# Multiple income stream, scaling and the riches?



## Causalien (Apr 4, 2009)

A few years ago, I was convinced by one of my "buddy to riches" that the way to do it is through multiple streams of income. Initially, it started as making something every month that earns $20/month of revenue and let that accumulate, but as time goes on, I eliminated a few of them and ended up with the 4 I have now. My situation is in an awkward balance. Call it first world problems if you like, but since we are all here to learn to get richer, I might as well spill it: I cannot starve to death, but the wealth accumulation is also too slow. $100 when I only have $1000 net worth was great, but $100 at $10000 net worth is nothing.

I am of the opinion that this idea doesn't scale and I will be better off concentrating on one. Currently, if I want to grow any one of the 4 streams, I need to spend full days working on the idea, if I were to spread to all 4, that'd mean about 1 day per idea and before I know it, the week is gone. People say passive income is great, but often neglects to mention the upkeep part of any money making scheme.

So my question is, is this the way to riches and I am just not working hard enough? Or are people better off focusing on one idea once a comfortable base is established?


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## avrex (Nov 14, 2010)

I would work to develop 1 of the 4 ideas further.
Set a reasonable time limit on the project (i.e. x number of days/months) to see if you can further advance the income on that 1 project.

Once the time limit expires, I would move on to the next project.
Best wishes to you Caus.


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## kcowan (Jul 1, 2010)

You need to focus on leverage to enable you to handle multiple streams. Use other peoples' time and money to make money.


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## Causalien (Apr 4, 2009)

Kcowan, I'll need some example of this.

I can see using other ppl's time, but I have to pay for them. Or getting investor money, but they are buying for my time. Combining the two would theoretically be what you meant, but I would still spend as much time pitching ideas than increasing revenue.


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## kcowan (Jul 1, 2010)

An example is that, if you are using up all your time, you start mentoring others to do that job for you. You focus on the highest yielding activity (pitching ideas). And you get the labour rate down that way, maybe even charging people to get the training. And you offer some incentive to keep them connected to you even when they are masters.


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## rookie (Mar 19, 2010)

cause, as you mentioned, if i wont starve to death, then i would pick the one i would enjoy doing the most. 
another note of caution is that technology moves so fast that sometimes, a great idea today, can be worthless very soon. so if you are doing things part time, you will not have the momentum to encash the potential returns before the product/service is rendered obsolete.


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## Mall Guy (Sep 14, 2011)

Causalien said:


> . . . Initially, it started as making something every month that earns $20/month of revenue and let that accumulate, but as time goes on, I eliminated a few of them and ended up with the 4 I have now . . .


well, I'm not sure I understand what your doing ??? By "making something" do you mean a computer program, a craft item, custom woodworking . . . scale comes from raising the minimum return on a project - early days $20/month was acceptable - so now maybe you only look at a project that return $50/month (you pick the number). A focused specialty, where you are viewed as an expert, commands higher returns . . . as long as the skill set remains in demand.


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## Causalien (Apr 4, 2009)

Mall Guy said:


> well, I'm not sure I understand what your doing ??? By "making something" do you mean a computer program, a craft item, custom woodworking . . . scale comes from raising the minimum return on a project - early days $20/month was acceptable - so now maybe you only look at a project that return $50/month (you pick the number). A focused specialty, where you are viewed as an expert, commands higher returns . . . as long as the skill set remains in demand.


In your example, it'll be something like custom woodworking, except I make it so that they are mostly automatic. i.e. I start out making them myself, then I develop a machine to do it for me. Now if I want to go forward, I need to invest time to improve on the machine or I can invest capital to make a copy of the machine. And if I follow along what rookie is saying, have someone working for me to do the improving and copying. While getting a poor sap to pitch in his money.

All 4 ideas resides in different industries so that when one fails, the others are mostly intact. Take the stock trading algorithm for example. Since I've mentioned it before, it is no secret. Does the job for me, is consistent but sadly, doesn't scale with amount of capital injected due to the small total volume of the niche market it latches onto.

So things developed, and everything started with $20/ month in mind. And I slashed and hacked the other projects so that the 20% (4 projects) that makes 80% of the money remains because I am too lazy and the pool in the summer is too attractive.


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## Just a Guy (Mar 27, 2012)

Is that $20/month above the cost of your time, or are you lying to yourself about profits?

If you are actually making passive income, then there may, or may not be ways to scale it. For example, you could hire lower cost labour to make the products, produce more and thus increase profits.

Of course, if there is no market for the increased demand, then there is no point in scaling production. Your choice then is to lower costs or find a more profitable, higher demand product.

100 units producing $20 is the same as 1 unit which produces $2000. Many times, the more profitable products take less time to push, but the lower volumes scare people.


