{"id":9291,"date":"2024-09-15T12:21:46","date_gmt":"2024-09-15T19:21:46","guid":{"rendered":"https:\/\/plugoarts.com\/blog\/saved-4-later-why-you-need-a-signature-product\/"},"modified":"2024-09-15T12:21:46","modified_gmt":"2024-09-15T19:21:46","slug":"saved-4-later-why-you-need-a-signature-product","status":"publish","type":"post","link":"https:\/\/plugoarts.com\/blog\/saved-4-later-why-you-need-a-signature-product\/","title":{"rendered":"SAVED 4 LATER: Why you need a Signature Product"},"content":{"rendered":"\n

As with all my SAVED4LATER posts \u2014 I\u2019m quoting it here so that I can come back and more thoroughly analyze and offer my own thinking on the topic later – like it says on the title\u2026<\/em><\/p>\n\n\n\n

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I hear many creators talk about their goal of creating multiple revenue streams to “diversify their income.” This usually comes from wanting to earn more <\/em>revenue and assuming a new income stream as the best path.<\/p>\n\n\n\n

While diversification is beneficial for many reasons, it’s not the most efficient path to increasing revenue.<\/p>\n\n\n\n

The diversification myth<\/h2>\n\n\n\n

The IRS once reported that the average millionaire \u200bhas seven revenue streams\u200b<\/a>. <\/p>\n\n\n\n

The idea spread like wildfire. <\/p>\n\n\n\n

People interpreted it as causatio<\/em>n, thinking that the way to become <\/em>a millionaire was through diversification. Business owners took this as a directive to diversify their revenue streams inside the business<\/em>. <\/p>\n\n\n\n

But when you look at that report, those reported seven revenue streams are:<\/p>\n\n\n\n

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  1. Dividend income from stocks<\/li>\n\n\n\n
  2. Earned income from a paycheck<\/li>\n\n\n\n
  3. Rental income from real estate<\/li>\n\n\n\n
  4. Royalty income intellectual property, inventions, etc.<\/li>\n\n\n\n
  5. Capital gains from selling assets that have appreciated in value<\/li>\n\n\n\n
  6. Profits from a business<\/li>\n\n\n\n
  7. Interest from savings, bonds, or lending activities<\/li>\n<\/ol>\n\n\n\n

    The diversification represented here isn’t about the revenue streams of a business<\/em>, <\/em>but an individual<\/em>.<\/p>\n\n\n\n

    Warren Buffett once said diversification “makes very little sense for anyone that knows what they\u2019re doing” but is instead “a protection against ignorance.”<\/p>\n\n\n\n

    I’ve heard it said another way…<\/p>\n\n\n\n

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    You GET rich through concentration. You STAY rich through diversification.<\/strong><\/p>\n<\/blockquote>\n\n\n\n

    That is, it’s the singular focus that achieves major financial outcomes, and then diversification allows you to maintain (i.e. not lose) those outcomes.<\/p>\n\n\n\n

    The good news for creators is that new wealth is most commonly earned through entrepreneurship. You make something new of incredible value and either generate a ton of cash or sell that valuable asset.<\/p>\n\n\n\n

    However, this concentration vs. diversification idea applies to both the individual and the business. Focus <\/strong>is the faster path to extraordinary financial outcomes, at which point diversification becomes more prudent.<\/p>\n\n\n\n

    The cost of diversification<\/h2>\n\n\n\n

    Creators often diversify by creating new products. I’ve been there! You make a thing, launch it, and it makes money. You think, “Woah, that was awesome! I’m going to do that again!” So you do, and that product makes some money, too.<\/p>\n\n\n\n

    This feels great at the time. It feels like you have the Midas touch: everything you make makes money.<\/p>\n\n\n\n

    Nathan Barry described this to me as building a strip mall<\/a> (rather than a skyscraper). You create several discrete, smaller assets instead of making one massive, compounding asset.<\/p>\n\n\n\n

    But creating new products comes at a massive cost:<\/strong><\/p>\n\n\n\n