Posted by Tony Colella on November 26, 2010 at 15:01:47:
One obstacle that may be under-rated when seeking new or greener pastures is the learning curve any new endeavor requires.
Most of us here have spent years not just investing in mobile homes but submerging ourselves in this niche. We read posts here and other sites daily, we post ourselves, email, talk on the phone, attend seminars, boot camps and buy books and courses.
I don’t know that every new pasture will even afford one the opportunity to delve so deep but even still the time it takes to take a new business from start to success can be lengthy.
I don’t know if it would necessarily be a zero sum game but it would seem to me that by pursuing a different niche it would have to be done to some extent (more or less) at the expense of one’s current investment/business.
Trading a proven practice, even though it needs adaptation, to pursue a totally new niche could in theory lead us into further peril since we may not yet know what we don’t know about it. Then we have to wonder if the information available on that niche is as timely as the mobile home niche.
So many of us post here daily that it doesn’t take much reading to discover the state of the niche in various parts of the country. I have no idea if other niche’s are so well documented or as candid.
Posted by Tony Colella on November 25, 2010 at 10:10:54:
In many conversations I find people mentioning the model of diversification. This in theory makes great sense, especially during a recession. Not having all your eggs in one basket allows you to have fallbacks in the event your main game goes south.
On the other hand the people that I know or read about who were most successful seem to be the ones who focused the entire attention and time upon one niche. They became the expert and maximized what they could do in that niche. It seems to me (as best that I can recall) that this was the case in the book ?The Millionaire Next Door.? Most of the wealthy there had blue collar type businesses and lifestyles (although not all) but at the very least had one business model. I have not read this book in some time so please feel free to correct me if I am wrong here.
The people I see best weathering the recession so far do seem to contradict the focus theory. I feel it important to stress that the focused business model folks were in the game for the long term and had weathered the storms to become so successful. Those with a couple of different income streams seem to be best able to keep afloat in these hard times. Does this mean that they are less successful in good times because their attention is divided?
I have seen several who have had to all but flee their normal focus model because other money streams are profitable at this time but admittedly they are not expected to be so in the long run. Many of us are seeking jobs to stem the outflow of cash into properties but many are finding out that the job eliminates their ability to manage their properties effectively. Some are loosing properties in order to put food on the table.
There will be many tough decisions like personal vs business finances. Sometimes they seem to be at odds with one another. Eat now at the expense of future financial security investments now established. My prayer for these folks is they find a balance in the now that will survive into the future.
Again I point no fingers at right or wrong but rather I seek to provide food for thought and time for discussion.
Re: To Diversify or not to? - Posted by Shawn Sisco
Posted by Shawn Sisco on November 26, 2010 at 08:41:42:
I believe diversification is something harder to achieve as one?s business grows and matures.
I think many of the difficulties lie in identifying the goals of diversification ? when the goal is to get $1000 per month ?mailbox money? coming in focus is pretty clear as to just what to do. When the goal is to be able to quit the JOB that pays $60,000, again it is pretty clear what needs to be done, and how to measure progress. It seems that so long as the goal is to gain income, clarity of thought is easier to come by. But when the goal is preservation of capital, or income streams, and growth, well now the number of variables makes decisions much harder.
For me, I think the diversification should include the aspects that you have so well described using the 3 legged stool analogies. My difficulty these past few years has been that of only finding deals in the long- term segment without enough cash generating ?legs? to balance it out. I could easily plunge deep into the pool of debt and really add a lot of risk to my financial health. I second guess myself as to whether I should just go along taking what the opportunities are offering. So far I haven?t left the path that leads to debt-free business.