Hedging Your Risks Through Multiple Revenue Streams

December 23, 2007 | No Comments

With a regular job the risk of not being able to pay bills is minimal as long as your spending is under control. But with a work from home business and the fluctuations that may occur with the business model may leave you in a soup if you have not planned well in advance for the vagaries of the business. In fact no business is totally fool proof and there are times when you may see a slack that may occur.

The slack in businesses can happen due to a number of reasons. New taxes can be levied, competition can get tougher, better technological options can surface or the market may get saturated. The factors that can affect the final profits that you may be able to make can be numerous and there is no way that you can preempt and control all of them.

What option then do you have to be able to ensure that you are able to manage you expenses and maintain a certain basic lifestyle? One option is to ensure that you have multiple revenue streams that you can tap into. The concept of multiple revenue streams is a simple one and can be understood by taking the example of a river. A river has many tributaries and water is fed into the river from these tributaries. Each tributary adds to the total volume of water in the river and in the eventuality that a particular tributary dries up and cannot add water into the river; the total impact of the loss of water is not large.

Similarly, if your income sources are diverse, the flattening of revenue and profits from one source shall not dry up your total income. You shall still have other revenue streams that will enable you to pay your bills and maintain a basic minimum living standard. No doubt the total profits will reduce but you will have the comfort of knowing that the profits have not totally dried up.

Having heard an argument that there should be various revenue sources when you are working from home, you may counter argue that diversification can lead to being a ‘jack of all trades and master of none’. This maxim is definitely true and should be kept in mind while choosing your revenue streams. Lets take the modern day newspaper for example. The newspapers make money from selling the newspaper, publishing advertisements in it and also by selling classified space. Some newspapers also make money by charging a fee for online content. This hedges the risks for the business.

And if you notice, you will see that the revenue sources are all linked in a way. And therefore, to avoid doing too many things while maintaining multiple revenue streams, you should choose options that are linked in some way and augment your position as a specialist. For example, if you are a web designer and freelance for other companies, you may decide to develop a short course and teach it in a nearby university. If you are a writer and are working on an ebook of your own to sell on your website, you may want to also write for other professionals who need ghostwriting from time to time. You can also teach speech writing or resume writing skills to students and professionals.

Alternate streams of revenue can be created by giving the idea some thought. You don’t need to be terribly creative about it. All you need to do is to think of the basic skill that you have and the manner in which you can use it differently from what you are already doing. If you are good at baking and supply cookies, cakes and savories for birthdays and daily consumption, you may think of writing the recipes in a book and selling it on the Internet. If you are working as a consultant with various companies you could transfer your skills to the merging professional in colleges and institutes.

You also need to realize that the development of multiple streams is essential because if you have one revenue stream, you tend to overuse it to such an extent that the revenues dry up eventually. If you have a website that attracts traffic, you will be tempted to put as many ads as you can get on the homepage and that will lead to high clutter. Eventually the individual who visits your site may see nothing but a bundle of ads and will not convert. This may lead to a situation wherein advertisers dry up and desert your site. Such eventualities should be avoided by being judicious and arranging for alternate means of revenue for yourself.

Written by Vishal P. Rao of Work at Home Forum.

Posted in Work from Home Business