Day 25 — How to build a business with multiple income streams and business angles.
You’ve no-doubt read articles stating that if you run a business that is completely dependent on your time you don’t have a business — you have a job. Likewise there’s the prevailing school of thought that the most successful entrepreneurs build multiple sources of income. But How?
What I’ve found is that they don’t address how you should actually go about building those income streams. Having multiple streams is all well and good — but without the how it’s all just a idea. What I decided I needed was a plan. I plan on how to build multiple streams as quickly as possible.
I’ve broken it down into 3 strategies that I could use to build multiple streams;
Spray ’n’ pray
Build and flip
I think my main focus is going to be on leverage where I can. But if I need to change my approach, then I’m more than comfortable in doing that.
Spray ’n’ pray
This is a term borrowed from video games where accuracy is not the priority. In simple terms it means firing a whole lot of bullets in multiple directions in the hope that something connects, and that an enemy is critically wounded or killed. This same sort of approach can be made to business — a number of market tests can be constructed, tested and then products or services built based on the results.
This essentially means just trying a series of business angles simultaneously, and then seeing what the results are. You could offer consulting services in various different fields. If you get better results from one field in particular, then you double down on that one. Choose the winners and drop the losers. It’s a pretty simple approach, but the main drawbacks are that it is going to take time, money & effort to achieve.
Having a very short feedback loop is very important with this type of approach. If you’re using advertising to test out multiple streams, then you’re going to want to cut off losers as quickly as possible, as otherwise you’re likely to find yourself in a deep dark hole.
If ever there was a buzz word to sum up this approach—symbiosis is it. While you’re probably familiar with parasites in the animal world you may not be familiar with the symbiotic relationships. Parasites live off, and often require a host in order to survive. They benefit from the host — at the host’s detriment. Symbiotic relationships conversely involve a pair of animals where both benefit from each other. Again — in some cases the symbiotic can’t survive without each other any may have evolved alongside each other such that their fates are forever intertwined.
In business, a symbiotic relationship can be engineered from within the business by interconnecting various business processes. These individual processes can then be split off into separate business entities — which are dependent on each other, but can also be adapted to serve other (external) businesses as well. This is essentially an extreme version of cross selling, which is applied both within a business enterprise and externally to customers.
Some businesses have built their entire income from an initial symbiotic relationship. Tools that were developed to assist with an internal business process are then offered to external companies — spawning an entirely new income stream. Wholesale companies create distribution arms of their businesses — and then offer those distribution services to other businesses. Amazon created AWS in order to service it’s own IT network, and now they sell their cloud computing services to the entire world.
This is my preferred approach. If I am working with a business, and providing a tool and/or service there are connected tools/service that I have to utilize in order to get the job done. These connected tools offer a great opportunity to leverage and pivot into new business areas. If we need them, then other businesses will probably need and benefit from them as well.
Build and flip
If you can’t find customers, you can always try to create them yourself. This is much more of a long term strategy, and would take considerable effort to pull off, but it has been done in the past.
If you can create several small scale business that is dependent on a core business that you control — you can essentially set yourself up with a captive audience.
Believe it or not this is the strategy that has been employed by some well known franchises. Individual sites are set up and run profitably by the central franchisor and then sold off. The new franchisee goes on to run the site, all while paying the franchisor for the privilege by way of licensing and marketing fees.
In this sense the franchisor has created it’s own customers (the franchisees) and essentially has them as a captive audience — with the benefit of an ongoing fee.
Cash Reserves: $15,050 USD
Total Messages Sent: 50(0 today)
Current Leads: 2 (No change)
Current Customers: 4 (Another customer invoiced)
Total Money Spent: $1,018 USD (Paid more bills)
Outstanding invoices: $2000
Revenue Received: $6,068
Feeling: Frustrated — but I can see the end in sight.
Thoughts: Should be back to it tomorrow..