There is a conflict over how you should be spending your time as an entrepreneur. Some people will say that you should focus on just one business, pour your all in to it and make it the best it can possibly be. But others will tell you that is too risky. Diversify. Build as many income streams as possible.
Well, it is not quite as simple as saying one option is always better than the other. In this episode, we talk about how to balance your goals, your personality and the opportunities available to help decide if you should be building multiple businesses.
Resources Mentioned In This Episode Of The Lazy Entrepreneur Podcast:
01:18 – What’s your full time job?
02:52 – Focus or breadth in business depends on temperment
04:18 – Why Sam decided to focus on multiple income streams initially
06:00 – Self-employment security vs. employment security
08:18 – How many sources of income does a typical millionaire have?
10:29 – Identifying personal goals
13:35 – How Emma decides what to focus on
16:41 – Emma’s experiences as a freelance marketer
19:24 – Lapses in work load
23:50 – How Sam would approach restarting his businesses
SAM: Hello and welcome back to another episode of the lazy entrepreneur, I’m your host Sam Priestley and we’ve got Emma back.
SAM: It’s been a bit weird the last few episodes, in fact I have recorded about five or six in the last few weeks without you on it.
EMMA: I’ve been missing out.
SAM: They haven’t been as good without you on them obviously.
SAM: So welcome back to our regular broadcasting. Today I wanted to talk about is it better to build multiple income streams or focus on just one. That’s a topic I’m sure you’re very interested in.
EMMA: Very familiar.
SAM: We’re 30 episodes into this podcast and we haven’t spoken about it.
EMMA: And it’s a key part of our life.
SAM: It’s quite an interesting discussion, and it’s not an easy answer.
EMMA: No and it’s quite a weird way to live your life. I mean I always complain to people when I talk about the gin business, they say oh is that your full-time job and I find that really frustrating because there isn’t really, it’s not my full-time job when you compare it to the hours I put in at PwC but it does provide income and I do other jobs, so people don’t really get their head around the fact that you can do more than one company or job at one time.
SAM: Yeah people ask me what I do, I always say a bit of this, bit of that.
EMMA: People don’t understand.
SAM: Come off like a wheeler-dealer but that’s not really accurate. It’s always one of the criticisms I get quite a lot, why you always start new businesses? Why don’t you just just focus on one? If you’re always building businesses than you’re neglecting other ones. If you build multiple different businesses then you’re never really gonna give any single one all the attention it deserves.
EMMA: Which is what you want to do, you don’t want to do one business that you focus on forever. You want to do loads of different things and it constantly changes because you get bored of one business. It doesn’t mean you stop, you completely neglect it, you still carry on ordering more stock or writing more content or whatever but what drives you, what gets you out of bed in the morning is something new.
SAM: Yeah so there’s a few things there, one is it depends on your personality so if you’re like me and that’s what you enjoy doing, starting new businesses, curious, get bored quickly, don’t really like the drudgery of maintenance of a business but do really enjoy coming up with ideas and getting excited and designing new things and launching stuff then obviously doing multiple businesses suits me quite well, which then kind of brings onto a second part it depends on your goals. If my goal was to make as much money as possible, would I be doing something different? Would I just be focusing on the highest expected profit business?
EMMA: There was the gambling and you made a conscious choice to stop doing the gambling.
SAM: Yeah well in this podcast we talked a lot about lifestyle as well as it’s the lazy entrepreneur and the goal is not to become a billionaire yeah.
EMMA: And I don’t think a lot of people can understand that, they think well if you’ve got this brilliant business idea that has this potential to earn you a million pounds each year, why don’t you do it? But you consciously choose not to do that.
SAM: There’s more to it than that, there’s also some businesses do you seem to hit a point of diminishing returns where there’s not an obvious thing you can just do to push it to the next level. I suppose gambling is a good place to start really because that’s when I go into the multiple income streams and the reason was for stability and protection. I started with match betting which is when you take advantage of free bonuses and offers that casinos and bookies give to new customers, so that means that the entire income stream is reliant on bookies existing, gambling not be made illegal, the, letting me play there which, when you’re a profitable player doesn’t always happen. And them offering bonuses, anyone of those things could have quite easily have changed which then that business would have shut down and then I would have been left with no CV, no career so that’s when I got interested in trying to keep myself safe by starting loads of different businesses and not just businesses but other income streams so investing quite a lot of money to get investment income, passive income which is the main advantage people talk about when it comes to having multiple sources of income, is the safety of it, if one of them fails then you’ve got other ones to fall back on. I think there’s something about being an entrepreneur, a business owner that makes you very conscious of the risk and the danger of whatever it is you’re doing collapsing.
