One or Multiple Revenue Streams
November 21, 2023
Welcome back to Business Unfiltered with Mercer and Jeff Sauer today's topic is One or Multiple Revenue Streams
0:00: Revenue streams and financial stability. Jeff defines multiple revenue streams as having multiple ways of money hitting your bank account every month. For stability, it's important to have multiple income streams, especially in personal finance, to avoid reliance on a single source of income.
2:01: Diversifying income streams for business and personal finance. Mercer compares business to a "money tree" and wonders if diversifying revenue streams is a distraction or a smart move. Jeff suggests there's no definitive answer, and it depends on scenario-playing and role-playing to make the decision. He discusses the benefits of having multiple revenue streams, including a cash flow safety net and diversification to mitigate the impact of unexpected events. Jeff highlights the importance of having multiple sources of income, such as investments, business profits, and distributions, to maintain financial stability and security.
6:19: Multiple revenue streams and financial planning. Jeff advocates for having multiple revenue streams in business and personal finances for stability and growth. Mercer shares his experience of diversifying too quickly into other revenue streams in their early 20s, leading to financial losses. He discusses his approach to managing multiple income streams, including saving a portion of each stream for emergencies and investing in other money trees (e.g., Amazon or stocks). Mercer believes that having multiple streams of income and utilizing savings as a form of multiple income can help attract more money and achieve financial success.
10:33: Expanding business revenue streams through new products or investments. Mercer reflects on past mistakes, such as diffusing focus too quickly across multiple revenue streams, leading to lost opportunities. Mercer ponders how to expand into new revenue streams, considering creating a new brand, product offering, or leveraging existing assets within the current brand. Jeff shares their experience of building a successful marketing agency, which grew by 600% and led to them becoming a millionaire. He also shares his mistake of investing in a drop shipping website, poolandpatio.com, which lost money on every order and eventually sold in a fire sale, recouping half his investment.
14:46: Entrepreneurship, business models, and investments. Jeff learned that creating multiple brands under the same umbrella company can be beneficial for sharing resources and reducing redundancy in the business. He also realized that people who are good at services are not necessarily good at making products, and vice versa, highlighting the importance of different mindsets in business.
16:41: Investing in multiple business streams. Jeff emphasizes the importance of reinvesting profits from a cash cow business into a new, innovative venture to maximize growth potential. Sauer believes in investing in businesses he owns 100%, taking on more risk for potentially greater reward. Mercer emphasizes the importance of actively working on multiple revenue streams, rather than relying on a single source of income. He suggests focusing on improving and expanding existing products or services, rather than creating completely new ones.
20:32: Managing multiple revenue streams and risk assessment. Mercer emphasizes the importance of having a rainy day fund to cover expenses during unexpected downturns. Mercer and Jeff discuss the value of having a great team and working hard to achieve success, citing examples of successful entrepreneurs like Elon Musk and Steve Jobs. Mercer reflects on past mistakes, such as pursuing multiple revenue streams without considering potential consequences, and now prioritizes focused effort on opportunities with higher probabilities of success. He highlights the importance of evaluating the effort required to pursue a revenue stream versus the potential reward and prioritizing minimal effort opportunities with the potential for additional income.
24:54: Passive income, byproducts, and investing in active managers. Byproducts can be easier and more profitable than creating something new but require careful consideration of potential drawbacks. Invest in the person, not the how, for steady passive income.
28:00: Multiple revenue streams for businesses. Jeff discusses different revenue streams for businesses, including time for money, money for time, and money for money. He emphasizes the importance of margins in a high-margin business and the need for active management in all revenue streams. Mercer shares his thoughts on passive income and the idea that there is no such thing as passive investing. Jeff and Mercer discuss the importance of actively managing investments and the value of leveraging the expertise of others.
Topics Covered In This Episode
- A Balancing Act: While Mercer muses over the concept of businesses as "money trees" and debates the merit of diversifying income, Jeff stresses the importance of scenario analysis in making savvy financial decisions.
- Lessons Learned: The conversation gets personal as Mercer shares a youthful foray into multiple revenue avenues leading to losses, and Jeff recounts a 600% business growth spurt contrasted with a sobering drop shipping venture flop.
- Growth Strategies: Mercer discusses the intricate dance of expanding revenue streams, whether through new brands or optimizing existing ones, while Jeff sheds light on the benefits of reinvesting profits from a primary successful business into fresh, innovative projects.
- Holistic Business Approach: Jeff highlights the insights gained from managing multiple brands and the distinct skill sets required for service versus product-centric businesses.
- Smart Income Management: The discussion shifts to the strategic approach towards handling various revenue streams, with an emphasis on the essential nature of a safety net fund and prioritizing efforts in opportunities with higher success rates, drawing inspiration from industry giants like Musk and Jobs.