Everyone should be diversifying their income. Bold statement, we know, but uncertain times can fall upon us at any given moment and without notice. And as business owners, this could mean the difference between money in the bank or food on the table. As leaders in business, it is our responsibility to take care of our employees, provide for our families and serve our customers to the best of our ability. We can't do these things if we have to close up shop. Diversifying your sources of income is a great way to protect your finances and plan for continuity during uncertain times. Here are our best strategies for anyone to think about while approaching diversifying their income.
Strategies to Diversify Your Income
Whether you own a brick & mortar, online store, consulting company, provide a service, work at a Fortune 500 company, or hold a full-time nanny position. Diversifying your income can protect your finances and build your net-worth.
AKA diversification can 1. lower your financial risk 2. make you more money and 3. protect your income streams.
Let's get into it!
1. Start a side hustle.
Embrace your entrepreneurial spirit and start a freelance or side business that plays to your strengths. Pick something that you know you'll be good at and doesn't require a lot of upfront investment. This is a great way to pursue a passion project that can also generate revenue. Dream big but start small - if you love writing you may want to start a blog or write an ebook before you dive into writing a book. This will give you a chance to test your commitment and test your audience before you go full throttle. You have to start somewhere so squeeze in time where you can and find innovative ways to share your offering.
2. Think about your savings.
Consider the options before you decide where you're putting your savings. Throwing all of your savings into a retirement fund will set you up for the future but it can put constraints on when and where it's used. You might find more financial gain in other places. Just as we diversify our income we must diversify our savings (aka our future funds).
3. Create passive income.
Passive income is income streams that you monitor but don't actively put time into on a daily basis. Examples are commercial real estate investments, renting out your beach house, money market accounts, stocks, and bonds. There are options for people at all income levels, so don't think you have to be a millionaire to grow your money.
4. Offer another service. If you already own your own business start thinking about your current streams of income and how you could extend off of those to create another stream. For example, if you own a gym, maybe you offer online workouts, group classes or a nutritional program. If you own a financial consulting company, maybe you offer online courses for people who want to learn at home or host a seminar. Get creative, hone in on value creation and get feedback to find out your community is asking for!
5. Protect your cash flow. It's important to mention that protecting your current finances correlates with diversifying your income. You can't invest your money in new places if your income is tied up paying off debt so take inventory, set goals, and make a plan. 1. start by paying off largest debt first 2. pay more than the minimum balance but not more than you can sustain long-term 3. limit credit card use - don't rack up more debt 4. commit to a budget.
6. Continuity Planning. Continuity planning is basically risk management 101 - it creates systems for prevention and recovery to any business threats. In an event that an income stream completely fails, it becomes negatively impacted or doesn't perform how you planned, it's important to have a backup plan or a safety net. Also know at what point do you wave the white flag. I'm not saying plan for a failure but be so committed to success that you know your offense and defense.
Comment ways you are working towards diversifying your income and what's worked for you below!
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