EMMA: Yes but at the same time you’re really you’re not risk-averse, the whole the thrill of it is that actually around starting new businesses is that they might potentially fail and by having multiple sources of income and multiple businesses to some extent it doesn’t matter so much if one fails but that kind of thrill of well this might really take off or actually it hasn’t really taken off but I still learned something, it’s all part of the drive for you.
SAM: I think it is the balancing of risk-taking with being sensible and balancing your goals for your life outside of your businesses, but when you have a job, people in a career they don’t think well what if I get fired and lose this job. I better go work at Starbucks on the side or something.
EMMA: No and one of our friends has just been fired in a quite secure professional services role and we kind of sat around thinking, well what are they supposed to do next? Do they just go to the next professional services and get a job or is it now gonna be hard for them to get job because they were fired.
SAM: But then again if you’re working in a career like that you can’t say well I am only gonna work two days a week at this place, two days a week as a lawyer, and one day a week as a banker in order to keep yourself secure and you just can’t do that you get nowhere.
EMMA: And of course your response to that situation was well maybe it’s time for a career change.
SAM: But what why would we think the correct thing to do if you’re focusing on a career is to go 100% on one career one job rather than diversify whereas when we talk to people starting businesses we’ll often say, think about building multiple income streams so you’re safe. It’s probably something about the the monthly variance and change in how the business is doing that makes you very aware of danger. You’re getting your monthly paycheck it’s only when you get fired that that suddenly changes and you don’t see it going down a little bit than a bit the next month and down a bit more.
EMMA: Definitely like take any of your retail businesses so whether it’s table tennis bats, whether it’s gin you look at Christmas versus January and to a certain extent February like this they’re polar opposites.
SAM: Yeah there is seasonal variant, there’s also like output on my behalf variant, there’s stock issues, there’s extra competition, stock issues, there’s unforeseen disasters. I remember there was an earthquake at a port that had a bunch of our stock in it at one point. How do you prepare for that?
EMMA: But then the things that every year you always say to me, oh it’s Chinese New Year, no work gets done and it’s kind of like you say it as if you kind of set on Chinese New Year day. You don’t really say it like oh yeah we planned that the stock in from China is going to slow down. It just kind of happens each year.
SAM: So let’s take a step back and think about these two options that we’re often given. One is to really diversify and try and build up those different sorts of income. You might have heard the saying that a typical millionaire has seven sources of income. Sounds like a load of rubbish to me, but that’s kind of the advice that a lot of people put out. You should be aiming for seven for some reason.
EMMA: How many do you have?
SAM: I don’t know. Probably about seven seven or eight and then the other side is that no you should just focus on one thing, give it your all, work as hard as possible, and just try and make that thing the best. So on one side if you’re building multiple income streams, you’re kind of safe, provided they kind of work out, then if one of them fails, you have the stuff to keep it going. We’re in a nice position where if any one business fails completely it doesn’t have any impact on our day-to-day life but then on the downside, you’ve also got this risk of half assing it and never actually making any of these businesses or income streams any good. There is some benefit to just going a hundred percent on one thing and trying to make that work out.
EMMA: And I think actually if you sat down and looked at all of your businesses from a financial perspective, there might be some changes, and there might be some quick wins. Spend a bit of time doing that and actually has quite a big impact on on your salary that month but that’s not that’s not how you live your life.
SAM: Well it depends on your goals isn’t it. So it brings us on to I think that the free air that you mentioned earlier, your goals, your personality, what opportunities are available, you need to balance all of those to work out how you should be spending your time. It’s not simply saying you should focus on multiple income streams or you should focus on just one, you’ve got to balance these three criteria and work out what’s best for you.
