The importance of multiple revenue streams
The importance of multiple revenue streams:
There are several reasons why for most people it is important to have not one but several or many different revenue streams. In other words, you may have a day job, but you also have a work-at-home-business that you do on the side. Or you may have a business, but it pays to have multiple revenue streams in the business, not just one core one.
Online this is easy: Don’t just have one web site, have 5, or 10 or 100. Each one should also have multiple revenue streams, making money not just from ad revenues, but also from email lists, product sales, etc.
Reasons:
1) The 80/20 rule: It takes a certain amount of effort to be successful in one revenue stream. After you know how to do that it might be very hard to get to the next level because at each level of success new skills are needed. Maybe one doesn’t have those skills or the personality to implement those skills. So it can be much easier to put the first stream on autopilot and create a second stream in a similar way. Put the second stream on autopilot and move on to the third, etc. You get 80% of the success for only 20% of the effort each time.
2) Diversify for safety: If one revenue stream dies or gets cut in half you still have the other(s) to fall back on. Often I find that if one stream gets hit others might improve at the same time which evens things out.
3) Diversify for success: It could be that a second revenue stream totally outperforms the first one. Multiple streams give multiple chances to find something that works better; then you can focus on building the one stream that works the best.
My own experience with this is as follows:
I started out about 10 years ago designing web sites as a freelancer. On the side I worked to build up traffic to 3 information web sites that my wife and I had built with the hopes of making some money from them. Eventually one of the sites started making a bit of money so I had 2 revenue streams: my freelancing and that site.
After a lot of work and time the web site was doing better but my freelancing still brought in most of my income. On the other hand, the web site was bringing in the money without much time spent on it. The web site got to a plateau so I took the advice of the late Cory Rudl who said to build a site, automate it and move on to the next site. I now had 2 assistants and we started building more sites, one at a time.
When the dot.com bubble burst my freelancing revenues went way down as did the revenues from our sites. But we got better and better at building the sites and soon we were making much more from the sites than from our clients. We kept building and now we have over 50, running almost entirely on autopilot. As a bonus, I learned quite a lot from our own sites that has helped me help my clients.
Sometimes the sites earn more and sometimes less. But almost all are all making at least some money, and when one goes down another is likely to go up.
We got to the point where were were making about 80% of our revenues from our own web sites and other projects and the rest from our clients. The clients were 80% of our headaches for only 20% of our revenues. So I started to let them atrophy — we serviced them, but we didn’t look for new clients and if we lost an existing client we could live with that.
You might guess what happened next: our own sites started to tank due to increased competition and tougher search engine criteria. So what did we do? We kept the sites and we keep adding to them but now we are getting more into the client business again. We have a number of clients, each of which is basically a revenue stream.
Thus we have many revenue streams. If something works we focus on that. If our focus stops working so well or goes away we just shift our attention to something else that is working. And we keep trying to build and expand so that hopefully we will soon get to the next level, whatever that is.
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