If you are a small business owner with an income from only one type of product or service, it is high time that you think about diversifying your portfolio. It would be best to think about your career as a portfolio with different income streams. To survive any turbulence that your main business stream might throw at you to destabilize your market position, you need an auxiliary way to earn money when you’re in a challenging situation.
Having multiple sources of income is crucial in today’s world to mitigate the risk of putting all your eggs in one basket.
Why Do Multiple Income Streams Matter?
Your business may be providing a product or service, and having various income streams is the need of the hour.
Suppose the main product is retailing gift items, and every year the demand goes down post-New Year’s Eve. In that case, there will be a slack period where you may not be able to make rent or pay your employees on time. You may also be in the process of employing foreign nationals to work in your company and will require a home office sponsor licence. To do this and expand your business, you must ensure you can keep it afloat in months after the peak seasons or when peak business times are upon you. While employing overseas employees, you will also have to ensure they have a visa for a temporary worker. All this documentation requires your finances to be in excellent shape and the business or company to show good profits.
You could have a mix of products and services that your company provides to balance your income streams or build your income. However, relying on only one product or a single type of service is very risky in these turbulent times post-pandemic.
To have and successfully manage multiple income streams, take care of your employees, and provide for your business and personal life, you need to follow a simple thumb rule. No income stream or a single client should be worth more than 30% of the overall business. You don’t want any single stream or service to take up too much time and effort, or it could be detrimental to the portfolio. This rule is vital to balance the ups and downs of any streams that may lead to an adverse effect on the entire business.
As A Small Business Owner, How Do I Decide If I Need Multiple Income Streams?
For practice, take a piece of paper or open your notes app on your phone and write all your income streams. Then, put a percentage value of your income that each stream is made up of next to its name. Now, if you have just one source of income, then it is time to rattle your brain and think about diversifying into different avenues.
The last two years have taught us that relying on a single income stream may not be as fruitful as having multiple income streams. Not necessarily every source of income should be from a retail store or an office space. You could have one retail store, two E-commerce stores, and five online income sources operated from a single place.
Here are a few examples that small business owners could consider creating multiple income streams:
- Personalized or Group Coaching
- Kindle Book Publishing
- Affiliate marketing
- Public Speaking and Workshops
- YouTube Automation
How Do I Start?
There are many lucrative online and offline methods to earn money these days. You need to comprehend what people want and how you can provide for them.
First, you need to ask yourself these two questions:
Do I need an extra income stream? – Always
Do I have the time to start something new? – Time has to be managed
These doubts are usual, but you will be unstoppable when you start and earn that extra £5000 a month.
Your primary business might be utilizing 40% of your time and comprises 100% of your income. Now think about using the remaining 60% of your time to get extra cash. You will have to dedicate time and build one stream at a time.
Start with research, make a business plan, and then execute it independently. Once a particular stream picks up pace, hire virtual assistants or remote employees to handle administrative and clerical work. Once that stream is stable, start developing the next one. This way, you can diversify your portfolio, not be dependent on anyone’s income stream, and when needed, support a failing source with the one that is stable.