Have you ever heard that you should build 7 income streams?
Have you ever wondered why that is?
If you’re an entrepreneur, personal development junkie, or business owner…
This post is for you.
When I was 17 years old I read a book called how to build multiple streams of income by Robert Allen
To tell you the truth, I think it was the first book I completed for pure pleasure.
Robert Allen, the author, had me thinking for the first time on building several revenue streams into my life…
Inspired by Robert, I will write today on how and why to build multiple streams of income.
Let’s start with the how.
Today, I have 2 solid streams and currently working on 2-3 more.
Of the 2 I’ve built, they began with just two simple things.
1. An assumption of value creation
2. Testing the waters
For example, my first stream began because I felt I could grow a certain type of business in a unique way. (an assumption of value creation)
I prospected 100 businesses in the niche I was looking to help, met with 5-6 owners, and started a deal with one.
It’s turned into a lucrative role that provides full time income with lots of flexibility.
Not so bad huh?
The second was another situation when I felt that I could add unique value to a person who needed some help.
I’ll keep the details discrete because this is confidential, but the point is I had an idea and went on to testing.
So. Let’s dive into step two.
2. Testing the waters:
If you have an idea on how you think you could create value (which is all businesses are— predictable machines to deliver value) …
Start by testing the waters.
Create some type of “minimum viable test” and allocate some resources (time & money) to see if “there’s anything there”
These simple steps do not give justice to how to build multiple streams of income, but they are a start. 🙂
So, let yourself have ideas of what could work to make money (assumptions) and conduct a tests to see if there’s something there.
You can do this by…
Prospecting, studying, running an ad, conducting a survey, telemarketing, attending a meeting, or whatever else it takes!!
Now that we have that covered…
Let’s get into why to build multiple streams of income.
The number 7 constantly pops up in business circles.
“Create at least 7 streams of income” they say.
But why 7? And why so many?
Here’s my opinion…
Let me give an example…
In finance, when looking at an acquisition, bankers constantly look to see where the revenue is coming from
And they know it’s better if the business doesn’t have all of its revenue based in one source or a couple large customers.
It’s because it means that the business relies heavily on those streams of income and would likely not support debt should the revenue stream change.
How does this correlate to you?
The number 7 is approximately 15% of the total revenue assuming each stream produces the same amount of cash.
If one revenue stream fails, it’s no big deal, as the other 6 will support the business or person.
So, risk management tells us that when revenue or income produces 15% or less of the total income — it’s safe.
100% of income from one source is MUCH more risky.
The point of this post is to tell you how to build more streams, by looking for places to find value and conducting tests to see if it’ll work.
And the reason why 7 is important is because 15% of revenues from each source is a well known “de-risked” number that demonstrates less dependency on any one source.
Your economic well-being is extremely important, DONT leave it up to chance from just one stream.
Hope this helps.
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