We all need multiple lines of income. No one wants to be at the mercy of one big client or even one big product.
- If you only sell to walk-in customers, what do you do when the city tears up your sidewalk?
- If you only do consulting, what do you do when you get sick for a month?
- If you only sell online, what do you do when your Internet connection goes down?
- If you primarily sell one big flagship product, what do you do as the market shifts imperceptibly out from under you?
Having multiple lines of income helps to spread out those risks.
You don't necessarily need multiple lines in separate businesses, though I have several myself. It's possible to build new lines of income within your existing business.
Before you start in on this, you need to know how to manage multiple lines. It's not easy to add a new line while still keeping your business moving forward. Here are some tricks I've learned to managing businesses as diverse as a liquor store and a cattle ranch.
1. Build a portfolio of lines of income
Most healthy businesses can create income in one of three ways: one-to-one interaction, one-to-many interaction, and on-their-own interactions. For example, an expert in commercial illustration might work directly with clients. That would be one-to-one. They might lead training classes. That would be one-to-many. They might write an instructional workbook. That would be on-their-own, where the clients could learn without needing the expert to be present.
Think about creating your own portfolio, diversified among these three methods.
You can see how balanced your business is on one sheet of paper. Divide the paper into equal thirds, labeled one-to-one, one-to-many and on-their-own. Put each current line of income in the correct column. How do you come out? Lopsided, or pretty balanced? If you really want to check, put the revenue numbers next to each line of business. Now how does it stack up?
My local sewing center in Alva, Oklahoma, has a decent portfolio. They sell sewing machines, teach classes on sewing, sell vacuum cleaners, service sewing machines, and speak at sewing events. Selling is generally a one-to-one activity. So is servicing. The classes and speaking are one-to-many. They don't offer any on-their-own products right now, but they could easily write up books or workbooks, or create videos to sell. How did they get so diversified? They did it following the next tip.
2. Establish then extend
Farmers take their time in adding any new crop. That new crop will take acres away from the existing crops, so it needs to be worth the effort. If the crop requires buying specialized equipment, that has to be factored in. Then there is the learning curve. Any new crop will take some time for the farmer to get a feel for it, to know the potential problems and the issues of timing.
It's a smart lesson. Take your time in adding new lines of income. Let each one get well-established before you move on to adding another one. It will take time away from your existing lines, so it needs to be worth it. If it takes new equipment or training, factor that in. Give yourself time to learn the feel of the new line, to know when it's vulnerable, when it's strong. Learn the seasons and cycles of your new line of income, before you start thinking about adding another one.
This is also the trick Richard Branson used, establishing one business at a time, growing it up to a thriving point, then making sure it could survive before he turned to establishing the next one.
3. Manage Your Time
When you have multiple lines vying for your attention, it's hard to know what to work on next. Should you finish that work for a client, work on the ebook, or address the 800 things that you already needed to do in your business?
I deal with this by focusing on one at a time. I know my priorities for each line of income. That helps me know what each one needs next. I delegate (though I ought to do more). During a single day I may work on several different lines, but I give each my focus during that time. I might start out figuring the daily deposit for the liquor store, then head out to work on a windmill at the farm in the afternoon, and finally focus on my writing after that. Because I'm focused on each in turn, I keep them all moving forward.
How do you keep from getting distracted or scattered?
I'm not sure my day is more scattered or distracting than a typical corporate or office day, with meetings, emails, phone calls, and distractions everywhere. Here's how I fight to stay focused.
I have a central mission: I help small town entrepreneurs prosper, so they can help their communities prosper. Every project that someone asks me to take on, I run through the filter of whether it helps me to support small town entrepreneurs. Yes or no. Very simple. This article fits my mission because so many small town entrepreneurs run multiple businesses in order to survive. Knowing this made it easy to work this into my schedule.
Multiple lines of income help you face the What if? scenarios
Now that you have some ideas of how to manage multiple lines of income, you may be ready to start brainstorming for your own business. Take those "what if?" questions from the top of this article, and start thinking through your own scenarios. What would you do if.... Knowing the answers may mean the difference between surviving and failing.