almost anyone no matter what industry they’re in. Get involved with too much and in the end you realize you’ve done nothing.

 
 
Ben on January 18th, 2009 Subscribed to comments via email

dead on. I think the 80/20 rule comes into play here, there will be a few strategies and products that will make you 80% of your money.

Stay focused on those and keep optimizing them and don’t get distracted by all the other potential strategies and monetization options available.

The problem when you’re getting started is that you don’t know what that 20% is, you have to figure it out by trying different things. If you track your traffic and conversions, eventually you’ll see the sweet spot and can go after it full throttle.

Gyutae Park on January 22nd, 2009

Hey Ben,
I’m a big believer of the Pareto principle myself (the 80/20 rule). You’re right that it’s difficult to know what the 20% is when you’re first starting out, but you can’t do everything at once to try and find it. You have to focus on one thing at a time and fully develop the idea to see if there’s real potential there.

 
 
Donny Gamble on January 18th, 2009

Once again great post Gyutae. People have to learn how to develop their business first before starting a new business. Most people just keep starting different business because they simply don’t give them enough time to grow and develop. This is why most entrepreneurs fail because they expect everything to happen immediately and they don’t give anything a chance.

Gyutae Park on January 22nd, 2009

Well put. No one seems to have any patience these days. They buy into the hype of a “get rich quick” system and expect results in a few days without doing any work. Obviously, this will never work.

Internet entrepreneurs need to stick with one thing without jumping around hoping for the next big thing. If it doesn’t work, keep going until it does. There’s always a way to make something successful.

 
 
Mr Javo on January 18th, 2009 Subscribed to comments via email

Great article Gyutae. Many people jump among different businesses because they expect to succeed in 1 month or less… Success is not an over night thing, so trying to be consistent in just a few things is the best choice, just keep the focus…

I will apply this lesson in the future, I noted I was “switching” too much…

See ya!

Gyutae Park on January 22nd, 2009

Thanks Javo. I agree with you 100%. Success doesn’t come in 1 month – in some rare cases it does but that’s the exception not the norm.

Either way, you have to be able to persevere and stick with something without being distracted by other projects. That’s the true way of success online.

 
 
Yung Drew on January 18th, 2009

Perfectly said Gyutae… Spreading yourself “too thin” is never a good idea when starting out. Once you already have a successful project, then you can evaluate the option of multitasking / starting something new. Until then, you’ll be essentially running around like a chicken without a head…

-But a point I want to make is the fact that if a blog / affiliate marketing venture / etc. is no longer fulfilling to you as a person, it is OKAY to move on and leave your project behind. People shouldn’t be afraid to start up something new if it fits their lifestyle better…

Definitely a much-needed post for me to read during a football commercial…haha – But on the real, that title had me worried about the content – until I read it…lol

Gyutae Park on January 22nd, 2009

Thanks Yung. Once you have a successful project, you can outsource the tasks or sell it so that your involvement is low. It will still make you money but you have the time and attention to pursue new projects. That’s perfectly fine.

What I’m talking about is working on simultaneous projects hoping to make them all successful. It just doesn’t work and in the end you get nothing.

As for fulfillment, you always have to do something that you love and enjoy. I hope that’s the case with your Yung Drew projects!

 
 
Aggressive Dog Behavior on January 18th, 2009 Subscribed to comments via email

This is a very useful post. You’re absolutely right. In order for any business to grow, one must nurture it with dedication and hard work. Time and energy cannot be given to other projects at the same time, because the main project will ultimately suffer.

Gyutae Park on January 22nd, 2009

Very true. Intentions can be good (i.e. diversify and reduce risk) but in the end working on too much will do more harm than good.

 
 
saurav on January 19th, 2009

The adage in itself is true to its core. It is the misrepresentation of what it means that causes all the issues. Diversification is needed to spread the risk but should not be undertaken at the cost of the core business.

See it like this – you have a business and the first thing you need to do is get yourself into a comfortable position. Achieve the “star” or the “cash cow” position on BCG matrix. One achieved diversify into other market segments. In a nutshell, have a strong base before diversifying.

Enter a market, consolidate market position and move on. Can’t or should not do it in the beginning.

A tree is a perfect example. It branches out when it has a solid trunk to support the branches.

Thank you for bringing it up and putting it up nicely.

