If all your money was invested in the stock market, you’d be feeling pretty nervous when prices start dropping.

That’s why financial advisors suggest you diversify — mix it up between stocks, bonds, guaranteed investment certificates and other products with varying degrees of risk and reward.

(Then there’s your mattress, which is starting to look just as secure as some other places. You won’t make any money on it, but then again, you won’t lose, either.)

Freelancers try to follow the same principle of diversifying. Spending all your time on just one client leaves you vulnerable.

• What if the contact you work with leaves, and the replacement would rather use another person?
• What if the client cuts the budget for the specific work you do, leaving you with less work, or perhaps even none?
• What if the client goes out of business or moves the work to another country?

That’s one reason why I keep an eye on where my time is spent, including a year-end summary of my billings for the year by client to make sure all my eggs aren’t starting to pile up in one basket. Over my freelance career, I’ve fairly consistently had repeat business from a number of steady clients who account for about three-quarters of my time.  The rest of my time is accounted for by one-time projects or irregular work, often by clients referred to me.

The interesting thing is that in 2008, the amount of business that came from referrals was twice the amount referred in 2007. Oh sure, I have increased my online presence this year; but most of those referrals were from people I have met through the networking groups I belong to.

Referrals are like magic, but there’s really no secret to them:

• You have to do good work; even better if it’s in a particular niche.
• You have to be reliable.

Meeting both requirements means someone referring you has no doubt you’ll deliver, making the referrer look good.

Sometimes you have to ask for a referral, or let others in your network know that you’re looking for work. Other times, your reputation may do the legwork for you.

One of the best ways to demonstrate your talent and reliability — and do a good deed at the same time — is by volunteering for an industry networking group (such as IABC, as I do). Pick an area that showcases what you do, or an area where you’d like to learn something new, or maybe an area where you see a glaring need for what you can offer.

There’s one caveat: You must treat your volunteer tasks as seriously as any paying job. Sure, you’re a volunteer, but believe me, people are observing how you work and making judgments about how reliable and talented you are.

Are you diversified? How do you do it?

Image: “Digitalart” and FreeDigitalPhotos.net.