Making Money: Staying Focused vs. Multiple Income Streams

We have all heard from time to time, the importance of the reasons to make use of multiple streams of income. I remember reading a book on it at a time - the Multiple Streams of Income by Robert Allen. Not satisfied with the old information in the book, even though it is still relevant today, I kept looking for newer books by different authors or new editions to see how I could make money from different channels, especially in the tech-depending world.

Even though the message was well understood, it is somewhat difficult to implement in this part of the world. This does not negate that others have tried and worked at it. For me, I still have lots to get right to make money from different streams in the true sense of it.

Just recently, I saw two interview videos, one where the message was to avoid multiple streams of income if you are serious about becoming a millionaire or multimillionaire (at least from the beginning of your career). The other was where a man claimed to have about 13 streams of income, with one "unsexy" one, as he called it, bringing in about $2 billion recently.

With this conflicting information, someone like me is never more confused. This is why I choose to dedicate myself to the course of finding out what exactly is working. Is the proclamation of multiple sources of income unnecessarily exaggerated? If yes, what is the ideal way to make your way up in the course to being rich? This work will look into the two sides of the coin and account for the reality.

Supports and Critics

Multiple streams of income is the practice of generating revenue from different sources, to reduce dependency on a single income stream. Advocacy for this approach emphasizes its ability to provide stability, enhance financial security, and foster wealth creation. Accordingly, by diversifying their income sources, individuals purportedly mitigate the risks associated with economic fluctuations, job insecurities, and unforeseen circumstances.

In Multiple Streams of Income," bestselling author Robert Allen guides readers on creating diverse sources of revenue. Allen shares practical strategies and principles for generating income through real estate, stocks, entrepreneurship, and more. However, in certain scenarios, additional effort may be required, giving the impression that it is not just an ideal approach to wealth.

This among other reasons, could be why critics argue that the pursuit of multiple streams of income may lead to dilution of focus, inefficiency, and diminished returns. They posit that instead of spreading themselves thin across various ventures, individuals should concentrate their efforts on maximizing the potential of a single income stream, thereby achieving greater success and wealth accumulation. 

Nick Nolan, a known advocate of multiple streams of income, recently warned people against it, claiming that it may not be right for everyone. He called attention to the world's wealthiest individuals and their strategies. According to him, figures like Elon Musk, Jeff Bezos, Larry Page, Bill Gates, Warren Buffett, and Mark Zuckerberg amassed their wealth primarily from a single source of income. Similarly, companies such as Tesla, Amazon, Google, Microsoft, and Berkshire Hathaway, while they may have diversified their projects, achieved their billions by focusing on a single core company, rather than pursuing multiple side hustles.

Case Studies and Real-life Examples

To elucidate the practical implications of multiple streams of income, it is imperative to analyze real-life case studies and examples. One such case study is the story of Warren Buffett, renowned for his investment prowess and diverse portfolio of income-generating assets. Despite his primary focus on investment, Buffett has also ventured into various industries, such as insurance, manufacturing, and energy, thereby exemplifying the potential benefits of diversification. However, it's unanimously known that he got rich through investments before diversifying into other industries.

Similarly, the success story of Richard Branson, founder of the Virgin Group, underscores the power of multiple income streams. Branson has built a vast empire encompassing airlines, music, telecommunications, and hospitality, leveraging his diverse interests to generate substantial wealth. Unlike Buffett, who made significant gains with investments before diversifying, Richard Branson's first business venture, the student magazine "Student," merely laid the foundation for his entrepreneurial career; he did not achieve significant wealth from it. It was through the subsequent expansion of the Virgin brand, which began after he closed the magazine, into industries such as music, airlines, and telecommunications that Branson amassed his considerable wealth. Virgin Records, in particular, became highly successful, contributing significantly to Branson's financial success.

Before creating GoPro, Nick Woodman started Funbug in 1999. The company was a gaming and marketing platform that allowed users to win cash prizes. After accumulating more than $3.9 million in funding from investors, the company shut its doors in 2001 after failing to attract users. The flop later became known as one of the biggest busts during the dot-com era. This business or his wealth could have been saved if he had sought other sources of income or diversified earlier.

However, not all examples of multiple streams of income are unequivocally successful. The cautionary tale of individuals who spread themselves too thin, pursuing myriad ventures without a cohesive strategy, serves as a stark reminder of the potential pitfalls. Such individuals often find themselves overwhelmed, unable to effectively manage their various endeavors, and failing to achieve significant financial success.

