DON’T PUT ALL YOUR EGGS IN ONE BASKET: TRUTH OR MYTH?

“Don’t put all your eggs in one basket.” This old adage became popular when it was first used in the novel “Don Quixote”, where it was written “It is the part of a wise man to keep himself today for tomorrow, and not venture all his eggs in one basket.” How is this famous quote relevant to the business?

 

I remember my wife’s boss said that it is not wise to put all your eggs in one basket, because the moment you drop the basket full of eggs, you will lose everything that you have and live a life later in regret. True enough, she does not only own one, two, or three businesses. She owns at least five business ventures, wherein two of which are personally managed by her while the rest are managed by her business partners. I would rather say that the businesses she is handling are all thriving, while the others are barely hitting the break-even.

 

On the second thought, my friend from the entrepreneur’s ministry of our church may be right when she said that it is a smart thing to put your eggs in one basket. She pointed out that a business would become more successful when the entrepreneur focuses his time and resources in managing the business. For as long as the entrepreneur gives his focus in the business, there is but a slim chance of failing.

 

With these two contradicting business acumens, at which side are you? As for me, I believe that both perspectives are correct; nonetheless, depending on what situation the entrepreneur is currently facing, and that he must consider the risk before deciding for new ventures or investments at any point in time.

 

Business risk is calculated by evaluating the severity of the effect of the hazard to the business, the likelihood that the hazard could occur, and its vulnerability to such hazard. Once the risk is assessed, taking into account the aforementioned parameters, and the result shows that the business faces a significant risk, then necessary controls must be applied to manage the risk.

 

As long as the entrepreneur manages all the significant risks identified in the business, I don’t think having one, two or many business ventures is an issue at all.

If you agree or disagree, you may share your comments below.

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