A chair needs at least three legs, so does your business

A chair needs three legs to be stable. On two (or less) it can't stand by
itself, and it's funny but the same seems to hold true for businesses.

When you're relying on only one 'line of business', or even worse, just
a single or only two big customers for your survival then the first
hickup will immediately bowl you over.

It's possible to survive a hit to your income stream, but how much of
a hit you can survive depends on how much cash you have in the bank
and how big a portion of your total income that hit represents.

Anything over 50% and you are looking at having to significantly
restructure your operation, whatever it is (from a one man show
to a mid sized company). The clock will be ticking from the moment
you're aware of it and any time wasted will significantly decrease
your options and your chances for survival.

The question you will be asking yourself afterwards, regardless of
whether or not you will survive, is how did I let it get this far.

So don't!

At a minimum you need:

- three sources of income at any one time

- to keep an eye out for deals that will require you to
neglect other customers because they are 'big'

- monitor the dependence you've got on your customers
so that if one gets too large that you either grow
another or diversify to decrease that dependence

Easier said than done!

Imagine, you're running a small, maybe one or two people company,
and one day a big order comes in, do you take it (money in the bank!)
or do you walk away from it and pursue smaller deals, potentially
less lucrative ?

That's a tricky situation to be in, as with all these things, it
depends. If you estimate your chances are large to find a bunch
of smaller jobs then you'd be better of doing that, if you estimate
that it will be very hard to find other work then you might still
have to go for the big job. But I'd make a provision that you
reserve the right to spend a certain amount of time on other
work, just in case a smaller customer comes by and wants you to
do something for them. You can't say 'no' to your smaller customers
for the duration of the larger job, if you do that you may have lost
a significant portion of your customers by the time you're done.

In a business-to-business situation, or when selling goods or
having a website that earns you money the situation is completely
different, but most of the same rules still apply. Don't take
all your income from a single source. If you have a profitable
website, don't lean back and count your money, make another one!
And preferably two.

That way, if something unforeseen happens you're not right away
in crisis mode, but you can fix things properly by cutting back
a bit and using the remaining 2/3 of your income to buy you time.

Like that you can weather most crisis. A lot of little dripping
taps are a lot more reliable as a source of income than a single
firehose. For one a firehose can be turned of by a single event,
it also makes you vulnerable to a competitor offering that single
source of income a better deal.

Another way of achieving this is to split the income of your
website in to two streams, say advertising and a freemium plan.

That way you are already a bit more stable, if you lose the advertising
income or if you lose your card merchant services (this happens with
some regularity, unfortunately) then you can limp along while looking
for a replacement.

More is better, but 3 sources of income really is a minimum!

And to have several months of operating capital in the bank is
another healthy reserve, it can mean the difference between
end-of-story or a successful restart or pivot.

Just like that chair, lest you fall over when one source temporarily
or permanently dries up.