I’ve talked before about the importance of creating multiple streams of income before in getting rich. But only a fool would start from nothing and try to run multiple ventures at the same time. You need a firm foundation before you can start to diversify.
So if we zoom forward a little bit let’s imagine that you have a stable business that’s earning you a decent amount every month.
You want to cover yourself against industry changes and drops in clientele by creating a second stream of income.
How do you do it?
I’ve experienced this exact same process in the past and here’s how I did it without ruining my current business.
Choose the Right Moment
You already know that running a business takes time and effort. To start a second business and establish a new stream of income you need to do it at the right time.
My favourite time to do this is summer. Work is always quiet in the writing business in summer. Sales are down and freelance writing clients don’t tend to be doing a whole lot. People are thinking about their vacations not their SEO.
So the summer is the quietest time of year for me, therefore I choose this part of the year to begin exploring new avenues.
Don’t try to do this when you’re snowed under with clients. Your idea can wait.
Protect Your Main Business
There’s always a risk of expanding too quickly. You’re only one person and it’s so easy to overstretch yourself.
In your mind, you need to be telling yourself that your main business is your priority. For me, it’s always freelance writing work. It’s the most urgent and it can’t really be postponed.
So the first part of my day is always spent on freelance writing. Only then do I continue with writing novels, which is my second stream of income.
Everyone knows that when you start a new venture you’re enthusiastic and you want to spend as much time on it as possible, but remember where your income is coming from at this stage.
You lose that and everything collapses. It’s a tender growth stage, like a new plant pushing through the soil for the first time.
As much time as I wanted to spend writing novels in the beginning, I remembered I wasn’t making more than a few dollars. My first business had to come first.
Automate as Much as You Can
One of the big secrets I came across years ago was the power of automation. Now, I’m not just talking about an automated newsletter chain you send out to new subscribers.
As a freelancer, you spend most of your time marketing. This was taking up so much of my time. So what I did around six or seven years ago now was to team up with another writer. She likes to market and she has more time than I do.
What that means is that she does the marketing and I write. In many ways, it’s a partnership. When she has some work she posts it up on a Trello board and I just do the work.
Sure, there are disadvantages. I make less money than if I was doing it myself and it largely depends on her efforts, but it frees up half of my day. It’s that much of an impact.
I balance that out by ensuring that I’m making more money elsewhere. Every hour is, therefore, more productive in moneymaking terms.
Even if it means hiring someone to handle tasks for you, such as a virtual assistant, you may be able to use your time in a more valuable way.
The biggest mistake entrepreneurs make is they try to do too much without help. This is where the term, “You’ve got to spend money to make money.” really comes in handy.
Just because you can do it yourself doesn’t mean it’s worth doing it yourself.
Work on Creating Semi-Passive Income
I would never tell someone with a full-time job in web design, graphic design, writing, or a real world job to start a full-time job in another field. It’s a time-intensive exercise. And there are only so many hours in a day.
You need a semi-passive income stream when you think about adding another string to your bow. Your second income stream shouldn’t be consuming your day or you can’t continue to run your first business to a high level.
Take my novel writing income stream as an example. Sure, I have to write the novels, but I only need to spend an hour or two per day on that.
The rest of the time my books are selling as I sleep, eat, and shit. It’s a semi-passive income stream as it does require some work, but most of the time it’s ticking over without my input.
A truly passive income stream is the hardest type of income to create. For example, if you owned a house and you were renting it out through a property management company that’s truly passive. You’re not doing anything on a regular basis.
Money with little work requires effort. We should all be working towards creating passive income streams, but these take years to refine.
Take note, semi-passive income streams can be converted to passive income streams when you generate enough money to have others manage everything for you.
That’s why I target semi-passive income streams, as opposed to jumping straight to passive.
Don’t Be Afraid to Put a New Income Stream on Hold
Making money isn’t as easy as people like to tell you it is. I remember when I first started writing novels and during the initial months I made practically nothing.
So when I had an influx of freelance writing work I had no problem putting the novels totally on hold. I didn’t want to, but I understood that it didn’t make sense to compromise my core business for something that, at that time, I had no idea would work.
Putting a business on hold isn’t a failure. It’s merely a necessity.
As Time Goes On…
If you’re diligent at saving, you should have a large war chest built up over the course of a few years. I’m thankful that I’m firmly in that situation, so I can take more risks.
However, I will never compromise my core business. That’s the one rule I always follow when considering the giant map that is my business life.
Have you successfully established a second stream of income?