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## Causalien (Apr 4, 2009)

They are now mostly self sustaining. otherwise there's no point in automation. 

Time cost is relative. With initial development time being huge and as the passive income grow, my worth per hour grow. So it was worth the time sink when I did my first project. Not so much now if you measure it this way. 

But I just want to build. I don't really mind the work. Life is boring otherwise.


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## donald (Apr 18, 2011)

I think(generally)your best off focusing on the one income stream out of the 4 that has the most promise and focus solely on that.Better to have one ''bigger & growing'' stream than 4 smaller one's.otherwise you'll be scatter brians.Along the lines of-he who carries too many baskets must put one on his head and if one basket falls all other's are in jepordy.

Most people that are sucessful focus on one thing and put all there concentration in it(i think this holds true).That would be the safest bet.and once you start hiring-- each employee added is a new income stream(or machine)build your income streams off one idea/avenue and multiply that way.Maybe offer your employee(s) piece work rates(so you have a easier fixed amt of labour attached to each item-perfect if your selling unit based products)and you know how much your mark-up(profit) is(instead of fumbling around with hourly pay/salary)Set-up a system that is scaleable from the onset.Look for one or 2 big clients right away*team up with* that need your services(so you don't have to ''sell'' always/forever)network that way,through and around there network(then branch out to outer sales along side your bigger clients).Then you can start multiplying money on the operations side(buying your bulk cheaper from your supplier's ect ect)If it's(similar to ''woodworking").That's what i would do.Sounds like you could plan/build this way with your product.What type of product/machine are you selling/building?who are your clients?


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## Just a Guy (Mar 27, 2012)

Well, the other thing to consider is selling off the successful ones you don't want, or even all if you think they are too small, and investing the capital into a new, higher margin one. Business flipping can be a profitable way of working...most franchises have people who make fortunes starting the business and then flip them when they become stable to start the same franchise somewhere else.


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## Rusty O'Toole (Feb 1, 2012)

The Bill Gates Computer Software and Storm Door Company..... The Donald Trump Real Estate Development, Ice Cream, and Athletic Shoe Company..... The Warren Buffet Stock Investing, Car Wash and Self Storage Company.

The best, most successful investors and business people seem to stick to one thing. They may branch out into other fields but only grudgingly, if the opportunity is too good to miss, and is in an allied field.

Like Donald Trump who went from a Manhattan hotel, to Manhattan commercial and apartments, to Atlantic City hotel and casino investments. All represented real estate fix up deals and all entered into after much research and analysis. He did not go into anything he was not familiar with.

Same with Warren Buffet. He invests in many businesses but always from the standpoint of the value investor. He carefully analyses each investment and buys only the best and safest. He does not want to run any of the businesses he invests in, he leaves that to the experts. In fact he has said many times that he prefers to invest in businesses any dummy can run because sooner or later, a dummy will be running them lol.

Bill Gates of course is famous for computer software and nothing else. When he started I did not think there was that much money in computer software. I was wrong. Lucky for him, he did not take my advice to branch out into a few sidelines in case the computer thing didn't work out lol.

In other words if you have one good business or investment idea that is enough. If you don't, having 4 or 5 bad ideas is not the same. Pick the one you like the best or the one that draws you to it, and become an expert on that. Stick with it until you master it, or until you find out it will not take you where you want to go.

It is VERY hard to be an expert in even one field, by that I mean being good enough at any investment or business to make money at it. To do 3 or 4 really well at the same time is impossible. You will only kill yourself if you try.


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## Causalien (Apr 4, 2009)

Specialization and focus seems to be the theme nowadays. I still remember a time when putting "multitasking" in your resume is a must. But I think I am shifting towards focusing on one thing now, however it does not mean that the original premise is wrong. The multiple income stream idea works and is giving me a comfortable life, but it is not enough to be great.

Speaking of multitasking, Elon Musk is probably a good example of success with this method. Is this method an outlier? Did anybody else you know of succeeded with this path instead of the focus path?


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## Rusty O'Toole (Feb 1, 2012)

The multiple stream of income idea is more or less bullshit. The first I saw it was a book, Multiple Streams of Income by Robert G. Allen the former real estate guru. I say former because he went bankrupt then came out with the multiple streams book.

Another one who is big on multiple streams of income is Robert Kyosaki another obvious phony. I have read his books too, and if you follow his advice you will get hurt badly. His first book was total bullshit written by someone who obviously knew nothing about business or investing, but told a very plausible story. His later books have a little bit of merit. Once he got the dough from his first book he did learn a little about handling money. But he is still all about scamming the suckers.