EMMA: Yeah because at the end of the day the goal is that your lifestyle is your work. You feel like oh I’ve got loads done today, I feel really motivated, I feel like I’ve achieved a lot.
SAM: Yes that is definitely one of my goals, and one of the key goals at the moment, but goals can be both short and long term, they could be let’s say a family member who’s going to do some problems and we needed to earn a bit of money to support them then your short-term goal could be, well I need to earn enough money to pay for this, or let’s say that something happened, we had a huge bill to pay, we’re in an accident and we need to make everywhere wheelchair-accessible. That’s gonna cost a fortune and I’ve got this barrier to overcome or maybe a goal would be if you’re doing a business that the purpose is not just to make money but is also to do some sort of good in the world then that’s a different type of goal isn’t it. That’s saying actually I’m gonna focus on this quite a lot because I’m prioritizing the work that this business is doing over my own life.
EMMA: Yeah because it’s having an impact on my community or certain group of people or whatever.
SAM: So we’re in a situation now where we’re kind of focusing the work we’re doing around our lifestyle goals. Which is kind of continue living the life that we are living at the moment.
EMMA: Yeah the life we want to lead.
SAM: But we also have other goals, so one of your goals is to get better at cooking, to get more into food and drink, to network and meet people who you find interesting in that industry, to become a bit better known in the industry, to be thought of as someone who’s not just an outside amateur looking in but actually part of that industry.
EMMA: Yeah and another goal is as it’s coming up to International Women’s Day is to encourage other female entrepreneurs. So to share my experience of quitting the 9-5 and starting my own businesses. Show the realities of it and to encourage people.
SAM: And the way you’re doing that is not by focusing on one business, but by doing a little bit of all the stuff that interests you from doing supper clubs, to doing the gin.
EMMA: And networking.
SAM: And networking not with a sole goal of pushing one of those businesses but also, yes to help those business, but also to push you as a personal brand and you as a career person.
EMMA: Yeah and I get a lot of validation from networking. That I absolutely have made the right decision to quit my 9-5 and I’m really happy.
SAM: So I think your goals definitely mattered there, but when it comes to what do you spend more of your time on your supper clubs or doing the gin that’s not just down to your goals. There is other reasons, there is other things in there. Why would you spend a day cooking for the supper club when you could spend that day phoning around 100 new bars to try and get our gin into them?
EMMA: Well that’s a good question. So I try and strike a balance and I find it quite easy at the moment because the supper clubs, I control how frequently I do them or how infrequently. I try and spread them out and they are very timely so I see if I have a for example if I have a supper club today I would have spent the last few days focusing on the supper club and not the gin and then when I don’t have a supper club on a Friday, I then focus on the gin. So I don’t necessarily plan it to have a balance, but I guess I have planned it in that way.
SAM: And I think the balance you’re striking there is not a balance of your overall goals. It is a balance of your personality. And by that I mean they’re very different businesses so supper club but you’re running completely on your own, you have the autonomy, you don’t need to tell us what you’re up to, you can experiment, you don’t need to wait for us to approve an idea, or anything like that.
EMMA: Which I love.
SAM: Which you love. You get instant feedback. You do it, you put it on, it’s quite stressful while it’s all going on. Then the end the day everyone tells you how great it was and gives you an envelope full of money.
EMMA: Yeah it’s lovely.
SAM: Yeah you got instant gratification, you’re learning some skills, which are good for your overall goals, you’re getting additional income, whereas Pipehouse Gin is the complete opposite business one we’re all profits have been reinvested into it at the moment. It’s very hard to give an exact quantifiable idea of how well the day has gone whether it’s being productive or not. You could spend a day going around bars and get nowhere, or you could spend a day going around bars and everyone loves it.
EMMA: Yeah I assess a day by how good the news is for that day, so it could be for example a brand new bar has just emailed us to say I’d like to place an order. It could even be for one bottle, but that’s still good news. There could be we’ve had loads of breakages today or something’s been cancelled or whatever it is.
SAM: What you’re saying now is that you’re mood is linked to how that business is going. If things go bad, and that is your only business that it’s the only thing you’re focusing on then that could mean all of your mood is tied to that or a large part of it.
