Putting All Your Eggs in One Basket
With Easter 2022 now firmly in the rear view mirror, let’s take a quick glance back at all those Easter eggs. Everybody’s grandmother has said at one time or another that you shouldn’t put all your eggs in one basket. And they’re right.
Even if you’re not in the egg business, they’re right. And they’re right about putting all your business eggs in one basket.
In fact, an entire investment industry has been built around the concept. Isn’t that the main, underlying theory behind mutual funds? Spread the risk among hundreds or thousands of individual investors so that when XYZ Company’s stock tanks, you’re not wiped out.
The same concept has many applications. The head of a very successful public relations firm advised to never have more than 1/3 of your business with one client. This was a lesson lost on someone whose firm was quite successful until his largest client (which represented 90 percent of his firm’s billings) took a walk. Within two or three months, the business closed and all the employees (including the owner) were out on the street.
We’re seeing this today in manufacturing. It’s called “supply chain issues.” If your company has 50-60, or 70-80 percent of your manufacturing done in China, you might now be teetering. It seems foolhardy to concentrate all your manufacturing in one country. Upon closer inspection, most of today’s supply-chain issues can be traced back to China.
This is especially true if that country is less than stable and, at any time, is susceptible to things way beyond your control such as war, revolution, labor unrest, natural disasters, etc.
The same could be said for raw materials. The U.S. found that out in the 1970s with the Mideast oil embargoes. When OPEC turned the spigots off, all hell broke loose.
You’re not a control freak if you want to keep a close hand on where and how things are made as well as where your raw materials are accessed.
“Don't let others be your obstacles.”