How a diverse income can future-proof your freelancing

Future-Proofing Your Freelancing (part one)

Apr 15, 2020

Welcome to Future-Proofing Your Freelancing!

This mini-course will help you launch at least one additional revenue stream so that you can spread your risk, protect your freelance business and increase your earnings. Welcome! I’m so glad to have you here.

What does diversifying your income mean?

Let’s be real, “diversifying income through multiple revenue streams” is a really unsexy phrase. In the context of freelancing and for the purposes of this course, all it means is making money from more than one source. Another way to think about it is simply “not putting all your eggs in one basket”.

Why do you need multiple revenue streams?

There are lots of good reasons to have a diverse income, but I’m going to highlight three key reasons why you need one as a freelancer in this current climate.

Reduce risk: This is especially important right now because we find ourselves in a time in which entire industries are collapsing overnight. Having a second, third or even fourth revenue stream to fall back on is vital.
Make more money: As a freelancer, there’s only one of you and eventually, you’ll hit a ceiling of how much of your time you can trade for money. Some revenue streams enable you to scale your business and significantly grow your income without you needing to start working weekends
Adapt to the new normal: It’s time to accept that the current situation we find ourselves in isn’t going to change any time soon if anything the economic conditions may only get worse. The biggest asset you have a freelancer is your agility, use it to adapt now to the new normal

What does a diverse income look like in practice?

Let’s put all this together by me showing you what my different revenue streams look like. For the financial year that just ended, I made my money from the following six revenue streams:

Journalism (25%)
Podcast advertising (10%)
Newsletter subscriptions and events (30%)
Content marketing (25%)
Public speaking (5%)
Consulting (5%)

NB: these percentages are based on revenue, not net profit. Some revenue sources have higher costs than others (eg events have much higher costs than journalism does)

As you can see, no one source of revenue amounts to more than 30% and that’s deliberate. I don’t want to make more money from a single revenue source than I can afford to lose. What I mean by that is if my newsletter and events disappeared overnight, I wouldn’t be thrilled about losing 30% of my income but it’s a more manageable chunk than 80% or even 90% of it. And of course, some of these streams have disappeared overnight, so I’m even more grateful for the ones that are still intact.

It’s important to note that any of these revenue streams could be a sole source of income – and a good one at that. I choose to structure my freelancing like this because I think it’s a more sustainable business model and because it works for my personal level of risk-tolerance (which is low to medium).

How many revenue streams you need and what percentage of your total income they should be, depends on a number of factors. From a practical standpoint, if you currently have one sole source of income it’s likely going to be too much to try and develop five new sources right off the bat. Next week we’ll talk more about what and how many revenue streams might be right for you.

How hard is it to do?

You might’ve heard about passive income. I personally think it’s a misleading concept. There are some forms of income you can develop which are scalable, which means you can sell multiple versions of the same thing at no additional cost (I’ll talk more about this later), but you’ll struggle to generate money without doing anything. In other words, if you were hoping that diversifying your income means you can make money fall out of the sky, then yes it’s going to be impossible.

The honest answer is that developing multiple revenue streams isn’t hard but it does take time to put in place and know-how to execute. The good news is, I’m here to help!

In order to get the most out of this course, all I ask is that you make the time for it. I’m going to give you the roadmap to get you where you want to be, but you need to drive the car.

Exercise: Revenue audit

For your first exercise, I want you to take an audit of your current revenue situation. Put aside 30 minutes to an hour this week to go through the following questions:

What current revenue streams do you have?
How have your existing revenue streams been affected by coronavirus?
How many revenue streams would you like to have?
What do you think you stand to gain by diversifying your income?
What are your preconceived notions about diversifying your income?
What is your biggest fear about diversifying your income?

For bonus points: Work out what percentages you make from each stream!

To calculate this, you first need to add up all the income you made in a year. Then you add up the total you made for each of your income streams. Then you divide each income stream total by the annual total and multiple by 100.

For example: You made £30,000 a year of which £15,000 was from journalism, £10,000 was from content marketing and £5,000 was from speaking. To work out the percentage you made from journalism: (£15,000 ÷ £30,000) x 100 = 50%