Many business owners just starting out get caught up in the glamour of having an info product, or group training program, available for the clients and customers to purchase or register for. However, what they don’t realize when starting out is that before they can sell products and run group programs that they need a pool of people who are ready to buy … i.e. a list.
And when you’re just starting out, it’s highly unlikely that you will have a ready-made list to market to.
So, what’s a business owner to do? How are they supposed to make a profit?
The answer lies in understanding the different income streams that you need to have in your business, and, more importantly, when to introduce each one.
Let me share with you today what those income streams are, and when you use them. The three income streams that you need to have are:
- Active Income
- Leveraged Income
- Passive Income
And you need to introduce them in that order too!
Active Income: this is the income that you receive from working directly with your clients, on a one-on-one basis. This is the fastest path to income in your business as you’re typically charging a much higher rate for your one-on-one work. Therefore, you need fewer clients to earn that income. And when you’re just starting out in your business, this is where you need to focus first. Don’t even think about adding additional income streams until you’ve got some momentum going with your one-on-one clients.
There will come a point though, where you’ll find you’ve reached the ceiling in your business. You can only increase your profits so much at this point, by either:
- Increasing your fees; or
- Working with more clients; or
- Increasing your fees and working with more clients.
When you reach this point, it’s time to introduce the second income stream: leveraged income.
Leveraged Income: this takes the form of you teaching live to a group of people. This can be a teleseminar, telecourse or some other form of teaching or support program. You are required to be present to teach the information but you are doing so to a group of people; therefore you are leveraging your time – one person but many participants.
You introduce this income stream when you’re almost at capacity with your one-on-one clients. You feel you’re going to hit the bursting point in your business; you have more demand for your services than you can supply, so you need to leverage your time … and teaching to a group of people all at once is a smart move. It’s also great for your clients too, especially if they aren’t yet ready to invest with you at your highest level. This is a great way for them to experience your work at a lower investment.
When you put the Active Income and Leveraged Income together, you’re creating a much stronger business foundation. But there is one final source of income that is also great to add to your business, and that is passive income.
Passive Income: this is something that you create once, and then sell it via your website for a continuous income flow. Usually this will be a digital product, i.e. a product that once someone has made payment for they are taken to a page to download the product. The product can be a PDF document, such as a workbook or report, and/or an audio file, maybe of a live teleclass. The point is with passive income you spend time creating the product once and making many sales from it. These sales take place via your website, so in fact you are earning income even while you’re sleeping – that’s why it’s such a popular business model!
The Successful Business Building Formula
Active Income + Leveraged Income + Passive Income =
A Successful, Thriving, and Profitable Business
You’re not reliant on a single income source; instead you’ve spread your revenue out over several different income sources. And when you add passive income to the mix, you’re able to take time away from your business and still generate an income.