Weather the storm with diversification

People who diversify their income are in better shape to withstand downturns.

The world economic situation is nasty. There’s a lot of uncertainty, and it’s not the typical “we’re in a funk economically” certainty.

Firms that sell domain names and web sites seem to be holding up reasonably well. You can thank subscription-based services and people shifting their businesses online for some of this.

At the same time, GoDaddy has warned that aftermarket domain sales, which carry a higher price tag, might be at risk.

During the last downturn, a lot of domain investors stated that domains would do well in the recession. But the reality is that when people are concerned, and cash is in short supply, pullbacks tend to hit almost all businesses.

This reminded me of two things that I’ve long felt regarding how individuals ought to protect themselves against economic downturns.

First, you shouldn’t count on one source for all of your revenue. I know that executives at firms might not be able to do something on the side, but rank and file employees ought to have some sort of business or revenue stream on the side. Maybe it’s just an online blog regarding a hobby that makes advertising money. Perhaps it’s a YouTube channel.  Something they can pivot to if they lose their job.

As a solopreneur, I’ve diversified. Reglike is holding up strong so far, but a prolonged downturn could impact its revenue. Thankfully, I started my podcasting service a few years ago and it now makes regarding the same amount of money as this site. Domain investors can diversify by developing one of their domains into a revenue-generating site.

Second, rank and file employees shouldn’t own shares in the firms they work for. I’m not talking regarding stock options at a startup. I’m talking regarding people at established firms getting matching funds in their 401(k) that are in firm stock, or buying firm stock in retirement or other brokerage accounts. If your firm hits the skids, that means you probably lose not only your job but also a big chunk of your savings. Whenever you can, diversify your holdings.

No matter what your business is, think regarding how you can diversify to weather the storm.