To gain deeper insights into the psychology of wealth creation and the decision-making processes underlying the pursuit of multiple streams of income, it is essential to examine behavioral economics and psychological theories. The prospect theory, for instance, posits that individuals are inherently risk-averse, preferring the certainty of a single income stream over the uncertainty of multiple ventures.

Moreover, cognitive biases such as loss aversion and overconfidence may influence individuals' perceptions and decision-making regarding income diversification. While some may succumb to the fear of loss and opt for a conservative approach, others may exhibit overconfidence in their ability to manage multiple ventures successfully.

Available Data Supports Multiple Streams of Income

While it's important to note that individuals who made their millions from a single source are still rare worldwide unless you aspire to replicate their approach, many fall into the category of 'others.' We don't necessarily need to emulate figures like Bill Gates or Mark Zuckerberg; multiple streams could be the best option for us if we don't have what it takes to follow the path of a few wealthy individuals (these people are genius, to say the least) who rely on one stream. However, we should not forget that some of the richest eventually diversified their income streams later in their careers after achieving significant success.

Above is the summary of available data I've come across. Check them out!

1. According to a survey conducted by Bankrate, 45% of working Americans reported having a side job or additional source of income apart from their primary employment.
2. The Bureau of Labor Statistics (BLS) highlights that the average person born in the latter years of the baby boom (1957-1964) held 11.7 jobs from age 18 to age 48. Nearly half of these jobs were held from ages 18 to 24.
3. Interviews with financial advisors, wealth managers, and successful entrepreneurs provide valuable insights into the practical strategies and benefits of income diversification. Experts like Suze Orman, Dave Ramsey, and Robert Kiyosaki often advocate for a diversified approach to income generation to achieve long-term financial security and wealth creation.

Relating This Finding to Nigeria

I've previously mentioned my challenges in establishing multiple streams of income in the true sense of the concept. However, this doesn't imply that all my earnings originate from a single source. Let me elaborate. I'm a member of the resource team behind Techie BEC Konsult, a tech firm offering education, business, and computer services. As you may have observed, our revenue is derived from various services, ensuring a steady flow of income from multiple channels.

Nevertheless, this setup does not constitute multiple streams of income in the context of this article. The discussion here checks into the realm of creating distinct businesses or diversifying into different sectors. Personally, I find this endeavor challenging due to the time commitment required by my work at Techie, coupled with family and social obligations. Nonetheless, I am actively exploring avenues that wouldn't demand my physical presence, with a focus on investing in liquid assets as a starting point. Additionally, I am considering rental services that can be managed by a small staff, enabling me to expand my income streams without spreading myself too thin.

In the context of Nigeria, the concept of multiple streams of income holds particular relevance and significance due to the unique economic landscape and challenges faced by individuals in the country. Here's how the findings and arguments presented earlier can be related to Nigeria:

Nigeria's economy is characterized by volatility, with fluctuations in oil prices and currency exchange rates impacting various sectors. In such an environment, relying solely on a single income source can expose individuals to significant financial risks. Multiple streams of income can provide a buffer against economic uncertainties and help individuals maintain financial stability.

Job insecurity is a prevalent issue in Nigeria, with high levels of unemployment and underemployment. Relying solely on employment income leaves individuals vulnerable to sudden job losses or salary cuts. By diversifying their income sources, Nigerians can reduce their reliance on traditional employment and create alternative sources of revenue, thereby safeguarding against the risks associated with job instability.

In summary, the concept of multiple streams of income is highly relevant to Nigeria's economic context, offering individuals opportunities to navigate economic challenges, pursue entrepreneurship, and achieve financial resilience and prosperity. By embracing income diversification, Nigerians can unlock their entrepreneurial potential, create sustainable livelihoods, and contribute to the country's economic development.

Sources:

1. Nolan, Nick. "Maybe You Shouldn’t Have Multiple Streams of Income." Medium, Nick Nolan, 2022
2. Bankrate. "Nearly Half of US Workers Have a Side Hustle." Bankrate, 2019
3. Bureau of Labor Statistics. "Number of Jobs, Labor Market Experience, and Earnings Growth: Results from a National Longitudinal Survey News Release." U.S. Department of Labor, 2015
4. Board of Governors of the Federal Reserve System. "Evidence from the Survey of Consumer Finances." Federal Reserve, 2017