Like it or not, building a home business from scratch is likely to be a risky endeavor. Something around 97% of new businesses fail, over 70% of which fold within the first year. For bloggers, over 80% of bloggers never make more than $100, and only about 2% can ever turn their online income into a six figure a year business.
As an entrepreneur, you’re likely to have all of your eggs in one basket with your business. That can be good, in the sense that it provides incredible motivation that will push you on to success, but it’s also a very bad thing when considered from a realistic standpoint of most companies failing.
Online Income Diversification: Smart Investing
Because of these staggeringly powerful statistics, it’s extremely, extremely important for entrepreneurs to consider creating plans to diversify their income wherever possible.
If you have some runway capital to begin with, you might create a strong investment plan from day 1, but if not, you should still start planning early, so that you can re-invest your earnings as quickly as possible, and have a clear plan and goals for how to do so.
My personal favorite vehicle for smart online investing is to have a diversified options portfolio.
Whenever I tell people this, I usually get a wide range of responses, most of which are negative. Options trading tends to have a get rich quick type of stereotype, which simply isn’t true.
There are lots of low risk options strategies you can take advantage of, and when done right, you can steadily make a consistent return on your investment, regardless of overall market conditions.
For starters, you can learn more at www.studyoptionstrading.com, and start learning about why this is such a powerful way to add to your income.
Paying Yourself A Real Income
One of the tricks to starting to diversify your online investments is to have a consistent income. When you’re starting a business, one all-too-common fault is that entrepreneurs will neglect to pay themselves a decent salary.
While you obviously shouldn’t be earning six figures while your company is struggling to get by, setting a consistent, livable salary for yourself should be a priority.
That will give you less stress, since you know what money is coming in when, and will allow you to invest predictably over time.
To come up with this number, you need to take a look at what you realistically need to live every month, and create a salary that’s larger than that number by a good margin.
You also need to consider what your business can handle. A general rule of thumb is to make sure you have operating cash for at least a 3-6 month window, so you can’t pay yourself so much money that you risk your business not being able to function and pay its bills when the month ends.
Finding that balance is key to maintaining a good diversity in your investments, both with the company and with your personal income.