Gyutae Park on January 22nd, 2009

Wow, I really like the analogy of the tree and I think it really adds to my point in this post.

Newbies should never diversify their projects because they have nothing to rely on. They need to create that solid tree trunk base from which to launch new projects and ideas. Without the base, all of the multiple small projects (branches) will fall.

Thanks for the great idea.

 
 
TStrumps on January 19th, 2009

I think in the short-term focus should be the most important thing.
But, long-term, diversification should be seriously considered.

Gyutae Park on January 22nd, 2009

Definitely. See the comment above with the tree analogy. I think that describes it pretty well.

 
 
max on January 19th, 2009

Good post, I have to agree, diversification is hard for someone just starting out. But if you do have long term outlook (at least 1 year), diversification can be the better way.

Gyutae Park on January 22nd, 2009

I don’t think it depends just on outlook. You need to have a solid foundation no matter what your long term plans are. You can’t diversify without having something solid to rely on. And even then you should never spread yourself thin to the point where productivity suffers.

 
 
Joe Green on January 19th, 2009 Subscribed to comments via email

This is an excellent post. It’s at the hub of successful Internet Marketing. I was roaming around looking at every next opportunity. I even spent three months developing one idea and then got cold feet because I didn’t know where to go next.

I think one of the reasons we don’t start properly and we don’t concentrate on building a solid business foundation is that many of us need money quickly. We don’t realise how much we are going to spend searching for the ‘golden egg’.(Which doesn’t exist of course).
But we keep searching.

But once you do finally realise that you need to spend several months laying the foundations for your long-term business it’s helpful to know someone who has been successful and who can advise and guide you.

I’ve been lucky enough to find an excellent mentor and for the first time in several years I’m totally focussed and prepared to spend time creating a solid business foundation. And I’ve stopped chasing the money. I know it will come to me later.
Best Wishes
Joe

Gyutae Park on January 22nd, 2009

Hey Joe,
Congratulations on your newfound focus and determination. A mentor can really do wonders for your motivation and direction.

I see Internet marketing newbies chase the “golden egg” and jump from one business opportunity to another all the time. If they would just sit down and spend that time developing just 1 good idea, they would do a lot better.

Of course, people need and want money quickly but it’s just incorrect thinking to expect that sort of thing.

Good luck!

 
 
mecozz on January 19th, 2009

nice post, I think it’s important, focus. At now, I join review, and learn affiliate. Ok, now maybe join paid review is my business

Gyutae Park on January 22nd, 2009

Yeah you don’t want to jump around from one thing to another without giving it a fighting shot. Focus.

 
 
Proven Online Business on January 20th, 2009

Great Post!!! The key concept here is that of FOCUS – you need to focus on one project at a time.

Here’s an exercise to prove the point…

Next time you’re in a busy location where many conversations are taking place at once, try to listen to all of them at the same time. You’ll find that you can’t make sense of any of them. Then choose one conversation and focus your attention on that one. Once you’re able to make sense of what’s being said, choose another conversation and focus on that one…then choose another…then another.

What this experiment will prove to you is that you’ll always achieve much more when your attention is focused on one thing at a time.

Gyutae Park on January 22nd, 2009

That’s actually a very good example of how the mind cannot take in a bunch of information at once. Try multitasking and you do nothing. Focus on something and you get at least 1 thing done. Very well put. It just pays to focus and do things one at a time.

 
 
Gennaro on January 20th, 2009

If you are interested in diversifying consider waiting until you have perfected and exhausted your primary avenue for revenue first. Then, open the door to new opportunities.

Gyutae Park on January 22nd, 2009

Yep, that’s the correct way to approach it. But when do you really “exhaust an avenue for revenue”? There are always ways to grow a business and make more money. You just have to be creative and tap into new markets.

 
 
Chris Turner on January 21st, 2009

This is a very important article. In our company we handle a wide variety of SEM arenas. I maybe a novice or intermediate in this internet world but I do know business, the article and the supporting references hit the nail on the head. Hope the boss follows the insight. Thanks!

Gyutae Park on January 22nd, 2009

Yep I’ve worked with SEO agencies in the past and clients have signed just because we’re focused on search marketing and not much else. They liked the focus and trusted that we’re good at what we do because that’s all we do.