The reason I say "more or less" bullshit is that the main thrust of the idea is bullshit. You will do better to concentrate on one thing. But you can still diversify your investments. Just don't try to juggle them, or be an expert in everything at once.

In my case, my main investment for the last 35 years has been real estate. That is what I concentrated on. Now I have only a few rental houses so that takes a minimal amount of time. I also have some gold and silver in a safety deposit box. That requires no care or effort, I regard it more as insurance than an investment, although it has done well over the last 5 years, even though I never look at it.

Now that those things are set, I am learning about the stock market. But note, I did not jump into 4 or 5 things at once. I did one thing, mastered that, then either got out of it, or set it up to take minimal effort to run.

That is what diversification means. You might own your own home, have some insurance policies, possibly some precious metals stashed away, and your stock portfolio. That would make sense. Trying to run 4 businesses at the same time, does not.


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## Rusty O'Toole (Feb 1, 2012)

As far as Musk goes, it appears he started his different ventures one at a time, got other people to run them, then went and did something else. He did not try to do all of them at once, or to do all of them himself.

Another guy who operated in a similar way was Howard Hughes. He started with his father's machine tool drill bit company, left that in the hands of a manager when he went to Hollywood, got into movies (RKO) started his own airplane company and a lot of other things. Most of his ventures lost money as long as he was running them, supported by Hughes Tool profits, and only became profitable when he lost interest and handed them over to a hired manager.

On the other hand, maybe you can start and run 4 successful businesses at once if you are a) a super genius and b) have a few billion dollars to invest. Mortals like me, Warren Buffet, Bill Gates and Sam Walton will keep on doing things the easy way.


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## Rusty O'Toole (Feb 1, 2012)

You mention a stock trading algorithm that makes $20 a month but won't scale because it is a niche market. I would follow up on that. Is there a way to develop another algorithm, or some other method to exploit a larger market? With the experience you have now it should be possible . I know I couldn't do it because I don't have the skills but you do. That is what I mean by sticking to the same line. Donald Trump didn't keep renovating the same building over and over, but he used the same skills, contacts and knowledge from one deal to the next.


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## Lephturn (Aug 31, 2009)

5 years ago I spent two weeks creating and recording a video training course for an online video training company. I get royalties - that is true passive income at this point. I still get a very nice cheque every month from that one course. Think car payment. I can't do any more in my current situation unfortunately - but I have a friend who has done over a dozen of them - not all as successful as mine (My topic was Outlook 2007 training) but those streams of royalties are extremely valuable when they are totally passive, even if individually they are small. It's worth working very hard for a short time to set up something completely passive like that. Think about intellectual properly that once created can funnel money to you with absolutely zero extra work.

I agree that the way to go is to focus on one revenue stream at a time - scale and grow that one and ensure it will eventually be totally passive - then move on to the next one. I've only managed to get a couple up and running - but wow they do add up! Just be sure to focus on things that can be completely hands-off in the long run. That may mean selling a business or idea to somebody else and simply collecting royalties.

This is why I love dividends.


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## Causalien (Apr 4, 2009)

Some clarification

Some of them are completely hands off. Some requires occasional attention when things break down. All of them started off as a $20 idea, but they earn much more now. The stock algorithm is the most time consuming since I need to check the balances at the end of the day as it is more prone to do something catastrophically wrong (computers manipulating your money? Same worry as letting computers drive your car). It hasn't gone skynet yet though. So multiple income stream works for me, but you also get this mess that I am in right now. So I am glad I get to learn about the true stories of all those advocates of multiple incomes. 

For musk, I am referring to his multitasking Tesla and SpaceX, but I get the fact that it's because has has the capital to hire great people at both companies. Also, the US government is probably grooming him as the next tech icon, so he gets more break than most. Reading his past, it looks like unless you are a rich billionaire, you cannot afford to divide your attention. 

Anyway, it's great to have come to a decision for the next move. Unfortunately it won't be anything beneficial to this forum since I regard the stock algorithm as just a leech in a zero sums numbers game that is not helpful to life.


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## Just a Guy (Mar 27, 2012)

I guess Rusty, you haven't heard of Trump water, Trump board game, books by Trump, TV shows starring Trump, Trump appearing on WWE wrestling, Trump teddy bears, Trump vodka, Trump perfume, Trump steaks...then there are golf courses, miss universe, miss America, casinos...

Sounds a little diversified to me....

Didn't he nearly lose everything a few years prior to diversifying when his real estate empire collapse?


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## kcowan (Jul 1, 2010)

Just a Guy said:


> I guess Rusty, you haven't heard of Trump water, Trump board game, books by Trump, TV shows starring Trump, Trump appearing on WWE wrestling, Trump teddy bears, Trump vodka, Trump perfume, Trump steaks...then there are golf courses, miss universe, miss America, casinos...
> 
> Sounds a little diversified to me....
> 
> Didn't he nearly lose everything a few years prior to diversifying when his real estate empire collapse?


