Diversify Your Sources

Many hands make work light.

When all you have is a hammer, everything looks like a nail.

The world we live in today is full of all manner of uncertainties. In the past, you would confidently choose a career path and stick to it until you retire. It was not uncommon to find someone who worked for a singular company or organization for their entire professional life. Nowadays it is the exception rather than the norm.

What this means is that you can never be too certain that where you earn your revenue from right now is going to remain the same forever. Retrenchments happen, companies close down or downsize, acquisitions and mergers happen all the time some of which have an impact on employee numbers. Because of these dynamics, you are better placed when you have a diversity of skills and diverse revenue streams.

Have you ever met a person and you are not sure what to talk to them about from a professional sense? Have you ever found yourself in a situation where you are in the presence of someone who clearly has no need for what you deal in? What did you end up talking about? For many people, that becomes the end of the conversation. However that is not the way it should be. I have been there as an individual selling insurance where I have met people who have no time of day to listen to what anyone has to say when it comes to insurance. At such times, you feel frustrated because the only tool in your tool box is a hammer. Despite seeing that you needed something else to talk about, you remain stuck because you hadn’t prepared yourself for anything different. From these experiences I learnt that it is important to have more than one revenue stream you are working on. With that, you will be able to switch your conversations around and remain relevant to the discussion at hand.

How many revenue streams do you have? How many are you aware of? Sometimes we don’t diversify because we simply don’t have the insight into the different revenue streams. I will highlight a few of them here just to give you an idea. A majority of us are familiar with employment income because we work at a job of some kind. Salaries and wages are a revenue stream many of us can relate with. Apart from that, we also have income generated from business in the form of profits. Those who invest in stocks and bonds and other financial instruments also earn in the form of interests, dividends and capital gains. When you produce works whether in form of books, music, inventions, patents and the like, you are entitled to royalties which make up another source of income. With real estate, you benefit from rental income. This also applies to any other assets that you can let or lease. I believe this opens your eyes to the many ways you can earn or diversify your income. Sometimes you don’t even need to do something different from your current occupation. People in the medical field do a lot of locum work which enables them to earn more than they would if they focused only on their main job.

Why diversify?

Putting all your eggs in one basket is a risky strategy. If something happens to that basket, you will regret your choices. There is nothing as sad as investing all your energy in a venture then it goes belly up overnight. This can have an adverse effect on your life for a long time to come. We live in a day and age of constant disruption. The local taxi business was rudely disrupted by the entry of Uber and other ride-sharing platforms. The rise of artificial intelligence and machine learning means that the assurances people used to have about their jobs are no longer there. Your job can easily be taken over by machines which rarely need time off or fall sick. Think about what you do. Is it possible that your company can find a way of automating it? If your answer is yes, then you should know that you run the risk of being replaced anytime. Now is the time for you to do something about it. Think about where else you could earn your living from if the worst hits you. Is it your skills and expertise you need to upgrade or do you need to think about getting started on another side hustle that will get you to where you need to be?

Another reason to diversify is that you need to make your financial backbone as dynamic as possible. When you have income coming from multiple sources, it is easier to keep living your life even if one goes sideways. When everything is from one source, your financial health is hanging in the balance. One wrong move and you are thrown into disarray.

You do not have to be involved directly in each of your income generating activities. You should focus on what you are good at (I am not an advocate of multitasking), while you engage others in you other income generating activities. The super-wealthy have normalized the idea of buying other people’s time and expertise to help them carry out their projects. If you want to make big bucks, you must become comfortable with entrusting others to help you do your thing. You must learn the art of building systems and populating them with the right people to get the job done. Another approach is to be able to automate what you do so that it does not need you. This will free up your time so that you can go on to the next thing. A good example would be me hosting my courses on a platform like Teachable. This would free me from the need to sit down every single time and teach someone. It would be easier to send them on to the platform where they can learn at their own time and pace.

Whatever you choose to do, ensure that you are making progress in increasing and diversifying your income. It will serve you well in the long run to know that when one stream dries up, there are still 5 or 6 more bringing in revenue. Nothing is as liberating financially as to know that you have a strong, diverse backbone.

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