Diversified Revenue
I've been an entrepreneur most of my adult life. And I hate that word so much because now every MLM and life coaching scheme uses this word. And I don't want to sound snarky because I have several friends who do this and seem to do quite well. But I know it's not for me. And more power to you if you do this - hell, even I have. But I recognized three things about myself as a business woman early on:
If I'm going to work this hard, I want it to be something I CREATE. I want it to be all MINE.
Anything can happen so be prepared. The market goes up, politics change, people are fickle in their decisions and trends are just that.
Fear of failure is never as big as my fear of not following my heart. I have failed big and small and I am ok failing if it means something might possibly stick. I also meet every failure with as much grace as possible (not much some of the time) and try really hard to learn these expensive but valuable lessons.
If you aren't like me and your fear of failure is bigger than your fear of living your life in a 9-5 then my advice won't help you. If you are ok with MLM and are great at it, keep running with what works for you. But if you are one of those people who is discontent working on anything that isn't your own making, then this is for you.
I started my first nonprofit company when I was a mountain-biking, bindi-wearing, soul-searching Sedona desert rat at 20 years old. I didn't consciously decide I was going to create a career path for self-employment, I just knew I was passionate about something, loved that I could help people and started working away. I didn't grow up with a lot of financial or domestic security. We moved a lot and I lived a juxtaposed life of knowing home was on a farm in Northern Idaho but also attended elementary school in Costa Rica. My mom was a born and raised Idaho farm girl. My dad was a world traveler and lived all over the globe. My mom was an involved Presbyterian and my dad an atheist who collected Hindu and Buddhist art. I was a confused child.
But even the things my parents didn't teach me about, I learned by observation and finances, or lack thereof, and that had the biggest influence on me. My mom was always grounded and has had a steady job for decades with the very few companies she has worked for. She balanced her checkbook, saved pennies each week, and made sure we had the necessities. We never went without and I was allocated two pairs of shoes a year - one pair for sports and one pair for school and church. My dad was self-employed and bought what he wanted when he wanted. He made a lot of money at times and spent it on things to make life more enjoyable. Looking back as an adult now, I see how each shaped my entrepreneurial endeavors and philosophy about money. With a sprinkling of widsom from my parents, TED Talks, articles and interviews by the likes of Warren Buffet, books including Rich Dad, Poor Dad, as well as the sage advice of Suze Orman and Dave Ramsey, I have formed my own entrepreneurial philosophy about money. And it’s much like balancing postures on my yoga mat - I find the midline and sometimes I tip over, but when I am grounded and steady, I can reach for the stars and hold for quite some time.
And full disclaimer, the methods and advice I give here is my own opinion and what is working for me. I have absolutely no academic or professional experience in finances. And I'll also be the first to say that I have failed big. But I've also lifted a lot of people up so there's that. In this same vein, I will say that as a single mom I have done everything possible to give my child a good life and be an involved parent which is where my motivation in self-employment and financial independence stems from. Most recently, several years ago I undertook a venture that I didn't feel was right for what I wanted, didn't listen to my gut and didn't have the legal means in place for a fail-safe system. I was scraping by and if I had a safety net, all would have been fine. But the hardest part of taking chances is trying to figure out how you plan to fail. My failure resulted in an inability to pay people in the timely manner promised due to someone not paying me further up the chain and blah, blah, blah. I've since remedied this with payment plans and communications, even though some will always find a reason to be angry about it. I've learned to let go and continue to follow the Four Agreements so each day I'm doing my best.
Now that we have that out of the way, I'll share my philosophy. As a serial entrepreneur I believe in optimizing multiple revenue streams. It's nothing new or ground-breaking, but as I've tried and failed, tried and succeeded and consulted for others either starting out in business, searching for their calling or simply been a sounding board for friends I see making the same choices over and over again, I've seen my way work. When there is diversity in how a person makes money, the fail-safe is in place. If one thing starts to fail by not selling, or there's a shift in the marketplace, something else can carry the business through, maybe only temporarily, but that's enough time to come up with a new plan.
Multiple streams of revenue is hands down the key to financial success. You can live below your means, have no debt, save and still not get ahead to truly be self-reliant in the future. The only way to financial independence is a diversified revenue stream. And I've also learned that sometimes it takes going into debt to grab hold of the bigger slice of pie, but you have to have a sound business plan and even in that plan, have several revenue streams for income for your business. Having another income source is also important if you are fully employed. You can lose your job at the drop of a hat and then what? Even with savings to fall back on and no debt needing to be paid off, you are left treading water waiting for your next position at the mercy of your career field, the marketplace, politics, natural disasters, etc. It can be a gamble and the way I see it, it's also nice to have something you enjoy whether it's freelance writing or making ironic hair accessories. If your side hustle is something you enjoy as a hobby, what's preventing you from turning it into something more if you had to? If you wanted to? And even better, making some money off of it in addition to your full time gig.
There are two types of income: passive and active.
Passive Income is most commonly thought of as the interest you earn when your money sits in the bank. There are two problems with this. The first being according to a 2017 GOBankingRates survey, 57% of Americans have less than $1,000 in savings and that is not going to earn you a heck of a lot. The other problem with that is most of us don't realize the potential we have with passive income. Passive income is cash flow resulting from little to no effort. This can include earned interest, commissions, creating a product that can be used over an over again (think online classes), rental property (or renting a room in your house or renting out your car), staff, team members or automization of a task in place of you. For these purposes, a passive household income of someone who shares finances with a spouse could also include the spouse's income.
Make a list of different ways you do or could make a passive income and think outside of the box. What do you already have? What are you an expert in? What can you do once and make money off of over and over? How do you build a team to work for you?
Active income is the income most of us are familiar with. It's the daily grind - the work you put in each day. Your income is directly related to the amount of time you put in and how hard you work. This is your 9-5 day job, your passion project that you do in the evenings that you earn extra money doing and any effort you exert to make money flow towards you.
Where does your active income come from? Is it from a job you show up to each day? If so, are you happy doing it? If not, what would it take for you to change your job? Do you want to work for yourself? If so, what would you do? And from there, how do you branch out so you have multiple revenue streams from your new business?
Take some time to address your active and passive income streams or possibilities. If you only have one revenue stream, even if its a good one, you need to branch out. Unless you are independently wealthy, everyone needs a diversified revenue stream.