Why Women in Accounting Need to Create Multiple Streams of Income
According to the US Bureau of Labor Statistics, 20% of US small businesses fail in their first year. After five years, roughly 50% have failed. After 10 years, 70% of businesses have failed — leaving only a third alive.
Obviously, this has changed with the COVID-19 pandemic, which has created a reported 41% failure rate from March to June 2020. And this didn’t just impact small businesses or startups.
According to a study by LendingTree, 29% of failed startups report that cash flow was a big reason why they weren’t able to make it. When I hear cash flow problems, I see a few different things:
The product or service wasn’t great, so people weren’t buying.
The company’s marketing efforts were next to none, so no one heard about them to begin with
But, there’s one (huge!) reason that I tend to see more often than not:
Too much weight was placed on one single stream of revenue.
What people don’t realize is that putting a lot of emphasis on one source of income ends up having a ripple effect on your business. Why?
Because with so much focus on making this one stream work, you miss opportunities to diversify and multiply your revenue.
In my opinion, for you to succeed, you need to have at least 7 streams of revenue — and at least 2 or 3 of them need to be passive income. (But we’ll get to that later.)
So, what should those different streams of income look like?
A type of revenue stream that I always recommend for women in finance is creating a product-driven business. This is a business that’s based around solving a problem.
With this kind of business, it’s key to create a product that your potential customer can’t refuse. There’s a pretty big reason for this: you’re creating the product first, and finding your market later.
That’s why you need to create a top-tier, high-quality, deliciously irresistible product. Focus on every element of what you’re creating is essential!
It can be risky, but there are ways to succeed here: namely, by making sure that you’re unique.
Your product needs to stand apart not just from your competitors, but from everyone!
A great example of this comes from an episode of Shark Tank. (You all know I love Shark Tank! Don’t act surprised that I’m talking about them!)
A product was shown before the Sharks that personally, I never would’ve thought to invest in: blanket hoodies. That’s right: hoodies. That looked like. Blankets. That’s it. And guess what? They ended up becoming one of the most successful ventures to come out of Shark Tank.
And one of the main reasons why? They were entirely unique.
No one else was doing exactly what they were doing. There was a Snuggie, but a Snuggie isn’t intended to be something you wear outside of your house. And that’s what I’m talking about when I’m saying unique. They stood alone — and they thrived!
Another way you could format another one of your income streams is one that we know all too well as women in accounting: as a service-based business.
Now, this looks like a lot of work to add to your plate from the outside — and in all honesty, it is. But, the heavy-duty stuff is just at the beginning, when you’re laying the foundation for what your services will be, how to set up your business, and filling out your client roster. Once you have your systems set in place, you’re just focusing on keeping things in check and working with your clients — not much different from what you’re doing now.
Plus, just 2 or 3 high-value clients will create a robust stream of income for you, without as much work as 10 lower ticket clients.
So why do I recommend adding another service to your plate when you already have so much going on?
Because this allows you to leverage all of your expertise and your business’ resources — and you fully realize your potential.
Typically for accountants and CPAs, our skills aren’t concentrated in any one place: myself, I specialize in internal controls, audit and audit assistance, and strategic and operational growth.
With this wealth of knowledge, I don’t have to keep my eyes on one prize or leave all my eggs in one basket. Especially when I could be serving people in more than one way.
But, a word of caution, Lady Bosses: limit your service-based businesses to 2 or 3 of your streams. There’s only one you, so don’t spread yourself too thin.
What was I saying about passive income?
Passive income is a great way to add some streams of revenue to your financial health chart. With passive income, you’re doing less work, while still making money. Sounds like a dream to me!
I’m all about helping women in accounting and finance make more money with less work: this is a great way of doing exactly that.
With at least 2 or 3 of your revenue streams coming from a passive source of income, you’re avoiding becoming too heavily dependent on any one source. So, when crises hit (hello, COVID-19) you’ll still be covered even if some of your income streams suffer.
What are some ways to build a passive source of income?
We’ve talked about this before, and while it can be scary, investing can yield high returns for you as long as you’re informed and invest wisely, as the Dividends Queen, Charlene Rhinehart says.
Making sure you’re doing your research, combine it with your common sense, and pay attention to what’s going on around you, because the current climate can inform how certain stocks will perform.
And if you go for dividends stocks? Get ready to get the bag — without lifting a finger.
Publish a book
I know how this sounds, but let me explain first! I’m not talking about the traditional route here. In the digital age, anyone and everyone is capable of self-publishing an ebook. You included!
There is some work involved at first, as with a lot of different sources of income. You’ll have to write (or at the very least, commission and work with a ghostwriter), design the book (or again, commission a designer; UpWork is right there!), and market the book to attract an audience.
But afterwards, your book lives on, available for people to purchase at any time.
You just sit back, relax, and hear the “cha-ching” sing from your phone while you’re on the beach, for years to come.
No apples needed for the teacher here. What I’m talking about is creating an online course.
The principle is the same as above with self-publishing: you can either create your own course, or work with a course designer to transfer your expertise into a digestible, classroom format for the screen.
At this point, you already know how I feel about having a site. (Basically: you should have a website.) If you do, your course can just exist there.
But, if you don’t have a website, you can look into hosting your course on a site like Coursera or Udemy. This is a good option if you don’t really have a following or reach just yet and want to make sure you’re discoverable.
I’ve said it already: women in finance have such a wealth of knowledge, it’s almost too easy to create sources of income like this for yourself. You have what you need in your brain. Now you just need someone else’s expertise to put it into your desired format and get it out to the people who need it!
I’ve talked about this before, but one of the most important aspects of financial literacy for me is taking care of your financial health.
You could be making those 6 figures, but if you’re still living invoice to invoice? You need to work on your financial fitness.
This also creates a more sustainable construction of wealth that won’t just benefit you as you continue to work, but will leave something behind for your family to continue to build on.
That’s right: you’re building generational wealth.
And a great way of doing that is by adding multiple sources of income to your portfolio.
What are some of your additional sources of income?