Multiple steams of income and Side hustle are the new buzzwords, but what does it really mean? This is the concept of diversification, “not putting your eggs in one basket”. 2020 has been a tough year for everyone with job uncertainty, unavoidable retrenchments and job losses. Many people wished they had a side hustle that would keep them financially afloat during the lockdown, others tried to start a side hustle in the middle of the COVID-19 crisis to keep food on the table.
We have seen a boom in online businesses and business accounts on many social media platforms, we often see sponsored adverts popping up whenever we are on social media.
Forbes recommends 5 ways to generate multiple streams of income namely;
- Diversification of investment
- Service offering/sales
- Creating a product
- Staring a project about which you are passionate
- Investment in real estate
With all buzz-concepts are dangerous half-truths, there are some challenges that can arise with creating multiple streams of income, and many issues can arise which can create problems in both your professional life and personal life. Below is a summary of some of the things to look out for;
Market research: Diversification is always a good idea, but it requires that you possess knowledge about what you do. This can mean more time invested into learning more/new skills. You need to know the market in general, what the state of the economy is, what the market trends are. Once you know this you can segment your target market and study the spending trends of the market. Be realistic about the share of the market that you can capture given the amount of competition present. We live in a highly competitive world that is forever changing.
Business registration/legitimacy: Many product providers on the social networks do not have operating business licenses, vat registration numbers, verifiable bank accounts, etc. This creates a lack of trust in the market about the legitimacy of the product or service provided. Make sure that you get the necessary registrations before operating a business as per the laws in South Africa.
Capital: When investing into a new business venture, you need capital to be able to demonstrate the value of your product or service, this capital will flow from your personal account as an expense. This capital expenditure can have a negative short-term effect on your monthly budgeting, it is very important to discuss your business plans with all those that will be impacted financially by your investment into the new venture and get their support. If the market research is not done well, then the implications can be long-term, far reaching and devastating.
Expenses: There are many expenses that can arise in the course of doing business, such as the cost of advertising, storage, shipping, photoshoots, video shoots etc. It is good to anticipate these expenses
Time: This is another element that should be considered, given the fact that the side hustle is not the only thing you do, you need to consider how much of your time it is going to take. Many times, we tend to underestimate the time and effort that goes into dealing with suppliers and customers. You need to anticipate the follow-up required with suppliers and updates to customers, receiving wrong or damaged goods from suppliers, customers returning goods and keeping customer expectations in check.
We have limited time in any given day, we need to make sure that we invest that time wisely and also manage our other resourc1es wisely. The pursuit of financial freedom should not be detrimental to our health, wellbeing or main hustle. Diversification is great as a risk mitigation factor but, focused attention also creates financial success. Remember, you cannot be all things. Balance your life and look after yourself.