Last Updated Jan 4, 2011 2:23 PM EST
I learned this lesson while living in Houston, Texas, in the 80s when I was in law school. The oil business was booming and so was Houston. I'd grown up poor in New Jersey worrying about getting enough to eat rather than diversifying income streams. Seeing all those oil men driving around Houston in their Aston Martins and Ferraris lighting cigars with $100 bills was fascinating.
Then the world oil glut in the mid-1980s sank the price of Texas crude to the point that it was hardly worth drilling. The state's economy collapsed, Houston crashed, and the same people were reduced to pawning their Rolexes to pay bankruptcy attorneys. At that point I thought to myself, if I ever own a business I'm never going to let that happen to me.
So how do you diversify your business's income streams? Here's what I picked up along the way when I started YAS Fitness Centers:
1. Capitalize on the peripheral products/services that support your business or that your customers need. For me, designing a yoga and sportswear line of clothing was a no-brainer. My students need workout clothes and accessories. I can supply their demand right when and where they have it -- before or after they work out. OK, so launching a clothing and accessories line didn't exactly happen while I slept, but you get the idea. It's a major, additional revenue stream, along with teachers trainings, workshops, and boot camps. I have my own style of yoga and indoor cycling, so I have to train instructors to teach it.
2. Leverage your expertise. After years of teaching accessible, "No OM" yoga, I realized I had two built-in products that could easily extend the business beyond my brick-and-mortar studios: a book and workout DVDs. Again, writing a book and shooting several DVDs takes a lot of work up front-- but once they're done, they're done. Plus, even before we figured out distribution deals, we started selling them on our Web site and Amazon. I love getting nice-sized checks every month from Amazon for basically doing nothing. This is truly making money while you sleep.
3. Make sure your additional income steams don't pull you away from your core business. This is another good argument for coming up with revenue sources that don't require round-the-clock management. Your additional income streams should all feed back into your main business. Otherwise you lose your focus -- and that's one of the top reasons businesses fail.
Have you figured out how to make money while you sleep yet?
Flickr photo courtesy of planetchopstick, CC 2.0