I have several streams of income, hence the term multiple streams of income, which I have built over the years I have progressed in my entrepreneurial ventures.
Most of the streams generate what I consider passive income for me, with many others that also generate recurring or residual income.
Why am I highlighting passive and residual income streams? Because throughout your life you will come across many income opportunities, all of which will be competing for your time, attention and resources.
And because you only have 24 hours in a day, it is important that you have clarity over what is it that you want out of your income streams, or life for that matter without getting too philosophical.
The effect of multiple streams of income works just like a snow ball that is rolling down a snow hill. The longer it rolls, the more momentum it gains and picks up more snow (income in our case) along the way.
You may have several small, medium or large size income streams running in parallel, related or completely unrelated, but they all contribute to your personal financial growth. The more streams you have, the more and faster you will expedite the wealth building process (your money snow ball).
When your wealth increases, you have more discretionary income in theory to invest in other money making opportunities, hence the snow ball effect. This is why people say that your first million is the hardest to make. The rest comes in abundance relatively easier.
That is the simplest way I can describe how multiple streams of income work.
There are many reasons why multiple streams of income are important, however my reasons may not be the same as yours or someone else’s. Our reasons will vary and are predicated on our end goals and objectives.
In other words, the answer to the question “why should we establish multiple streams of income” determines the importance to each one of us. The following are just a handful of reasons why I feel multiple income streams are important in my life.
During the early years of my career in Corporate America, back when I was naïve, I felt very safe and comfortable in my position. As time passed and I gained more “real world” experience, my eyes started opening to the brutal reality, the worst of which we saw in the last few years.
Truth is, very few jobs are as safe as we think. Most people, regardless of how they feel or how strong they perform are dispensable. Simply speaking, most jobs are exposed to potential downsizing. When a person loses their job, they lose 100% of their income.
For someone who relies on only one income stream (income from employment), having a solid emergency fund or savings account helps mitigate the risk of devastation. That is why a strong understanding of basic, fundamental personal finance is important not just for an entrepreneur but everyone.
On the other hand, someone with multiple streams of income has alternative sources to rely upon in the event they lose one of them such as employment.
This is where I feel my blog differs from the 7,652 personal finance blogs out there. Frugality, or cheapness, can only go so far. I mean you can’t stop paying for electricity or heat. While some are ok subscribing to what I think is a life of compromises and mediocrity, I am not.
While there are limits to how much you can cut back, there is no limit to how much you can earn. Most people focus on trimming expenses to boost the bottom line because that is the easiest and most convenient (not in my opinion) way to do it. It also helps that advice to cut back on your Starbucks is on every personal finance guru’s list.
But why not increase the top line instead? Whether you increase the top line, or trim the expense line, the impact on the bottom line is similar. Again, there is no limit to how much you can earn, but one will eventually get tired of compromises and living a life of mediocrity, or bite the tongue and accept it despite deep down inside they’d rather not.
Money makes money, we have all heard that. There is a lot of reality to that statement. When your streams bring in more money, you have more money to invest in interesting ideas and projects.
Whenever I add a revenue stream to my portfolio, I see an exponential increase in the bottom line because the other streams start to kick in a higher gear as well. How does that happen?
If you have income streams that share a similar audience, you can up-sell and cross-sell all over the place like a spider. Even if you don’t, the simple fact of having more discretionary cash allows you to reinvest back into your portfolio to grow it bigger.
When you have multiple streams of income, you have the option to work on whichever stream you choose to when you wake up in the morning. This alone makes the whole concept of multiple income streams well worth it in my opinion. Life rarely gets boring when you have a plethora of choices.
Some people choose to feed the winners and starve the losers. That is also quite alright. The point is that you have options, and not many people can say that. These options also reinforce diversity in your financial position because when one stream dries up, you have several others to count on.
Remember the first million is the toughest to make? The same goes when establishing multiple streams of income. Your first one is the toughest to establish, with each subsequent one getting easier.
As you gain experience and learn from mistakes, you will eventually have a system figured out of what works FOR YOU. You will realize that you start working smarter, often knowing exactly what a contemplated endeavor would turn into and what kind of pay offs to expect.
If you have been there and done that I am sure you are nodding your head just about now. With experience you will also know when it’s time to pull the plug and when to step it up for a particular venture.
What’s interesting is that as you roll from one stream to another, you will have opportunities to establish passive income streams in the process. I am constantly surprised today by random ACH deposits I receive in my business bank account from names I don’t recognize. Upon further research these end up being streams I set up ages ago which are still trickling in.