EMMA: And that’s why I love the balance of the supper clubs because if I’m frustrated with something with the gin and it could be the decisions taking a long time, I then flipped to supper clubs and I’m like oh right I’m gonna go off and do this because I don’t have to wait for anyone to make a decision on this.
SAM: When you get annoyed at me you can go off and do something doesn’t involve me.
EMMA: Yeah exactly.
SAM: Let’s go back a couple of years to before we were married where having immediate income coming in was very important. And where you were doing freelance marketing. So you were doing something you didn’t particularly enjoy that much, there was quite a lot of work, and was quite draining. But something you could have spent all day every day working on really hard but you couldn’t sum up the motivation and energy to do it.
EMMA: Yeah I mean and there were so many elements of it like from the actual business development side to trolling through up work trying to find relevant projects and then applying for those projects, and then doing the interviews, and then there’s the whole bit of balancing my work load so making sure that I can deliver all the projects and then make sure that I was getting paid mmm. The whole thing was absolutely draining and although I found it quite liberating that I could control what I was gonna deliver and how I delivered it, it was very stressful managing ultimately it was to pay my credit card bill at the end of the month and I knew because we always pay it six weeks after, I knew how much it was and I found that very stressful.
SAM: Well it was something that the nature of the work meant you couldn’t do that many hours of it. Whereas when you’re working on the supper club, or you’re working on gin now and then balancing that you can actually do a lot more hours in a day.
EMMA: 100 percent year.
SAM: And you started doing multiple things while you were still doing the marketing, because when you ran out of energy for writing proposals, you could then think about, you could then decompress from that by doing a more creative business. It would still have long-term benefit for you.
EMMA: Yeah which was ultimately the supper club.
SAM: Doing cooking classes, personal development things, even when we started work on the gin you were also doing a bit of the marketing stuff back then as well but it was a way that you could by building a multiple income stream you weren’t taken away from that freelance marketing stuff, you were so drained by the freelance marketing stuff that you couldn’t do any more of it. So then you started to focus on some other things.
EMMA: Yeah but then there was definitely a conscious decision when the gin was kicking off so once we’d spent quite a long time on the strategy, the planning and we’d agreed what we were gonna do and it was time to actually launch it and kick it off and there was a lot to do, I made that conscious decision, right I’m gonna stop doing the marketing. So I love doing all this gin stuff, I’m getting a lot from it.
SAM: Well I think that brings us on to the third point, so we’ve done goals and personality so far and the final one is opportunity. You started working a lot harder on the gin and less on the marketing when there was more opportunity in the gin, while we were still waiting for our labels get printed or whatever and there wasn’t much that could be done, there wasn’t that much work to do.
EMMA: That was so frustrating.
SAM: When you’re setting up a business like that, waiting for licenses to arrive in the post, all this kind of stuff, there sometimes isn’t that much work to do yeah which is when you go work on the other things yeah and my most profitable business is my table tennis business but we hit diminishing returns quite a few years ago where we were the best selling table tennis bats in the UK, we were doing really well across the rest of Europe and in the States and Canada and places like that, and we kind of got this point where we like we can put in loads more work and get a small increase in sales, or we can put in hardly any work and it continued being how it is and making good money.
EMMA: And you can do other stuff.
SAM: I will do other stuff so we decided it wasn’t worth putting in all that extra effort, let’s keep the business how it is, maybe a little bit stagnant and not growing but you know still making good money and paying us a really nice salary and then focus on other businesses.
EMMA: And that’s also a good point because of the way that you like to set up a business is that you love the beginning bit, the creativity, the strategy and loads of time and energy goes into it upfront and then you develop all of your businesses to be quite low input as they run on a month-by-month basis and and that’s a very purposeful thing for you so that it does mean per month you could choose to do a bunch more hours, or a bunch more blog posts but at the same time, you don’t have to to get that regular income and for it to continue to run. It’s interesting though because if you compare the businesses that you run at the moment to say, a coffee shop, they couldn’t be any more opposite in terms of input. So like the amount of work so say you owned a coffee shop in Tunbridge Wells, the amount of input you have to put in the beginning of the project and during the businesses all day every day, it’s relentless.
