Having multiple streams of income is essential to go through economical or personal storms. What it means is, even if we have a good job, we should develop additional streams of income to survive and thrive in hard times. This article is intended to give some ideas to enable it.
An income stream can be Active or Passive. Active income is the income earned from a job or business where we actively participate to provide service or products. Passive income is the income from an investment or asset where we do not actively participate in a full-time manner.
While selecting additional income streams, let us choose what works best for our individual situations.
1. Active Income
Unlike two decades ago when our school/college education determined our career, the recent growth of the digital platforms presents a flexible arrangement. It is allowing us to start something on the side and grow it to be a full-time venture (if we wanted).
Just for understanding, let us think about every dollar we earn using the following 3 steps.
- Identify an income stream
- Develop(if needed) and establish a new income stream
- Diversify with additional income streams
We do similar steps in a 9-to-5 job, where we are primarily selling our skillset and time to one customer, earning one income stream. ie. we stop at step #2.
On the other hand, as a freelancer or as an independent contractor, or as a micro-business, all three steps are repeated for multiple customers earning multiple income streams. Before the industrial revolutions, our ancestors more or less had the same thought process as above.
Some of us may have done something on the side already and have a clear idea of what we want to do.
Where do we start if we are not clear about what we need to do?
The following thoughts are provided to help us identify our path.
- Based on our work history or educational background, what can we offer to the market?
- What are the actions that come naturally to us, without putting in a lot of effort?
- Where are we spending most of our time during our leisure time? Is there something that we can help others in that area?
- What are we passionate about? Can we do something in that area to help others?
- Are we affected by any personal issue where we learned something? Can that learning be of any help to others?
Let us try listing all the ones we can identify. Based on the list we created, let us try to create a shortlist of 3-5 items that we can offer to the market. Also, let us identify target customers/audiences for our products or services.
We can design a perfect product or service based on our interests and background. But if it is not needed in the market or if there are thousands of similar providers in the market, then all of our efforts are for nothing.
So before we venture out, let us do an inventory of the market needs.
These days, most of the business or non-business operations are packaged into different projects or sets of defined requirements. These projects or requirement sets are executed by internal employees as well as outside individuals. It is true for services as well as for products.
We can classify them broadly into 3 groups:
a. Providing Business Services
b. Providing Skilled Trades or Non-Business Services
c. Selling Consumer or Digital Products
Internet search tools(Ex. Google) and social media platforms(Ex. Facebook) may give us a broad idea about what is needed. But to narrow it down, we have to explore various online marketplaces and platforms.
The growth of online marketplaces and platforms has been enormous over the last 2 decades. It will be overwhelming to search through all the platforms. For now, let us take one or two platforms listed under our area of interest and search through them. The goal of this search is to evaluate what we want to offer and to identify a unique selling proposition for us.
While researching these marketplaces and platforms, let us take advantage of the SCAMPER technique used by companies for designing new products by improving or changing an existing product or service. It applies to any field.
- Substitute – Can we substitute an existing product or service for something else?
- Combine – What can we combine?
- Adjust – How can we adjust an existing product or service?
- Modify – Could we modify it?
- Put to another use – Can it be used for something else?
- Eliminate – Is there a reason why we should eliminate it?
- Reverse/Rearrange – Can we change the order?
Once we have identified our area of interest, let us make sure that we include the primary lessons from the difficult economic times of the past,
1. Small and frugal:
- Whatever we want to start, let us start it as incremental progress. One of the well-known product design companies engaged by large enterprises is IDEO. This company designed Apple’s first mouse, IKEA Kitchens, Western Digital Hard drives, to name a few. A core principle of this firm is Human-Centered Design, where working with end customers is central to the development. ie, delivering a rapid prototype and evaluating customer feedbacks for development. This principle could be very useful for us also. Instead of coming up with everything in a vacuum, we can deliver a sample product or a complimentary service, get our customer feedbacks, and fine-tune our final offer. This process increases the probability of our success.
- Let us first try a service-based offering. Compared to a product offer, it would have a low starting expense. If we are to go for product offers, let us try to minimize the starting expenses as much as possible.
2. Essential and Local:
- During hard times, people tend to focus on essential products and services. So we have to offer something essential to succeed in the marketplace. Even if we are offering something non-essential to the majority of the population, there could be a small segment of the population to whom our products or services may be essential.
- In good times, a simple email or a social media introduction may be sufficient. But during economic hard times, trust breaks down quickly, “not what you know, but who you know” becomes important. So it is always necessary to offer something to a local network of people.
