How to Maximize Your Self-Employment Income With Diversification
Self-employment can be a great way to make money, but it can also be daunting and provide inconsistent pay. To make sure you’re doing everything you can to maximize your income, you should consider diversifying your income sources and implementing savings strategies. Meaning, create multiple streams of revenue coming in from different places (rather than relying on just one) and making smart investments like a 401K.
Below are four ways to maximize your self-employment income with diversification and savings strategies. Not all of these strategies will work for everyone, so apply what works for you and your current circumstances.
1. Look for new revenue streams.
One way to diversify your income is by buying multiple streams of revenue. If you’re providing a product or service, there’s usually more than one customer who wants it! This means that eventually, you could start looking for other companies who would want the same product or service and make deals with them to sell their wares.
In addition to finding new partners and revenue streams, another way to increase your income is by reducing your costs. You do this by getting rid of expenses such as unprofitable customers and unnecessary business overheads, rent and running costs, reducing production costs, etc. The specifics will be different for each business, but the outcome will be the same: more money in your pocket.
2. Increasing average transaction size in your business.
There are many ways to increase the average transaction size in your business sales. One way is to focus on selling higher-priced items. You can also try bundling products or services together to create a more expensive purchase. Another strategy is to upsell customers on additional products or services they may not have originally planned to buy. By implementing one or more of these strategies, you can help your business bring in more revenue by increasing the average transaction size.
3. Save money through retirement investments.
A 401K is an investment account that you can contribute to with pre-tax earnings (meaning your contributions will be deducted from your paycheck before taxes are taken out). The money in the account grows tax-deferred, meaning you don’t pay taxes on any of the gains until you withdraw funds to use them. If you’re self-employed and don’t have access to a retirement plan through your job, establishing wealth management for 401k rollovers may be a good option for you. With an established 401k and your wealth management portfolio underway, you can contribute thousands of pre-tax dollars per year to your retirement.
4. Make sure you’re getting paid what you deserve for your work
As a self-employed business owner, it’s essential to make sure you’re getting paid what you deserve for your work. Here are a few tips to help make sure you’re getting the best pay possible:
1. Know your worth
It’s essential to research what other people in your field are charging, so you can make sure you’re getting a fair wage. This number might increase as you gain more experience and improve your product or service offering.
If your current client is not paying you what you think you’re worth, consider discussing a new budget with them or whether they’re worth your time. If they push back on a new budget, it might be time to part ways and look for a new client who will appreciate your work and pay you what your skills are worth.
2. Negotiate
Don’t be afraid to negotiate with your clients; it’s essential to ensure that both parties get what they want. Throw in discounts and upcharges where appropriate.
3. Stay organized
Keep track of your work hours and invoices, so you can be sure you’re paid for all the work you do. Staying on top of invoices and work orders while managing your company can be tricky, but it’s essential to make sure you are paid for the work you’re doing.
Being self-employed comes with many struggles, including maintaining a consistent income. But, diversifying your income streams will help to ensure that even if one source of revenue dips, there are other sources available to back it up. Introducing new revenue streams, increasing transaction sizes, investing in retirement, and getting paid what you deserve for your work are all ways to secure your finances.
Don’t forget; your business had to start somewhere. Applying these techniques will help you expand upon your company in future years. Remember, money compounds if invested correctly. So, the best bet is to use these strategies and start saving and making more money today!
Originally published at The Daily MBA.
