Multiple Streams of Revenue
Support your business venture with multiple streams of income.
When you go into business for yourself, it’s likely you’ll run into times when you’re just not generating the income you expected. In fact, it’s entirely likely you’ll run into times where there is no income – no income at all. Why, you ask? There are loads of reasons. Business start-ups can be far slower than planned which means a delay in income. For some firms, growing the customer base is slow, again, delaying income. Some businesses are seasonal while others rely on landing a ‘big account’ and it just hasn’t happened.
To smooth the financial ups and downs of operating your own business, many people try to have what is referred to as multiple streams of income. If your company isn’t bringing in sufficient capital, other income resources can take up the slack. When your own business runs into a seasonal downturn or is constrained by the economy or for any other reason is not generating the necessary capital, multiple income streams add to your income.
The federal government and the IRS recognize three types of income:
- earned income from a job or business,
- passive income from business sources for which you do not work regularly, and,
- portfolio income from personal investments. Passive and portfolio income can be paid regularly, eg, monthly, quarterly or annually.
Passive income can come from a wide range of sources including rental of owned property, book or patent royalties, e-book sales, website advertising, and certain types of ongoing sales commissions. Establishing several sources of income in advance of a business start-up can help to ease the financial burden many entrepreneurs encounter.
See Also: Money Matters: Money Ideas: Multiple Streams of Revenue