He is licensing the Trump brand to other qualifed executives. There was even one here in Vancouver (hotel and casino) that was proposed by local investors...


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## nomad_bmo (Jul 14, 2012)

Without getting into your business details too much...
I would keep the diversification so that your not fully reliant on one income. Those that you do not believe to be scalable I would look to sell/cash-out of/leave dormant and reinvest that money into another idea with more scalability. 
Now...some people have trouble shifting their mind from one market to another quickly, so perhaps it is best to find a scalable idea within the same marketplace/niche as one of your other profitable ventures, so that you become very specialized in one area, so to speak.

If the workload is too much to handle currently, outsourcing is soooo easy to come by for menial tasks. There is various sites you can find with a google search; just keep it to simple tasks because quality will probably suffer. I do this with a website of mine.
It sounds like your running a grey box in stocks, which should be very scalable; haven't seen many that weren't.


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## heyjude (May 16, 2009)

This seems more like work than passive income!


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## Causalien (Apr 4, 2009)

heyjude said:


> This seems more like work than passive income!


Aren't they the same? Find me something that is truly passive where all the effort it requires is to move money into an account and BAM you get 10% per year. My friend, you'll become my best buddy forever. But that is still effort :tongue-new:


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## donald (Apr 18, 2011)

I don't get why people always think "outsourcing" or handing off most of a business is the magic bullet or it's soooo easy,once something is up and runnuing/scaleable/profitable(depends what the business is i guess but this is so not true with typical bricks& morter traditional businesses,i don't know if these are the businesses being talked about)

You cross-over from whatever skill/endevour you built(typically by yourself or a very small # of people)To having to learn the Real tough stuff(imo).How to grow the business,trianing employees,quality control,over looking/seeing both the finance and operations side,more tasks and moving parts,putting out more fires,making more mistakes(because your # of decisions muliply)and the list goes on(not to mention you have to pay up for manger's or whoever that is going to be overseeing the day to day operations which reduces your margins.

That seems like such a ''myth"There truly is very few real passive income activities.


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## Rusty O'Toole (Feb 1, 2012)

Lephturn said:


> 5 years ago I spent two weeks creating and recording a video training course for an online video training company. I get royalties - that is true passive income at this point. I still get a very nice cheque every month from that one course. Think car payment. I can't do any more in my current situation unfortunately - but I have a friend who has done over a dozen of them - not all as successful as mine (My topic was Outlook 2007 training) but those streams of royalties are extremely valuable when they are totally passive, even if individually they are small. It's worth working very hard for a short time to set up something completely passive like that. Think about intellectual properly that once created can funnel money to you with absolutely zero extra work.
> 
> I agree that the way to go is to focus on one revenue stream at a time - scale and grow that one and ensure it will eventually be totally passive - then move on to the next one. I've only managed to get a couple up and running - but wow they do add up! Just be sure to focus on things that can be completely hands-off in the long run. That may mean selling a business or idea to somebody else and simply collecting royalties.
> 
> This is why I love dividends.


It's why I love real estate although I agree it is not for everyone. I am now collecting rent on free and clear properties because I started (with large mortgages) in the seventies. In a few weeks I will close on a sale that will give me a 30% profit on a one year hold, plus pay me 8% interest in monthly payments for 2 years followed by a large cash balloon payment. Again, this did not happen overnight and I did not learn how to do it in a day either.

Maybe I over reacted. There is nothing wrong with passive income or royalty income or dividend income. But it has become a buzz word used by slick operators. All I can say is do not trust any financial advice unless you can check it out with 3 or 4 independent sources.


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## Causalien (Apr 4, 2009)

It's funny how the benefit of one road only gets revealed once you steered your car onto the other.

There are certain things that has begun to come to light. 

1st is morale. With multiple projects it is easier to do small steps and fixing something small or doing a small incremental improvement that yields a direct increase in income (albeit small). Whereas the focus on one project means that these small incremental improvements disappear pretty fast and I am now staring at a longer commitment in time and capital. Doubts crops up pretty fast.
2nd is efficiency of capital allocation. As mentioned before, it takes a while to exhaust the smaller incremental capital improvements when there are multiple projects. So, I have to argue that the capital efficiency is higher with that setup mainly because I see an immediate improvement and get my money back faster. Whereas focusing on one takes longer for the money to turn profit. So in the short term, it is a more inefficient investment of capital, even though we all know that in the longer term, it is the better use of capital.

If only we can keep our emotions in check. But, I am happier and more confident.


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