Please note: I’m not a financial adviser, and this post is by no means professional financial advise. Instead, I’m simply asking you to think about where your money is coming from. If you want to know what to do with your money once it has arrived, how to invest, or the tax to pay, please contact your accountant and financial planner.
I’m a big fan of diversification.
It’s hard, it seems to go against everything we are told.
Niche, focus on a specific target market.
Focus, put all of your effort into one project/service/product
Don’t get distracted by the pretty shiny things.
And while those ideas are all good in theory, there are times when they aren’t
Don’t put all your eggs in one basket
You see, I’ve been burnt a couple of times before.
Relying on a single client for about 70% of my income… they ended a contract very unexpectedly, and I was high and dry.
Then…
Having one signature program which provided 90% of my students, until government legislation changes meant that we couldn’t run that course any more.
Then…
Relying on an incredible referral partner who passed me a constant stream of clients… until they decided to close their business and move into a different industry (completely their prerogative of course)
You think I would have learnt after the first time, right?! But I didn’t .
What does Diversify mean?
The Cambridge dictionary says
“diversify
1. To start to include more different types or things
2. If a business diversifies, it starts making new products or offering new services:
Simply right – it just means to do more than one thing.
I now have 3 solid forms of income and I’m looking to build 2 more different ones. I won’t be caught out again. I’d hate to be reliant on just one source of income again, I’ve finally learnt my lesson.
What can you learn from this?
Don’t put all your eggs in one basket.
Create multiple income streams and make sure you cover yourself.
Look for different ways you can generate income, so that if something happens, you will still be ok.
You never know what might change. Maybe a big change in legislation will mean that your industry can’t function the way it used to. Maybe a court case somewhere will impact the way you deliver your product or service. Maybe changes online will close down social platforms.
You just never know…
Some key things to remember
– You still need to focus
I suggest getting 1 income stream working before you start creating 2, 3 or 4. You won’t generate as much impact, or results as quickly if you try to do them all at once. (If focusing on 1 isn’t for you, maybe try just focusing on 2.)
– Don’t spread yourself too thin
You can’t do everything at once, and you still need to have time to focus on your marketing and meet the needs of your niche. (See point above about focus!!)
– Focus on 3 – 4 sources
You may want many more in the long run, but you can’t do it all instantly. Get 1 working, move to 2, move to 3 etc.
Once you get to 3 or 4 sources that are working well for you, make sure you are getting enough professional advice to invest the money you are generating, and to ensure you understand the tax implications.
– 2 sources shouldn’t be reliant on you
It is helpful to have ways to earn income that don’t rely on you day to day.
What if you get sick? What if a family member gets sick?
Touch wood, nothing will happen… but I’d rather be safe than sorry.
Look for ways to generate income, that don’t require you sitting at your desk 8 hours a day, or being the one face to face with customers.
– Consider insurance as a back up
This might be health insurance or income protection insurance. Consider what would happen to your and your family if you couldn’t work.
Please remember – I’m not licensed to provide you advice on this. I strongly recommend you go and talk to your financial planner about your income and how to keep yourself safe (and if you don’t have a financial planner, go and get one!)
Your challenge
Track all of your income year to date (or financial year to date if that suits you) and work out where your income is coming from.
Break it down into different sources, and look at which provide you the most income.
Next, work out which are reliant on you always being there, and which can run without you (this may involve hiring someone else in the future).
I’d love to hear from you.
Do you rely on just one income source? Or are you diversifying?