Going
Entrepreneurial

Backing up my variable income stream

Testing the Income Stream

One of the biggest unknowns about starting a business is understanding what kind of income will be generated. If you cannot forecast your income, how will you know whether it will be profitable? For those that have started businesses before, then your experience will likely guide your decisions. For first-time entrepreneurs, it can be difficult to really know what kind of income and what the expenses will be.

Many people would advise the new entrepreneur to first test the business while keeping your day job. For instance, if you are thinking of going into catering, this might look like catering a few small events for friends on weekends. For those who want to blog or write, consider writing your material and taking classes in the evening and weekends.

The idea is to gain small tastes of the entrepreneurial venture without having to incur all of the expenses. While gaining that experience you will better understand:

• Your "true" list of prospects/ clients
• How long it takes to convert a prospect to a client
• What the competition in the field is
• What your unique venture offers and what kind of income you can generate

This may seem overwhelming. This is one approach, and everyone will pick the approach that is best suited to him/her. Typically there is so much uncertainty with Year 1 of an entrepreneurial venture where discussions around finances can be difficult in households. The better understanding of what the true income levels for the entrepreneurial venture is and what seasonal effects there are, the better prepared the entrepreneur can be.

Building Multiple Income Streams

This idea is simple: build multiple income streams that leaves the entrepreneur less dependent on any one activity. Many people are familiar with dual-income families or generating passive income through real-estate. Extending this concept to entrepreneurism:

1. Do one thing very well

2. Then build additional products/services when ready

Starting with one primary concept is important so that our efforts are not fragmented. Run one product or service very well first. Get known for that first flagship product and build a loyal customer base.

Then launch additional products/services to enhance your company. Going in sequential order builds in discipline while reducing exposure to risk. Sometimes it takes a little while to tinker with the first product to find the 'winning formula.' Building a strong customer base and being known for delivering quality products/services are prerequisites to run a business of any size.