 
 
Ann Arbor Web Design on January 22nd, 2009

Good post; you have explained well why over diversification would be a pit fall to be avoided.

Gyutae Park on January 22nd, 2009

Yeah, avoid diversification when you’re first starting out. You’ll spread yourself thin.

 
 
5starAffiliatePrograms on January 22nd, 2009 Subscribed to comments via email

Gyutae, I’m going to blog this today, post it to my affiliate forum and refer my affiliates here often. What well written advice!

I try to explain this to affiliates all the time and advise to carefully research then pick ONE site to start on. After you get it to critical mass, start getting decent traffic and some sales MAYBE branch out. There is something to be said for diversification – BUT with planning and focus and with a one at a time strategy.

But I see so many start with this scatter gun approach. They are all over the place and wonder why they never get anywhere.

At any rate I’ll be linking to this post every time I get affiliates at my forum who start getting too scattered.

Off to blog this now.

Linda Buquet

Gyutae Park on January 22nd, 2009

Hey Linda,
Thanks! I really appreciate that and I’d love to be mentioned on 5 Star Affiliate Programs.

The lesson of staying focused is especially true in the affiliate marketing world just because there are so many offers that promise big results. It’s easy to get caught up in the hype and jump from one thing to another.

Glad I can help your readers as well. 🙂

 
 
ZK@Internet Maketing Blog on January 22nd, 2009 Subscribed to comments via email

Developing a business mind set is very critical before venturing into any business ( online or offline )

Pick up one good niches that you are passionate about and work on it till you get critical mass and sale. Then move on to the next niche or site based on your experience.

if you have 3 sites that make $ 300 to $ 500 a month, you have a good $ 1200 to 1500 a year in a few months, this is easily achieveable if you are willing to work

 
ZK@Internet Maketing Blog on January 22nd, 2009 Subscribed to comments via email

Sorry make that $ 12000 to $ 1500 a year …I was always bad at maths but does not mean I cant make any money 🙂

Gyutae Park on January 22nd, 2009

I think you meant $3,600 to $6,000 a year.. 😛

 
 
Classifieds on January 29th, 2009 Subscribed to comments via email

This is great advice, its true if you spend all your time one thing you can do your best on one thing instead of having several things that aren’t as good

 
Budi Waluyo@surabaya property on February 6th, 2009 Subscribed to comments via email

Of course, developing business is not the same as investing. But in the real field, a corporation can handle several projects in the same time. I don’t think multitask is a disturbance to success, as long as they are done with a team. According to my experience, building internet business also involve many discipline of knowledge. At least, must be involved are SEO master, web designer and marketing manager. Actually in the last 5 month we have been develop two website with different categories. The two, now, are visible in #1 SERP of Google and Yahoo with their each keywords. The point is that every single person must focus and concentrate in his own field and work as a solid team. What do you think ?

 
Mike on March 31st, 2009

thats sounds just like me 🙂 I am trying to find a new idea for my business now, but I have few sites running in the background (for which I don’t have the time to update)…. I am searching for an autopilot business strategies, where there is almost no effort after it is established, I don’t want to start a blog because if it dies, my income dies…. I am using adsense, affiliate and my own product, .. and now I am trying to make 3 projects at 1 time… everything seems better, or worse… I don’t know which one to do next, i am so depressed now 😉

 
Web Design Nashville on November 7th, 2009 Subscribed to comments via email

I agree mostly with this post, however I do believe you need to be able to multitask CERTAIN projects. Some projects just take too long to focus all your time and attention on to just flop and leave you with nothing.

 
Matthew Freeman on November 5th, 2010 Subscribed to comments via email

You hit the nail on the head here by calling out the difference between normal business models and online business ventures. It takes a direct and consistent focus in one area to perform well online. Diversity is the death of many online businesses in their early stages of development. A perfect example of this is trying to rank well in the SERPs.

A lot of young companies stumble by changing their keyword strategy too often or targeting too broad of a range of keyphrases. The vast majority of the traffic is captured by the top few ranking sites. So unless they focus in on a few attainable phrases at a time (and stick with them) they never realize the full ranking possibilities.

The good news is, an online business is not limited geographically. So it opens up the possibility of taking the smallest niche products–that could never sustain an offline business–and creating a profitable venture online, with little competition.

It’s a great time to be an entrepreneur. 🙂

 
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