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7 Key Factors to Build Successful Alternative Income Streams

March 17, 2008 by Pinyo.

Some people views anything related to alternative income streams (aka, making money) as scammy, waste of time, or taking too much effort. Some give alternative income building a try and give up shortly after, because it takes too much time and effort for the minuscule initial results. Why should they bother working on something for a week or even longer to earn $20 when they can work an extra hour of overtime? Well, here’s a quick answer: Your job is not going to be there forever. You can’t work forever. And you can’t retire until you figure out a way to replace income from your job.

Slow Stream

Photo by Dave Donaldson’s via Flickr

What about the scammy part? True. There are a lot of scams and schemes out there, but there are also legitimate alternative income building ideas. Possibly one of the best alternative income strategies is to invest your money in the global stock market and let compounded growth works over time.

Does it take a lot of time and effort? Yes, at least initially. I personally utilize a lot the alternative income ideas on the list I recently shared, and for some ideas I even have multiple ways of building that particular income stream. The way I see it is that I am planting seeds, or opening doors if you will. Not everything I try will come to fruition, and there won’t be a stampede through every door I open. But over time and across many income streams, the combined effect will snowballed and become increasingly significant.

Here are my 7 key factors to build successful alternative income streams

Passion — Do what you love. If you hate writing, don’t start a blog or try to write for money. Find income ideas that are compatible with who you are and success will inevitably follows.
Expertise – Focus on what you are good at to begin the process. Sure, you could learn something new, but you want to put your best foot forward when you are starting out. Leverage your expertise to generate that extra income!
Patience — Don’t expect to see the desired results right away — e.g., this blog was losing money for three months before I earned my first dollar. Building alternative income streams take time and effort. For some income streams, you might see results right away, for others you might have to wait. Time is your friend when it comes to building alternative income streams — start as early as you can and stay in it as long as you can.
Commitment – Some ideas take more effort than others. For example, investing my money in the stock market doesn’t take that much time — just contribute the money, set up my asset allocation, research mutual funds and ETFs, invest, rebalance quarterly, and watch my money grow. Others take a lot of time and commitment — e.g., this blog consumes about 3 hours a day.
Persistence — Not everything you try will be successful — e.g., my little stint with the bulk candy vending business. You may have to try dozens of ideas before you find the one that works for you. The important thing is to keep trying.
Diversify — Don’t stop at the first thing that work. The whole idea is to have as many income streams as you could. You never know when one would dry up — e.g., even the Niagara Falls stopped for a day! Diversification is a great way to reduce risk, and it’s the best insurance against losing an income stream.
Little by little – The nice thing about diversifying and having a lot of income streams is that little things do add up to a lot. Just like they said, “A dollar here, a dollar there. The savings add up” — in our case it’s the income that adds up.

Well, there you have it — my secret recipe for successful alternative income streams building.

This article was featured in:

The Money Hacks Carnival #4 hosted by The Amatureist Financial Journey. For more information please visit the Money Hacks Carnival.

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21 Comments

Laura, 17. March 2008, 7:38

Patience really helps as you’re trying to build quality first and hopefully money with it. I think if focus on your reader you’re going to have a solid foundation. Great article!
Mrs. Micah, 17. March 2008, 8:34

I think passion and expertise are so important. Something that made a billion dollars for another entrepreneur may be a complete disaster for you simply because you don’t have the same interests and skill set. It’s ok to be yourself and have certain skills, you just have to realize that you’re not other people.
Tim, 17. March 2008, 9:36

This is a great list. All of these factors are important for not only creating alternative income streams, but in creating wealth in general. Thanks for the link also!
Phil, 17. March 2008, 10:57

Yes, this list is great! And keep in mind that exposing yourself to new income streams, no matter how small, will likely also expose you to new people, skills, and knowledge that can benefit you in your mainstream work as well. It never hurts to learn new things and do some networking.
Fixemup Terry, 17. March 2008, 16:08

Good list! I’ve gotten started on new income streams usually only I have observed someone else being successful at it. Imitation my be the sincerest form of flattery, but its also a safe way to start a new business.
Pinyo, 17. March 2008, 16:30

@Mrs. Micah - Great point. Something that works for other people, may be proven — but it still might not work for you.

@Phil - Exactly, don’t overlook opportunities even if it seems small.

@Terry — It’s proven and safe, but it may not fit you.
hank, 17. March 2008, 18:08

I like #5 the best. Persistence. 90% of blogs, for example, die out in the first 4 months because it’s NOT a turnkey business. You need to CONSISTENTLY stick to the dream. It’ll come, but that’s why it is called ALTERNATIVE income streams. Good post!
Brip Blap, 17. March 2008, 18:37

Great list. It is true that a lot of people who are looking for alternative income get discouraged, because it’s hard… I get discouraged sometimes, too. But just like with anything - weight loss, personal improvement, etc. - you have to believe that the efforts you are putting in today will pay off tomorrow. Getting reminders of that - like your article here - are ALWAYS useful!
Aaron Stroud, 17. March 2008, 19:36

Multiple income streams are a great way to build wealth, but they can be extremely difficult to build up when you have children at home (even for a parent @ home).

