The ‘Multiple Streams of Income’ mistake
I’m sure you have heard people, including me, say that the way to ensure a stable income is to have multiple streams of income all running sending money into your bank account. This idea was first explained by Robert G Allen in his best selling book, ‘Multiple Streams of Income’.
When you have multiple streams of income you’re not reliant on one source. If one of your sites is de-listed by Google, for example, you still have several other income sources bringing in money so the impact of losing that site is reduced. On that basis then it is sensible to have as many sources of income as possible because each source you put in place reduces the contribution that each one makes to your entire earnings.
So why am I saying that multiple streams of income can be in some way a mistake? Let me explain. What I see all the time is people taking that piece of advice, creating multiple streams, and implementing them in the wrong way.
How do they do it wrong?
Let’s look at the process for creating a niche income. The first stage in the process is research. We look for possible profitable niches by brainstorming ideas. There are many ways to do this, including checking through the magazine rack for hobby ideas that can provide niches, research on Amazon for popular book/product titles, check out Google trends, Ebay pulse, there are lots of ways that I don’t have time to go into here. If you would like more help in this area post me a comment below and we can start a discussion about it.
As we do our research we compile a list of interesting niche topics in a notepad file or similar ready to start creating our niche sites. What lots of people do then is pick several of these topics, generate a bunch of keywords for each using the Google keyword tool and start creating a niche site for each one. More often than not these days that means putting together a WordPress blog, adding all of the plugins needed, sorting out the right widgets, optimising the site for the search engines possibly using all-in-one-seo, writing or getting written some content for them, adding an email capture form etc. There are a lot of separate activities to do to get your niche site up, and we haven’t even talked about traffic generation yet.
Let’s suppose that it takes a month of work to complete each site, which if you are doing it all yourself is not unreasonable. And let’s assume that you decided that you would start with 10 niches, that sounds like a good number of multiple streams of income. For the sake of this example let’s also say that when complete each site will generate us $1000 a month. If we now do the math we realise that at a month each our batch of multiple streams is going to take us 10 months to complete (i.e. 10 times 1 month) and by the end of month 11 will be bringing in $10,000 a month. So we work away on our business for 10 months and then we have them all finished and ready to start making us money. At the end of month 1 we have no money coming in because our sites are only 1/10th complete. At the end of month 2 we have no money coming in because our sites are now 2/10ths complete and so on for months 3 to 10. Finally by month 11 we start receiving our projected $10,000 a month.
Great when you get there but you have to survive while you’re doing it – for 10 months.
The Right Way to Multiple Streams
Now let’s look at a different way, the right way to do it. We do our research as before and identify 10 potential niches that we would like to work with. From our list of 10 we select 1 that we want to work with first, just 1. We then go ahead and develop our site, do the optimisation, start driving traffic and everything else we need to do to get the site up and running and generating money. We said that was going to take us a month and let’s assume it does. At the end of month 1 we have a site complete and ready to make us money and by the end of month 2 site 1 has generated us $1000.
Having completed our first site, we go back to our list, select the next most suitable niche topic and begin the process again on our second site. That takes us a month to complete so by the end of month 2 we now have site 1 making us $1000 a month and site 2 ready to start making us money. We continue the process that we started in month 1 so by the end of month 3 we have site 1 and 2 making us $1000 a month (we’re now bringing in $2000 a month) and site 3 is ready to go. As we develop each additional income stream our income goes up accordingly.
If we use the figures that we’re assuming here for this example and do the math now this is what we find.
The first approach generates us $10,000 by the end of month 10 and another $10,000 each month after that.
The second approach generates us $55,000 by the end of month 10 and another $10,000 each month after that.
Which option looks best to you, I know which option I’d choose every time. Now I know that I’ve used round figures here to prove the point, and not all of our sites are going to generate $1000 a month. More often than not only a few will do that. The point I’m trying to make is that when you complete one site, one income stream at a time, that income stream will be bringing in money while you’re working on the next, then the next and so on.
In summary, multiple streams of income is the only way to go but work on one project at a time or if you are outsourcing the bulk of the work no more than 2.
I read a great comment from Warren Buffet recently, where he said “You can’t get a baby this month by making 9 people pregnant at the same time” – the same is true when it comes to building your business.
Until next time,
Trevor
Remember “Nothing Happens Until We Take Action”