A sample of available platforms in various areas is listed below. But please note that new platforms are coming up every day. It is impossible to cover all the available platforms in a single article. Please use the following list as a means for evaluation.
a. Providing Business Services:
- Freelancing Platforms – Fiverr, Upwork, Freelancer, Peopleperhour, Toptal, Guru, Outsourcely, Workhoppers, Wonolo, Usertesting
- Digital Designs and Development – 99designs, Envatostudio, Designhill, Redbubble
b. Providing Skilled Trades & Non-Business Services:
- Household Services – Handy, TaskRabbit, Thumbtack, Lawnlove, Taskeasy
- Tutoring Services – LearnToBe, Skooli, Wyzant, TutaPoint, Mytutorlab, ClubZTutoring, classgap
- Coaching Services – Udemy, Udacity, Skillshare, Couchup, Noomi, CoachMe, Verbling
- Personal Care Services – Care, HouseSitter, SitterCity, UrbanSitter, Instacart, Postmates
- Other Services – Yourmechanic, Instacart, FancyHands, Zirtual, Bellhop
c. Selling Consumer or Digital Products:
- Consumer goods – Etsy, Bonanza, Ecrater, RubyLane, OfferUp, Poshmark, Mercari, Amazon Seller, Facebook Marketplace, eBay
- Electronics /Digital Goods – Swappa, Glyde
- Photography – Gettyimages, Shuttershock, Adobe Stock, Alamy
- Design and Sell – Zibbet, CafePress
- Dropshipping: Amazon, Shopify, Wix
We will see more details on these platforms in future articles.
2. Passive Income:
No income is completely passive. The following options also require some amount of our time and effort, in addition to a starting capital.
There are several ways to earn passive income. We can classify them broadly into two groups:
a. Upfront investment of Money:
These options require us to have starting capital.
- Dividend stocks
- CD or Bond Ladders
- Annuities
- REITs
- Renting homes or space
- Renting tools or equipment
- Peer-to-peer lending
b. Upfront Investment of Time and Effort:
These options require a minimum amount of starting capital but require a considerable amount of our time and effort.
- Affiliate marketing
- Informational products – Online Courses, EBooks
- Software products – Apps
- Blogging or YouTube channel
- Digital products – Designs, Stock Photos, Music
Based on our investment capital and available time, we can opt for any of the above options.
If we do a simple internet search, we can find thousands of articles on how to invest in any of these streams. But what we want to remind in this article is to be prepared for hard times.
- In both the groups listed above, let us be as conservative with money as possible. It is better to avoid huge upfront investment costs when we start something new.
- For investments requiring the upfront investment of money, let us consider all the risks involved. For example,
- Dividend stocks – The invested capital value may drop in a bear market
- CD or Bond Ladders – Inflation may rise higher than the yield
- Renting homes or space – Income instability for tenants and rent moratorium (similar to what happened during Covid-19) can happen again.
- Concerning digital products or earning money online, the risks are considerably lower. But still, we are relying on different digital platforms and any policy changes by those platforms may affect us as well.
Similar to active income streams, these passive income streams also have several online platforms developed for them. They are listed below. A sample of available platforms in various areas is listed below. We have to research and choose based on our area of interest.
a. Requiring an upfront investment of Money:
- Renting House/Space – Airbnb, Vrbo, Spacer, Vacasa
- Vehicle Ridesharing – Uber, Lyft, HopSkipDrive, AmazonFlex
- Vehicle Advertisement – Wrapify
- Renting Personal Items/Tools – FatLlama, StyleLend, Kwipped
- Real Estate Funding – Groundfloor, Fundrise, CrowdStreet, Roofstock, RealtyMogul
- Peer-to-Peer Lending – LendingClub, Prosper
b. Requiring Upfront Investment of Time and Effort:
- Digital Courses – Podia, Teachable
- Digital Products – Canva
- Photography – Gettyimages, Shuttershock, Adobe Stock, Alamy, DepositPhotos
- Affiliate Marketing – CJ Affiliate, Pepperjam, ShareASale, ClickBank, Amazon Associates
Final Thoughts:
Before we go, let us remember one fundamental thing. It is normal human behavior to come up with many excuses before beginning something new. We have seen several of them like below,
- I do not have time
- I do not have any skills
- I do not have any spare money
- It is too hard
It is difficult to argue against these points. But let us remember that few small steps we can take may make the difference between thriving and broke. It is time to look at all the possible options to multiply our income streams. So let us start now and start small.
Thank you for reading. Please share your thoughts below.