However, a second income stream is a great way to enjoy retirement sooner and more safely. No one really knows how expensive life will be in 30-40 years. Taxes will likely be higher and medical treatment will be significantly more expensive if we continue to push medical boundries, so part-time work might be the key to a retirement.
Brip Blap, 17. March 2008, 19:44

@Aaron: Alternative income streams are always difficult to build up - children at home or no. I have a toddler at home, one on the way, and I am away at work 11 hours a day - and I’m working hard at my alternative income. All the time I want my kids to be an excuse why I can’t work on my alternative income - I’m too tired, I already spent all evening playing/cleaning/etc. - but it can still be done. Until I go to a 100% TV free lifestyle, for example, I’m not willing to claim I don’t have time to work on things.
Aaron Stroud, 17. March 2008, 20:07

@Brip Blap, congratulations on the dedication. I continually have to fight against different distractions (real and artificial). If you can forgo the sleep, working into the night is the perfect time to get some peace and quiet.

We all have to draw the line on when to stop working. Right now I value my family time more highly than the chance to work, although that isn’t entirely true in practice (I watch tv too which is neither productive or family-related).
Pinyo, 18. March 2008, 6:16

@Hank - That’s true for most businesses also.

@Brip Blap - Thank you. We are in a society of instant gratification. To gain an appreciation for this, I always think about rice farmers. Rice farmers have to work from dawn till dusk for weeks to plant rice, and then they have to watch over it for months before they see any result.

@Aaron - I can relate because my wife just gave birth to a baby boy not long ago.

“However, a second income stream is a great way to enjoy retirement sooner and more safely.” And that’s exactly why it’s important to start as soon as possible.

…and I hardly watch TV or play video games anymore.
Ron@TheWisdomJournal, 18. March 2008, 9:10

Great list of tips, Pinyo. I really need to work on more income streams. My problem is that my job takes up 10 to 12 hours per day and more if I’m on a business trip out of town. Right now, I’m traveling 3 weeks per month!

THAT is motivation though!
Adfecto, 18. March 2008, 14:43

I’m with you 100% on starting multiple income streams. Thus far I’ve got a couple but I know I watch enough TV that there is certainly room to squeeze in one or two more ventures. The real challenge for me is not motivation but start up capital. I love blogging largely because it had virtually zero start up costs. The other businesses I regularly consider (like real estate or franchise ownership) have large start costs and fixed expenses that continue even if cash flow dries up. Do you have any suggestions for how to get started in these capital intensive fields and get off the fence about risking savings on an unproven venture?
Pinyo, 18. March 2008, 17:02

@Ron — Thank you. A job that you like and willing to invest a lot of time in is both a blessing and a curse. The important thing is to think about when that job is no longer there. I am sure there are plenty of Bear Stearns with six figures income that now wish they had thought about other income streams.

@Adfecto — I am reading a book by Terry Sprouse and he has some good ideas on how to get started in residential real estate investing. I am in the same boat as you — not really ready to start a more capital intensive business — although, I am not sure if this is the right time to do it.
Brip Blap, 18. March 2008, 19:48

Pinyo - excellent point on the Bear Stearns employees! That’s EXACTLY the reason why I self-downsized from my massive-time-corporate job with constant travel to a local consulting job - it freed up my time for alternative income and frankly a life. If you make 100,000 per year working 100 hour weeks you are making less than someone who makes 50,000 per year working 40 hour weeks. Seriously.

I don’t mean to say I’ve got it all figured out - I’m making $.02 per hour blogging right now, but I am confident it will grow. Adfecto, don’t get started in capital intensive business. There is no need. If you return $100 on a $0 investment you’re a lot better off than returning $10,000 on an $8000 investment - plus, as Pinyo said, this may not be the time to start. I know everyone buys into Buffet’s “buy when others are selling” but sometimes when everyone’s selling it’s time to be cautious…
tradesmen uk, 19. March 2008, 17:03

Nice article, I like the way it tells you about the good and the bad that may happen.. One thing for sure keep focused to the long-term goal and soon it will be knocking on your door!
Know The Ledge, 19. March 2008, 18:11

Nice post. There’s no question that passion and commitment are key factors to successful income streams. The key is finding “work” that doesn’t feel like “work” to you. Those things that are aligned with your interests so well that you would do it for free are the things that would make a great place to start looking for income.
SuperSonicSuccess, 22. March 2008, 20:25

Commitment and persistence are definitely things to keep in mind.

It took me 3 years to become an “overnight success”

At first it may seem like you’re not getting anywhere, but you never know when one of your ventures will start to prosper.
Newb, 1. April 2008, 10:34

appreciate small sucessess
Curt, 24. June 2008, 13:00

WOW. That’s a great article. I will have to go back to this one from time to time just to re-read.