If you have more than one girl in your life who you can invite for a sleepover, when things inevitably go south with one, you’ll avoid loneliness, sexual starvation, and will be less likely to become pussy whipped.
If you have more than one business, when some take a dive or have cash flow problems, the others can take up the slack.
I even like to have more than one place set up to live, work and sleep. Just in case some girl or unforeseen situation is causing a dramatic threat, I can bug out to one of my other locations.
Three years ago I had several thriving online e-commerce websites, selling the same product. But as a serial entrepreneur, I know to never trust any one business; markets change. And I hate it that Google has so much power over my income – a change in rankings can break me. I sought to diversify. I had dozens of great ideas, pursued several, and one of them took solid root.
With two income streams I had more confidence to invest in other businesses, which require more staff and long periods of R&D. The new businesses are further diversification, but there is quite a lot of investment involved, and there is always an element of risk.
Last year my older business did temporarily falter. If it weren’t for the newer 2nd business, I’d have had trouble making payroll.
I always have the option to just lay off staff and limit expenses, so my rent and food is never a worry. But momentum is valuable, and losing momentum can be far worse than losing money. The diversification allowed my momentum to continue.
A little over a year ago I started a third business. I got into property development. I’m building 5 bungalows on a plot of land that I leased for 10 years. The risk/reward profile looked good to me. I borrowed the money at a gigantic percentage with no security to lease the land, and used my own money to develop it. I’ve paid a lot in interest so far, but have managed to use my excess cash flow to complete the first of the five bungalows. Two others are partly complete.
Meanwhile my long term R&D projects have been inspiring greater confidence, and so I pushed the pedal to the metal and maxed out my expenditures against cash flow. That’s a high risk move. But it’s a move I was in a better position to take, as more and more new projects were approaching becoming profitable.
I have a chicken and egg situation with all of my businesses. In order to increase revenue from the existing ones, I need to hire more marketing staff than I have the money to pay for. In order to complete my R&D for product development, and then effectively market, I need to hire more staff than I have the money to pay for.
So I gambled that if I bought some eggs, I’d get some chickens in time to pay for eggs net 60 days. I hired some new marketing staff, on faith.
It was a good gamble. They increased sales well above their expenses. The momentum has increased, and now I’m in a position to double down and further expand the marketing department. Last week I discovered a great new hire who in his first few days has shown tremendous promise to increase sales in several of my businesses. This is giving me confidence to keep the pedal to the metal and hire more much needed engineers.
Last month I dumped money into finishing up the first bungalow. At the same time the oldest business had cash flow issues. This led to me having to dip into savings to make payroll and some other expenses. That’s not sustainable, and is scary and dangerous. My income remains solid, but now expenses are large, with 19 staff and plenty of regular expenses for R&D materials and bungalow construction.
But now we have increased momentum. The kinetic energy that we’ve built up is more valuable than money. And it feeds on money.
It seems my instincts for risk vs reward were finely tuned. I felt in my skin that it was important to push the pedal to the metal. I knew that I’d have to tough out a period of having nightmares about finances. Income will increase fast, I knew. I was right. Other projects will come online fast enough, I thought.
I haven’t had to touch my savings in two years. This month I had to dig into them. But my instincts were right, and we are not over stretched. Yesterday we pre-sold an unfinshed bungalow, using the finished bungalow as the show-piece. We have an agreement for 25 percent down now, plus 25% when the bungalow is 50% completed (it’s 25% completed now), and the remainder when the compound is complete. This 25 % down is enough to
1) replenish all the savings I dipped into
2) pay off the construction workers back salary
3) complete the bungalow to 70%
4) give a little cash flow buffer.
So now the property development business is no longer a drain on my cash flow, and is a self supporting new business, with huge growth potential. The construction project has done very well, and we will duplicate our efforts and build several compounds. It’s a good solid business, and a great diversification.
Within three months we should get a large cash infusion, as one of our first in-house developed products hits the market. That will enable me to fund as many engineers as I can find, and to develop the best marketing team that I can.
This has been a story of risk vs reward. Some people might read that I took an embarassingly large amount of risks. Some people might view it that my instincts were finely honed, and I took my sportscar at maximum speed around the corner until the doors were scratching the guard rails. Dipping into my savings is not something that I’m proud of this month, but a few years down the line, I will be. A few years from now, I’ll look back and know that I could not have gotten the chickens without gambling that the eggs would pay off in time.
New bungalows should sell in the medium term. Two or three other income streams will be coming on line within six months, and a few more within a year. Google will no longer own my ass. I’ll be in a position where businesses have synergy, and I’ll have ample income redundancy.
It’s been a scary ride. In hindsight, every move was the right one. But you never know that when you make decisions.