7.1 Steps to Create Multiple Streams of Income Serial entrepreneur Hal Elrod gives his personal formula for achieving greater financial security through diversified revenue sources.
Our biggest sale — Get unlimited access to Entrepreneur.com at an unbeatable price. Use code SAVE50 at checkout.*
Claim Offer*Offer only available to new subscribers
Opinions expressed by Entrepreneur contributors are their own.
"Don't let the opinions of the average man sway you. Dream, and he thinks you're crazy. Succeed, and he thinks you're lucky. Acquire wealth, and he thinks you're greedy. Pay no attention. He simply doesn't understand."
-- Robert G. Allen
At age 25, I began planning my exit strategy to leave a lucrative career in sales to become an entrepreneur and pursue my passion: empowering people to maximize their potential and make significant improvements to their results.
While still in my sales position, I started my first business -- and my first additional stream of income -- serving as a life and business success coach. In the past nine years, using the exact formula below, I've been able to add nine additional streams of income. These have involved authoring books, speaking, private and group coaching and staging live events.
For anyone who values financial security and ultimately desires financial freedom, creating at least one additional stream of income is no longer a luxury. It has become a necessity.
Diversifying your income stream is crucial to protect yourself and your family against the unavoidable ups and downs of economic and industry cycles. Because of the financial risks that come from relying on one source of income, such as a job or a business, consider creating at least one or more additional streams to generate cash flow.
Your additional income streams can be active, passive or a combination of the two. Some may pay you for doing something that you love (active), while others can provide income for you without your having to do much of anything at all (passive). You can diversify your income streams among different industries to protect you against major losses during downturns in one market and allow you to financially benefit from the upswings in another.
This truly is one of the not-so-obvious secrets of how the wealthy become -- and stay -- wealthy, which unfortunately isn't taught to the masses. The good news is that it's not magic. It's not even complicated. Creating your next stream of income is a simple, step-by-step process, which you can arrange to start bringing you monthly income faster than you might realize is possible.
Related: The 3 Decisions That Will Change Your Financial Life
ShutterstockEstablish financial security
Now, this idea isn't sexy, but it's imperative: Don't focus your time and energy into building a second stream of income until your primary source is secure. Whether you have a day job or own your own business, focus on establishing and securing a primary monthly income that will support your expenses before you pursue other steps.
Clarify your unique value
Every person on this planet has unique gifts, abilities, life experiences and value to offer -- and be highly compensated for. Figure out the knowledge, experience, ability or solution you have that others will value and might pay you for. Remember, what might be common knowledge to you isn't for other people.
You and your personality differentiate your value from that of every other person on earth. Many people will resonate with you (and your style) better than they will with someone else offering value that's similar or even the same.
Packaging is how you can differentiate your value. When I wrote my book The Miracle Morning, I had to overcome my insecurity that waking up early wasn't exactly something I invented. Would there really be a market for the book? But readers shared that the book was life-changing in the way the information was presented. It was written focusing on how to significantly improve any area of life by simply altering how a person starts the day.
Knowledge is the one thing you can increase very quickly. As Tony Robbins wrote in Money: Master the Game, "One reason people succeed is that they have knowledge other people don't have. You pay your lawyer or your doctor for the knowledge and skills" you lack.
Increase your knowledge in a specific area, and you'll simultaneously increase the value that others will pay you for, either to teach them what you know or apply your knowledge on their behalf.
Related: Create Side-Hustle Income by Teaching What You Already Know
Identify your market
Determine whom you are best qualified to serve. Based on the value you can add for others or the problems you can help people solve, who will pay you for the value or solution you can provide?
Build a community
A turning point in my financial life came when I heard author and self-made multimillionaire Dan Kennedy say, "The most valuable asset you have is your email list, so focus on growing it."
I don't like to think of my email community as merely a list of names but rather as a group of individuals, each with their own hopes and dreams.
Here's how you can build your community:
Acquire an email-marketing program (good: AWeber, better: Infusionsoft).
Get a program to create an opt-in page (good: LeadPages.com, better: Kajabi).
Create an added-value deliverable such as a free report, an ebook, an audio or a video training so that people will happily provide their email address in exchange for the value you provide.
Ask your community about their desires
You can either guess or assume what people desire and need, invest valuable time in creating it and then hope your guess was correct. But remember: Hope is rarely the best strategy.
Or send an email to members of your community with the link to a survey (using a free service like SurveyMonkey), asking what they want or need help with in your area of value that you've identified. Ask open-ended questions to help you later brainstorm or offer multiple choices if you've already thought about what you can provide.
Create a solution
After your community members tell you what they need, it's your golden opportunity to get to work and create it. This could be a physical or digital product (a book, an audio, a video, a written training program or software) or a service (dog grooming, babysitting, coaching, consulting, speaking or training).
Plan the launch
Think about how Apple rolls out its products. The company doesn't just throw a product on the shelf or its website. No, the company makes it into an event. Apple builds anticipation months in advance, so much so that people are willing to camp out in front of stores for weeks to be the first in line.
Do that. To learn how, read the definitive book on the topic, Launch by Jeff Walker.
Shutterstock7.1. Find a mentor.
The best way to cut your learning curve and achieve a specific result is to find people who've already achieved what you want and then model their behavior. Rather than try to figure it all out on your own, find someone who has already achieved what you want, determine how this person did it, model this behavior and make it your own.
While you might seek a relationship with a face-to-face human mentor, you could also hire a coach, read a book or articles by an expert or do web research. After some consideration, you may decide to make this your first step.
Schedule time to begin implementing these 7.1 steps, one at a time, and within months you can be enjoying the benefits, the perks and the financial security and freedom that comes from having multiple streams of income.