Whether you should keep firing a shotgun your way to multiple income streams or focus on one at a time is a common question I always get. This is difficult for me to address because I truly believe both approaches can be effective. I know because I have done both.
More than anything else, characteristics like your personality type and attention span make the biggest difference in what approach you should take. From personal experience, I can tell you that focusing on an endeavor yields quicker and stronger results.
That said the shotgun approach can also work out well, as long as you understand that it takes longer and you need to have the capacity to manage multiple projects in parallel. Do not underestimate this skill as not everyone can do it.
This is a big reason why I am not an advocate of quitting your job immediately while trying out a side gig. And though many Deperados have made it big in entrepreneurship, I believe that entrepreneurship is not for the desperate kind.
In the interest of not coming off as a theorist, this post will not be complete without my personal experiences in my entrepreneur’s journey.
I started building diverse income streams a year out of college, after securing a good job that paid a decent amount. Today I have my feet in the stock market, private company investments, small business, real estate, precious metals and several online businesses.
My approach was to establish income streams in areas of my interest in passion. Passion is what enabled me to become a student of the subject matter, and my entrepreneurship drive is what enabled me to seize the income opportunity within each subject matter.
Many people subscribe to a proven business model such as a franchise, or go after the low hanging fruit. Many successful professionals look into investments such as dividend portfolios, building their 401k plans, etc. That is also a good approach to get started.
The good news is that there is no one size fits all formula, and you can pursue income opportunities in areas you are most interested in. The best part of it all is that you can start building income streams while maintaining full time employment.
There are countless ways to make money out there and ANYONE can make it. With the amount of options available it is easy to get overwhelmed and as a result paralyzed from taking any action.
Stick to your passion and learn how to say no to income opportunities that do not appeal to you. Not everyone gets this immediately. I certainly did not, and ended up wasting A LOT of time in the scatter brained process.
I also understand that establishing multiple streams of income is not for everyone. Many feel comfortable in the position they are in, and if so then all the power to them. We all have different kinds of goals and therefore our decisions will vary significantly.
Whatever you decide to do, or not to, your contentment and satisfaction in the end is what truly matters.
Readers: Are you content and satisfied with where you are at? Is there room for multiple streams of income in your appetite? Please share what you are doing about it . . .
I’m trying to make a little bit extra while enjoy those last years at university. Those side income streams really do help to pay for those expensive classes.
Welcome to the blog Juan. What income streams are you currently making work for you?
I’m currently working on trying to make a little online. Currently only with cpc/cpm programs but if I can get a little bit more publicity then I am thinking of trying to branch off into affiliate/cpa programs. I do a little bit of investing on the side, though this is mostly for kicks right now as I don’t have alot of capital.
Quite impressive for someone still in school (I assume).
Please feel free to share what you are struggling with and what I can help you with. The more detailed and specific the better.
Well I can certainly confirm that were it not for my extra little income streams apart from my work at home job, there are several occasions where I would have been sunk if I couldn’t turn to those! Great post and excellent points made here.
Welcome Anna. Are you working online full time now or juggling between work and side gigs?
Working at home with two primary jobs and then also juggling several little side eggs.
Will definitely check out your blog to learn more…all the best
Informative post, Sunil.
One of the issues I’m facing is whether to put in more time expanding my one existing website or putting more energy into starting another one. Obviously as a site matures it brings in more traffic and hopefully converts better but there’s always that nagging feeling that maybe this site isn’t a “winner”.
Another e-business model I’m looking into is reselling physical products which will require more time/energy. I’m just contemplating whether it’s better to build a more information/content rich site which will hopefully bring in consistent/passive income versus shipping physical products myself which entails more headaches but also potentially more profit.
What are your thoughts?
it really depends on your objectives. I suggest investing time getting that clarity in your mind. once you have that, you will be able to focus. you might want to read about my experience starting an ecommerce business and selling it for a quarter million dollars. i now manage a portfolio of niche content websites.
I’m definitely just starting to pull together multiple streams of income. All of them are in their infancy, but like you said, the first million is the toughest!! For me, there are two reasons for digging in and getting down to business. Risk reduction is one of them. I have a great job. But, it is one income stream. I want to reduce my dependence on it. The other reason is the leverage you mention. You can only leverage your time so much with a job/career. There isn’t that exponential increase in revenue by increasing time spent with a career.
Thanks for a great post!!
Welcome to the blog Joe. You and I have identical sentiments. Diversification = risk mitigation. Online ventures are simply too high in ROI to ignore. Would love to interact more and get to know you better.
Great post Sunil. Multiple streams of income give you security (if one dries up you have other sources of income) and diversification.
