Problems on How to Create Multiple Streams of Income
The concept of creating financial security through multiple streams of residual income is very appealing; you diversify your investment and business risk. However, when people jump into trying to build multiple streams of income without adequate preparation or thought, reality hits their face.
The idea may be great but the problem lies in its successful implementation. Instead of creating a relaxed lifestyle, they get sucked into a situation where they have to become hyperactive in trying to control and maintain their residual income sources.
The reality is that we live in a highly competitive and fast changing world. To succeed in any business – you need highly specialized knowledge. It is extremely difficult to compete in widely varying fields without adequate skilled knowledge.
“It is better to have a permanent income than to be fascinating” –Oscar Wilde
We are also limited by time to be able to implement different business strategies. There is a pressing need to balance our family, health, relationships, recreation and spiritual needs.
Happiness lies in balancing our needs correctly rather than focusing only on one aspect of life. Financial security is extremely important but it must not be allowed to dominate every aspect of our lives.
Financial success comes from focused attention on one specific outcome. The effort in creating multiple streams of income diffuses your focus and creates extraordinary demands on your limited time. It can cause undue strain and stress on your life; your chances of failure increase in proportion to your defused focus.
In order to succeed in creating multiple streams of residual income, you have to learn to reconcile two seemingly contradictory realities: how to focus and how to create multiple streams of income at the same time.
Most people find it extremely difficult to build one stream of residual income successfully during their lifetime. How can they be expected to create multiple streams of income? Let us examine this idea a bit further.
Is Creating Multiple Streams of Income the Right Strategy for You?
Creating multiple streams of income is not suitable for everyone. You must ask yourself the following questions to check if the strategy is right for you:
- Do you have the right knowledge and experience?
- Do you know the principles of time and technology leverage?
- Do you have any previous business or investing experience?
- Do you have a team of experts who can advise and assist you to create multiple streams of income?
- How important are multiple streams of income to you? Are you ready to commit your time and energy to creating multiple streams of residual income?
Remember that each income stream you create will need its own set of skills, expertise and experience. It will make demands on your time, energy and resources. You will need to pay a price in creating each multiple income stream…are you willing to pay the price?
The Wrong Way to Create Multiple Streams of Residual Income
The wrong way to create multiple streams of income is to get all fired up and start buying stocks, investing in real estate or jumping into internet businesses without any knowledge or preparation. This is a sure way to failure because you will spread your resources thin and cause undue strain on your system.
You have to learn to walk first and then run or you will fall flat on your face. When you are in the game of money, you can destroy your wealth quickly because in each field of wealth creation, you will be competing against experts. These people live and breathe in the space they have created. You will need to become an expert before you can compete successfully.
It is fairly simple to create multiple streams of income if you go about it systematically. It is a tough game but it can be made simple if you take the trouble of learning the ropes.
It is not a smart strategy to take undue risk. You can eliminate risk only through acquisition of the right skills and knowledge, and if you don’t have that knowledge, then you should either be willing to pay for that knowledge or team-up with people who have the expertise.
The Right Way to Create Multiple Streams of Residual Income
You can maximize your chances of success by taking the following steps:
Step 1: Become an Expert in One Stream
Select your first income stream with great care; it should be based in a field that you have knowledge in and are passionate about. Broad categories such as: real estate, business, paper assets or internet income are present for taking, however, it will be difficult for you to master a broad category.
Within each category, there are sub-categories. For instance, in real estate, you can become an expert in – apartment flats or buildings, single family homes, foreclosure properties, retail shops, industrial properties, office flats or buildings, motels, hotels, buying rundown buildings and making improvements, flipping properties, etc.—the list is endless. Each subcategory requires its own skills. Apart from sub-categories, you have to become an expert in one city or locality.
Step 2: Systemize the First Income Stream
Once you have created your first income stream, you must automate your income stream so that it does not require intervention on day-to-day basis. There will be some maintenance required but if you put proper systems into place, then the time required for maintenance can be minimized.
There is a saying that goes, “You must find a jockey first, before buying a business.”
You will need either good managers or technology to automate your business operations to create residual income for you. You have to find the right managers, business systems and also invest in right technology to back them up.
You have to master the skills of systemizing your business and investments in order to generate income streams that do not require your presence.
Step 3: Leverage Your First Income to Create Additional Streams of Residual Income
Remember: your first income stream is the most important one because you are going to leverage your knowledge and resources from this stream to build other income streams.
Once you have systemized your first income stream, you will free up your time to create a second residual income stream. The second residual income stream you create has to be intelligently leveraged out of knowledge, skills and experience gained out of the first income stream. Do not try and create a totally new income stream.
The second income stream may just be a repeat process of the first income stream. You can now make improvements based on your experience in creating the first income stream. You will also need lesser time, effort and money because of your experience. The returns from your second income stream will normally be much higher than your first venture.
Repeat the process again and again till market conditions do not change. Once you hit on a successful residual income formula, just keep refining and repeating it. Creating residual income can at times be a very boring process however, the money part is certainly very exciting.
Be warned: the human mind seeks excitement! It will ask you to try out new ventures and divert your resources from the project that is creating new multiple streams of income. You have to resist this temptation and remain focused on repeating and maximizing your success formula.
A stage will come when you will need to branch out and create new streams of residual income because you can’t risk putting your entire income source in one basket. This should be done without changing your field of expertise.
Robert Kiyosaki, bestselling author of “Rich Dad Poor Dad”, got out of the rat race through real estate before adding paper assets and leveraging the financial knowledge he gained from his investment business experience into a successful information publishing business.
Robert G Allen got out of the rat race through paper assets before leveraging his investing knowledge into real estate, and then re-leveraging that same skillset into information publishing business.
There is a pattern to creating multiple streams of residual income from the successful examples I have quoted above. You have to learn the base skills in one stream and leverage those skills later to create additional streams.
You have to learn to walk with one stream before running with multiple streams of residual income. You have to leverage your existing resources. This concept, in the corporate merger world, is known as ‘operating efficiencies.’ It takes less effort to operate each additional stream of income because they are all built upon the same foundational resources.
If you attempt to create multiple income streams by taking on different fields of activity, you will be creating mayhem instead of leveraging your resources; it is the sure route to failure. If you follow a step-by-step process as outlined in this book, you will maximize your odds of success.