I strongly advocate having numerous revenue streams.
Having a multi-legged cash flow stool can help protect against unfortunate financial situations.
At the end of the day, I never want to be beholden to one person, one company, or the government to help make my mortgage payments or put food on the table.
Over time, my family has been able to develop several revenue streams.
Initially, our household revenue stream started with only W2 income. Even then, our household had two revenue streams coming in – paychecks from my wife’s job and paychecks from my job.
While we both worked in the financial services industry, we worked for different companies. There wasn’t industry diversification, but at least we had employer diversification.
With a constant eye on financial independence, we knew we couldn’t just rely solely on our corporate jobs as our only cash flow stream into the future.
With that in mind, we saved and invested our income from our salaries.
And our revenue streams started to grow.
Adding More Sources To Our Cash Flow
One of the first things we did was to build our real estate portfolio.
I believe strongly that real estate is a great asset class for growing wealth and for producing a relatively steady cash flow stream. That is why I argue that real estate should be the cornerstone of anyone’s investment portfolio.
Over the course of 15 years, we built a real estate portfolio comprised mainly of small multi-family rentals. Those rentals generate enough net rental cash flow to support our current lifestyle.
It felt great to know that we are no longer beholden to our corporate jobs to be able to pay our expenses.
While having an additional cash flow stream outside of our corporate job is great, it isn’t enough.
We wanted to further diversify our income sources.
Next, we started building up our private equity portfolio.
The cash flow from private equity is sizable but less predictable.
We receive cash in when there is a recapitalization event or when a realization event happens to a private portfolio company.
Fortunately, for us, we look at private equity distributions as icing on the cake. We do not need the cash from our private equity investments to pay our bills.
In addition to private equity, on a smaller scale, we have dividend paying stocks and interest from fixed income investments.
The cash flow from these investments is relatively small. But the total amount is good enough to help fund a few family trips throughout the year and a few nice dinners.
We want to continue to add more legs to our cash flow stool. The more legs we can add, the more stable our stool.
I Want To Start A Business But Will I Be Successful?
Starting a successful business is a great next step in the progression of having a diversified multi-pronged income.
At the minimum, my wife and I want to comfortably step away from our corporate jobs if desired and not have to change our lifestyle one bit.
Ideally, we want to be able to step away from our corporate jobs and be able to generate enough income to upgrade our lifestyle.
Having been in Corporate America for two decades with a level of success, now I am faced with the question of whether I can be successful in launching a new business.
I came across an article published by Inc. titled “18 Questions That Can Predict If You’ll Become A Millionaire”
The article lists a quick 18-question quiz that Jaime Tardy, author of “The Eventual Millionaire: How Anyone Can Be an Entrepreneur and Successfully Grow Their Startup”, came up with to predict your financial future.
The 18-question quiz is a result of her packaging her insights from her interviews with millionaires.
According to Tardy, answering “yes” to more than half of the 18 questions may indicate you have a mindset similar to those who have earned $1 million already.
I thought it’ll be fun to answer the 18 questions and see where I fall out. I want to know if there is a million dollar business in my future.
The 18-Question Quiz
1. Do you consistently think of ideas to earn more money?
Yes.
I am constantly thinking about ideas and ways to earn money.
Those ideas range from how I can maximize the return profile of the investments I currently have to how to reduce expenses on my real estate rentals.
Also, I currently keep a business ideas log where I document business ideas that pop into my head.
2. Do you usually care about value and spend less than you earn?
Yes.
I believe spending less than I earn is one of the key steps on the path to wealth building. It doesn’t matter how much you make; you will never be rich if you spend more than your earnings.
You can look at the statistics for pro athletes.
NFL players: $3.2 million is the median income of an NFL player. 16% of NFL players will go bankrupt within 12 years of retirement.
NBA players: On average, NBA players who declare bankruptcy will do so within 7.3 years after retirement. 6.1% of all NBA players will go bankrupt within 15 years of retirement. The median career earnings are $12.67 million.
Other research pegs a grimmer financial picture for professional athletes. 78% of NFL players and 60% of NBA players face serious financial hardships after retirement.
That is why sticking to a budget that is ideal for early financial independence is key to building wealth.
3. Do you already feel successful in many things, but aren’t sure you can do something on your own?
Yes to feeling successful in many things, but I don’t feel that I won’t be able to do something on my own.
I do feel successful on several different fronts.
Additionally, I do feel that I will be able to succeed in doing something on my own. Now, that conviction isn’t 100% resolute.
There are times when I doubt myself but I do believe that if I keep on working at a business, I will eventually find success.
4. Do you know you are destined for great things, but feel like things aren’t moving fast enough?
Yes.
I am appreciative of all the things accomplished so far. But at the same time, I want to be able to take my finances to the next level.
5. Have you always wanted to be in control of your own time and experiences, but right now feel like you are just trying to get by?
Yes.
Ever since I started working a corporate job right after college, I wanted to one day be free from the shackles of the corporate chains.
That is why I relentlessly worked to build numerous cash flow sources and not be beholden to anyone or any company.
Ultimately, I want to be in control of my own time and experience.
6. Have you tried business ideas that didn’t work out before, but still have the passion to try new ones?
Yes.
I started a few online businesses during college. Some of them worked out okay and some didn’t quite work out.
The ones that worked out generated money. But I didn’t have the foresight to stick with those businesses and to try to grow them into legitimate financial independence vehicles for me.
Instead, I devoted more of my time to climbing the corporate ladder and those online businesses faltered.
I feel I can point back to my experiences back in college and say that I can do this again. And this time, I will have more focus and persistence.
