Recently, I was given the opportunity to share an education segment for the MCBA local business networking group. As the co-chair of this committee with Shelby Leight, I have the freedom to share topics I believe will benefit the group. I chose the topic of creating multiple streams of income because I've been on a quest personally to build out a healthy income portfolio of businesses and investments. I've very new at this since we just got of debt last year. Nevertheless, my curiosity lead me to start this discussion and it went really well.
I started with a story about people losing their incomes in 2020 as a result of the Covid-19 pandemic. I recounted some examples of cleaning business owners and others that I personally know who were hit hard. Everyone in the room related as they all knew someone too. As a group, we went through every year where people felt a significant recession. Thankfully, we had so much wisdom in the room (that's a nice way to say age) and we went back to 1975. Here were the dates: 1975 (gas shortage), 1986 (stock market crash), 1993 (short recession), 2001 (9/11), 2008 (the Great Recession & crash), and 2020 (Covid). We all agreed that history and math teach us something. We have experienced these life-altering shifts every 8-12 years since at least 1975 and we're going to experience them again.
I wrote a new date on the white board -- 2028. What will you do to prepare your family against another loss of income? This is where I brought in 2 concepts: multiple streams of income and the cash flow quadrant. For multiple streams, I drew various pies as examples of families. We showed the single income family with 1 job or business, the dual income (which didn't really become normalized until the early 1980's as a few in the room told me), and the entrepreneurial family with 7 streams of income. I shared of some friends in the cleaning industry that lost 90% of their residential income while others grew in commercial. Others in the group shared how they lost 75% of their job income, but their wife had a job that earned more and her side businesses floated the family. They had multiple streams. Another member who had been through every downturn mentioned that they had diversified their services as a way to add multiple streams of income inside of their industry or business. This was a great point. How are we doing that? I know many cleaners that have added disinfection services while others have always offered window cleaning, carpet cleaning, and more. I shared that Tom Stanley from the book, "The Millionaire Next Door" shares that the average millionaire has 7 streams of income. As a group, we discussed the various forms of income like earned income (a job or business where you are the one working), a profit (selling products), interest (lending money), rental (real estate), dividend (stocks), capital gains (selling an asset), and royalty income (writing a book, music, or business passive income). Another member started a great discussion that during the downturns creativity emerges from the opportunists. Everyone in the room agreed and I shared the Mark Cuban quote from 2020. "I believe that tomorrow's new billion dollar corporations will arise out of this pandemic." Mark shared that he sees this happen in every crisis. The opportunist entrepreneurs find a major need or gap and develop a way to solve it. We wrapped up this discussion with the Cash Flow Quadrant. I kept that part simple to show that the 7 types of income can be mapped onto an active vs passive map. I explained each quadrant - the E, the S, the B, and the I. I talked about my own goals and the Cash Flow Game. "I want to eventually have all of my income on the right side and I want the total far exceeding our monthly expenses. That's financial freedom!" Everyone nodded. Most in the room earned their income and thus had 80+% of their income on the active side.
One member, Gary Volpe the founder or Volpe Enterprises was gracious to share that he earns most of his income through passive forms like rentals and a shareholder distribution (or portion of his companies profits each year). Gary is very humble and didn't want to take credit for his excellent money management and planning, but the others clearly saw an example of a life well-lived. Gary has passed on the business to his 3 sons as he shows up once per week to say hi. I want this type of business and life. I want to prepare against what will certainly happen again and again. I want to buffer my family against financial catastrophe. I want to build wealth through multiple streams of income. I know how I'm doing this. How about you???
Make sure to check out the many free & paid resources available at the Smart Cleaning School website. Also, do you have questions for me? Book a free coaching call on my website!
The Smart Cleaning School Podcast helps cleaning business owners from start-up to the struggling solo to the striving seven-figure get SMARTER in their businesses, reshape their mindset, increase productivity, clear the overwhelm, and get clarity through SMART goal-setting & personal accountability. Ken Carfagno is a lifetime learner and teacher. His mission is to help visionaries make the impact they were meant to make.