SAM: I think that’s a good example of why you need to include opportunity in your calculation before you should spend your time doing because when I did have a coffee shop, it was something where there wasn’t really any opportunity. Something that required a lot of work and where the max potential wasn’t particularly high whereas when you compare that to say the gin where we could potentially sell 1 million bottles a year, we’re not limited by the number of people walking past our little shop. It’s quite different.
EMMA: The opportunities are absolutely there and the markets big enough.
SAM: And with something like a coffee shop, I was tied in by staff and salaries, we’ve got monthly rent we’ve got a bunch of other stuff.
EMMA: Yeah you’ve got a lot of responsibilities that’s the other thing isn’t it with a lot of your current businesses you don’t have all those overheads and those responsibilities.
SAM: So let’s sort of summarize a little bit. Now there are exceptions to the rule but generally if you want to make loads and loads of money, focusing on just one just one business is the way to go.
EMMA: But it is risky.
SAM: But it is risky and you could fail, whereas if you’re able to build multiple income streams, I don’t mean build them all at the same time, I mean you build one, get it to a point where it is earning a nice bit of income, then go build another one, actually the risk of everything falling apart and having to go get a job is quite low.
EMMA: Say today you used all your experience and your knowledge so far in setting up businesses and someone gave you, I don’t know, ten thousand pounds, twenty thousand pounds to start a new business as if you got all the time the world, you haven’t got any other business you need to focus on, what would that business be and then what would be their additional income streams that you would add to that?
SAM: I would set my goals and my goals would be to get enough money to support my lifestyle yeah as quickly as possible and then once I was earning enough money to support my lifestyle it would then be to be to build in stability with that life. So get to the income target and then make sure I stay at income target.
SAM: So how would I do that? Well I start off by finding a business or income stream that earns money very quickly, and I’d still go back to the gambling for that, matched betting which I’ve done podcasts on before is a very easy way to make a few thousand pounds to begin with and you can take out ten thousand pounds and double it quite quickly. Now the thing about matched betting is that you do end up spending a whole lot of time waiting around for money to be paid out, so once you’ve got your winnings, you do a withdrawal from a bookmaker and they might take four or five days which is where having a small liquidity, a small cash flow does matter but that means that we would then have a bunch of spare time which would then start focusing on longer-term projects.
EMMA: So maybe something like an Amazon FBA product.
SAM: Maybe a product like an Amazon business, maybe a blog or a website and it takes time but very little monetary input at the beginning.
EMMA: And it could be something on a niche that you were really into.
SAM: And something like that I won’t make any money for six months to a year but it’s something I want to start working on and can at some point provide one of those extra income streams, so that’s what I do and I’d push each one to the max. You know at the Amazon business once you developed your product and you’ve chosen your prototype and you put in your order for a thousand, you’ve now got a six-week wait until they finish that, so what are you going to do for six weeks? Well I’d go and work on something else. Once I was earning money, once I was getting money above the income I needed to support my lifestyle, I would then start putting that money into investments, stuff that would earn me an extra source of income? I’ve already recorded this podcast on financial independence but it hasn’t been released it yet so that will be coming up, probably the next one after this. We talk about this quite a bit and one of the things about financial independence is you build up these passive investments, so stuff like stocks and shares or property or whatever that will eventually cover most of your your expenses just from the income of those, so that’s kind of what I’d be working towards and I’m sure what I was doing would change based on the opportunities that present themselves. That’s probably a good place to end this.
EMMA: I think so.
SAM: There we go. We had a little chat where we’ve talked about multiple income streams versus focusing on just one, we said it’s not quite as simple as saying that multiple income streams is better or that one income stream is better. It depends on the opportunities that are around you, it depends on your personal goals and it depends on your personality. Generally, though multiple income streams are good for stability and for making sure you’re not gonna lose everything, whereas the single income stream, a single focus of your attention is good for making money quickly or building a business quickly, but is a lot more risky. And on that note, thank you very much for listening if you have any feedback, please email me at hello at sam priestley, the show notes are all at sam priestley dot com and you can click on the podcast tab at the top in order to read about them, and until next time goodbye.