Wednesday, 25 February 2009

Why Multiple Income Streams?

Until recently I kept trying to use each new product I purchased on it's own. I was trying to achieve the same results the product owners were claiming were possible. When it I didn't achieve these results I would get frustrated or dis-illusioned and give up. I sometimes bought something else instead and started to try that before the other product had been given a chance.
I then read a paragraph in a product I bought which explained why they recommended multiple income streams.

They described the following scenario -

There are 2 companies selling cans of soda. One company has 1 vending machine and charges $1 for their soda. Their machine is in a prime location and sells 1000 units per month. The other company has 10 vending machine and charges 10c per soda, their machines however are in less desirable locations and each machine sells 100 units per month.

Company A = 1 x 1000 @ $1 = $1000

Company B = 10 x 100 @ 10c = $1000

Looking intially Company A sells more units out of its 1 vending machine and maybe is the best option. Now imagine that a vending machine breaks down at each company and it cannot be fixed for a month because they are waiting for a part to arrive.

Company A = 0 x 0 @ $1 = $0

Company B = 9 x 100 @ 10c = $900

Company B is still making money even though they have 1 machine broken. Company A has made no money because they put everything into just 1 machine and that is current broken.
This is the power of multiple income streams. If each stream earns a little then when they are added together they can become alot. If 1 one these income streams no longer makes money then not all our income has been lost.

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