7. Does the idea of working for someone else the rest of your life scare you?
Yes.
Being in control of my own time is a key reason why I spent the past 15 years building up my rental portfolio and putting different cash flow streams together.
8. Does having a boss feel constricting, and you don’t want someone telling you what to do?
No.
A boss can be constricting or a boss can be freeing. It really depends on the boss.
A micromanager or someone prone to say no would be very constricting.
However, if the boss is very supportive and put you in a position of leadership to make key decisions, then the boss can be freeing.
I’ve had both over my 20 years in the corporate environment.
9. Do you have the idea of waiting until retirement to enjoy your life and the world?
No.
I believe there should be a balance between enjoying life and working and that balance shifts as I age.
Work should be the priority in your 20s.
Effort, similar to investments, compounds over time. The earlier you put in the effort, the greater results you will see later down the line.
Lay a strong financial foundation in your 20s.
Try to accelerate wealth growth in your 30s. Continue to work hard during your early to mid-30s.
Then, hopefully, by your late 30s and 40s, you can enjoy the fruits of your labor.
I am not interested in waiting until retirement to start to enjoy life and the world.
10. Do you believe that success and wealth are in your power, but you don’t want to rely on others?
Yes.
Self-sufficiency and not relying on others are the basis for financial independence.
As you already know, financial independence is one of my key goals. Hence, the multi-legged cash flow stool.
11. Do you want to travel more but don’t have enough vacation days?
Yes.
My problem with my vacation days isn’t so much the number of days. I’ve been with companies that have been generous with vacation days.
The problem lies more with when I can take those days and the length of vacation.
My vacation calendar needs to work with my school age kids. That means the months of July and August are prime months for traveling.
I would like to have more free time during those two months but it would be looked down upon if I take 3 weeks off in July and then another 2 weeks in August to travel with my family.
12. Are you able to daydream about what you want to be when you grow up, no matter how old you are?
Yes.
I currently still have professional goals I want to accomplish such as being a successful entrepreneur and business owner.
13. Do you only sleep four to five hours per night because you are too excited about your new ideas or business?
No.
I have a few business ideas percolating. They don’t excite me enough to keep me up at night.
I feel I need to be flexible enough to not be stuck to one idea. My business ideas should be fluid and should evolve with marketing testing and customer demands.
14. Do you read success stories and think, “What made them so successful? How come I haven’t made it yet?”
Yes.
I enjoy reading stories of successful people to learn how they were able to achieve their level of success.
You don’t have to be a trailblazer to be successful. If someone has figured out the formula for success, why not emulate it as opposed to reinventing the wheel?
15. Do you want to do work that matters, not just something that pays well?
No.
I want to do work that pays well. I use monetary rewards to let me know if my work matters.
The financial success of the business is a great indication of when something matters. It isn’t meaningful to me to do something I think matters, but the market doesn’t respond well to it.
16. Do you want to become a better person through personal growth?
Yes.
I constantly strive to be a better person and to continue to grow my knowledge and skill set.
17. Do you want to leave a legacy?
Yes.
I want to leave a legacy but I don’t view money or a business as the main ways to leave a legacy.
Raising my kids right and having them be contributing members of society and being a positive influence on them are most important to my legacy.
Hopefully, they will be good parents and raise their kids right, and so on.
I want my legacy to be one of a positive impact on my family lineage.
18. Do you want to give more, but feel unable right now?
Yes.
While I have contributed to charity, I want to be able to give more.
However, I don’t feel comfortable donating a lot of my time or money yet while I am raising 3 school age kids.
Will I Be Successful According To the Quiz?
Let’s tally up my answers to see if I will eventually be the owner of a million dollar business.
Per the author of the quiz, answering yes to half of those questions means I have the million dollar business owner mindset.
My 18-question quiz results: 14 “Yes” and 4 “No”.
My results seem pretty positive.
According to the quiz, I have the right mindset to eventually be a successful owner of a million dollar business.
That is good news.
Now, the hard part begins. Time to execute.
To The Audience: How did you do on the 18-question quiz above? Do you think this quiz can predict one’s level of success? What do you think is the most important question to ask a new entrepreneur starting out?
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Many people work hard to better their physical and mental health. What about their financial health?
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My financial journey began with tens of thousands in student loan debt. Over the span of 20 years, I am close to achieving financial independence.
I truly believe anyone can get to strong financial health. Hopefully, this blog can help you on your financial journey to greater wealth and financial independence.
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I totally failed at that test, which I expected because I never saw any benefit in starting a business versus just working for someone. My skill set was pretty elite and I was able to make high compensation and never worried about losing my job because my network would get me an equivalent job at higher pay if that ever happened. Starting a business is a higher risk affair that usually involves more hours per week than my job did. You might incur some debt doing that as well and I haven’t owed anyone a penny in decades. It is the better path to extreme wealth but I don’t see much benefit in having extreme wealth. Just regular wealth of having more than enough to do whatever you want is fine with me. Starting a business is much riskier than working for a company, and if you can get wealthy on a paycheck, like I did, you can have your cake and eat it. I have friends who have much more money than me who went out on their own and I admire them for it. That just wasn’t for me, once I had enough money I was done with working. They would never have been happy working for someone else, so starting their own company was the best choice for them.
Thank you for sharing another perspective.
I don’t believe starting a business is right for everyone. You have outlined a few of the pitfalls with starting and running a business.
For me personally, I want to start a business for a # of reasons: (1) to see how well I can do on my own; (2) to try to increase my income; and (3) to have full control over a revenue generating venture (results in more control over my time and allows me to select the people I want to deal with).