As to the point about focus or scattergun, I’ve always struggled with that. Some great advice I heard that I’m now trying to follow is to work on one thing until it makes your target amount (say $1M or $1,000pcm consistently) before starting the next one. Otherwise you can spread yourself too thin.
Thanks for the useful information.
I agree Cassie. If it were only that simple (too keep an eagle eye focus). Many entrepreneurs are scatter brained by nature, and tend to jump over several opportunities – sometimes concurrently.
How are you doing with your business? Any personal tried and tested successful focus strategies that have worked for you?
It’s so important that people realize being scared to get extra income by starting a few side businesses can actually hold you back. You might have the security of a job, but no flexibility.
Welcome to the blog Temi. Fear is a huge reason holding people back. But the beauty of doing business online is that your losses are minimal, maybe none in some cases except for the time and effort invested. Well worth the shot don’t you think?
Great post Sunil. I believe in diversifying income as well. Currently, my wife and I both work full-time jobs, she does photography on the side, and I own/ am partnered with 5 different money-making websites online. If we lost our day job, we’d still be just fine thanks to our multiple streams of income. 🙂
Good to see you back buddy. I know you are well on your way to a very nice and diversified income stream portfolio. How is the wife’s photography gig going? I know that’s her real passion…
Building multiple streams is very important to me too. You gave a great admonishment to have, at the minimum, a fully-funded emergency fund. Like you said, that’s not just for entrepreneurs. We’re definitely expanding our income sources this year.
Most certainly Roshawn. An emergency fund is for each and everyone of us. Would love to hear more about the various income streams you have/will be creating…
You’re right, expanding your ways of gaining money can be a real cashcow. but you have to manage them with care. I have 3 ways of getting money at the moment.
Adsense + Providing services + Advertising. For the moment is enough.
Welcome to the blsiiog Radu. Three streams sound like a nice diversified approach. Why not add an eBook? I’d be interested in learning more about each of your income streams. What are your long term goals? How can I help?
we have multiple bills and children so why not income
Nicely said Tanisha. I agree…why the heck not?
Can you suggest any proxy network which we can use proxies for softwares like bmd, amr, ms or rank tracker etc.
Irrelevant and a bit out of place Rahul. I will leave your comment up in the event someone more technical would like to respond.
Thanks a lot for the interesting post.
What can i say?! First, many people have one fulltime job, and they would start a small business. it`s not easy to focus, isn`t it?
for example: i have a haltimejob, my son is 6 1/5, i have a new boyfriend…. AND i have a dream, to start with my own business…. ok, it`s a dream to start with online marketing and make money, but it can work.
it`s a hard way, you need a plan. You must share the time, and you never forget to follow your dream. Then it`s not more a dream… it`s true.
Thanks for your inspiring post on this site.
i`m glad to find you. with best wishes from Germany.
Welcome to the blog Sandy. You make some very good points and I agree. It can be a challenging juggling act, but your passion will definitely help you manage it seems like.
Looking forward to getting to know you and interacting with you more
I have been working on “many streams of income” since reading Robert Allen’s book of the same name. I worked hard at many various steams, but never seemed to get anywhere. Now in this last year, I have started making some, not a lot, but enough to give me hope that I can do it.
I like your comment about not cutting back, but increasing the income. At one time I felt I had cut back as much as was possible (and by the way, I did stop having to pay for electric and heat!). The only thing is that I did not want to live that way. And the only way I could live the way I want is to increase the income. I am still working on doing just that.
Thanks for sharing your knowledge!
great point. I’d rather aspire to earn more. one can only control spending so much. besides, earning more $ doesn’t necessarily mean living outside your means. your spending can increase as your income does, thus a better quality of life, and still well within your means. mind sharing what all you are involved with?
It’s always important to keep your 9-5 while building multiple streams of income, once the streams of income become passive, then you should leave the 9-5.
but what do you say to the school of thought that says pursue your passion (the side gig) 100%?
You must have multiple income streams as an entrepreneur! If one if your income streams collapses then you will always have other ones to fall back on while you are rebuilding!
ditto Freddie. that’s been my belief ever since I can remember being an entrepreneur
I recently came across your site, and have found many of your tips quite useful. Last year, I launched a personal development blog, with the intention of realizing passive income while helping others in the process. Its been a lot of work, but nothing could be more rewarding. Thank you so much for sharing your insight with the world!
you are most welcome Shawn. tell us a bit more about your business. how many pages of content do you have, how long have you been doing it for now, what kind of traffic are you seeing and what’s working really well/and not working well for you right now? if comfortable, I am sure we would love to hear the financial success you are seeing from all that work?