The Importance of Creating Multiple Streams of Income as a Freelancer
Every new freelancer has a vision of what freelancing will be like. This vision usually includes the optimal project and the perfect client, bringing in the right amount of money.
And when you start, you will often only have one or two different income streams, usually coming from your first client. It could be a short-term web-design project. Or, it could be an ongoing support agreement with a business.
This is great, but a freelancer who only has one client or one project isn’t a freelancer. They just have a part-time job. If this is all you want, that is fine.
But, if you want to grow your business and make this freelancing life work for you, you soon realize that multiple income streams are essential for long-term success.
Multiple income streams can mean many things, like having several clients, doing varied work, or investing in different lines of business.
There’s a difference between a new freelancer specializing in web design and an experienced, diversified freelancer.
The new freelancer has two monthly contracts to manage - hosting, providing simple site updates, and troubleshooting if something goes wrong. At $200/client, this is a great start.
But this freelancer is in a precarious situation. What if one (or both) of the clients decides to go in another direction? What does the freelancer then do? How do they compensate for lost revenue? How do they gain more clients? How do they keep moving their business forward?
In this article, I want to remind you why generating multiple income streams is essential for success as a freelancer and then explain how you can generate multiple income streams.
So, why do you need multiple income streams to succeed at freelancing?
Let me give you 5 reasons to consider:
Multiple income streams mean you have income flowing in from various avenues. So, if one avenue dries up, more money keeps flowing in. You are less vulnerable to periods of stagnation or economic instability.
You have to remember that freelancing is an ever-changing business. Technology is always changing. Clients’ expectations are changing. The economy is changing. Jobs come and go.
Pivoting as a freelancer is just the nature of the beast. And it’s easier to pivot when you have the financial backing to do so because you aren’t so vulnerable to slight industry changes or the whims of one client.
Feeling financially stable is key to having peace of mind. You’ve left a reliable 9-to-5 job with paid vacation days, sick days, and a steady paycheck for the unpredictable world of freelancing.
So you have to create the financial stability you once enjoyed by diversifying and creating multiple income streams. There is nothing quite as valuable as your peace of mind.
Along with peace of mind, the financial stability of multiple income streams allows you to enjoy more freedom.
No one is paying you for sick days. No one is giving you permission to take a paid vacation. You are in charge of your own time and time off.
If you have created many and varied ways to make money, you can afford to take time off.
When your child gets sick, you can take care of him without worrying that you’re not actively creating money because you have already set up avenues to continue making money, even when you’re not frantically working at your computer.
When you need a mental health break, you can afford to take a vacation or put work on hold to prioritize your well-being because you know that the money will keep flowing in through multiple contracts you’ve acquired.
Freelancing is awesome because it can afford you the freedom you crave if you’ve set up your freelancing effectively.
Because you’re not solely reliant on one client, project, or gig, you have greater control over what clients you want to work with, what projects you want to work on, and how you want to work.
The more varied your income streams are, the more control you have over your freelancing business. You can spread the revenue you generate across multiple projects, clients, and services.
You can afford to say no to the types of client who aren’t a good match for you.
You can pick and choose which projects are really worth your time and effort.
You can decide in which direction you want your freelancing business to go.
You aren’t constrained because you’re too worried about losing valuable income or losing your only client. Multiple streams of income allow you to invest your time, talent, and resources in ways that will realize the freelancing vision you have.
The reality is that the more you diversify and create varied income streams, the more opportunities come your way. It’s sort of like the “snowball effect.”
As you take on more clients, your name and reputation spreads to new clients. You gain those valuable referrals.
As you diversify your services, you attract more businesses and clients who need those services.
As you increase your visibility, you can expand your networking and forge potential partnerships with promising revenue.
Soon, new opportunities are coming your way, along with new income streams. Your freelancing business and your bottom line are growing.
Suddenly, you can free up time and resources to explore new avenues of freelancing, gain new skills and experience, and set yourself up for success.
You can even take some calculated risks you wouldn’t have dared with limited resources or income streams.
This leads me to why you should have multiple income streams.
You need multiple income streams to effectively grow your business.
You need to decide your end goals. You need to decide if you are actively trying to grow a business that will support the lifestyle you envision.
If you’re just supplementing your 9-to-5 income, then maybe focusing on one client or project at a time works for you. And that’s great.
But if you’re looking to leave the 9-to-5 grind behind and create a new life through freelancing, consistent and dependable growth is key to making that new life happen. And multiple income streams are the key to making growth happen.
So, now that we understand why it’s so important to create multiple streams of income, we come to this question:
Again, let me give you four suggestions:
Adding additional clients usually requires no new skills, but it does require the knowledge and effort needed to generate leads and referrals.
If you’ve been with a client for some time and it seems to be going well for both of you, don’t be shy in letting them know you are growing your business and in asking them to refer you.
Word of mouth is one of the best recommendations you can have, and you can incentivize existing clients to recommend you by offering a one-time discount for every new client they bring your way.
Usually, your work will speak for itself. People are always networking. Happy clients will spread the word about the value that you bring to their business.
When new clients contact you, be ready to take them on so that you can begin to add to your income streams.
As a freelancer, you have quite some flexibility in which areas you expand your services; if you are doing web development and you have design skills, you can bundle those in the package or sell them as individual services. Or perhaps you have experience and like writing content that can be an excellent addition to your portfolio.
Broadening your services can help you diversify your income streams and generate a more stable and future-proof business, but be careful to overdo it and lose focus on what your real goal as a freelancer is.
If you would like some ideas for inspiration, check out my article on side gigs to make money as a developer.
Consulting is an excellent way to increase your income without handling the full project. You will provide advice or feedback in a certain area of expertise, and that’s it. This keeps your workload manageable while still allowing you to help others and get compensated for it.
Consulting can be very rewarding since you are paid for your knowledge and experience. It’s a great way to start building relationships with potential clients and exploring new opportunities.
More and more of every business requires the integration of different tools and platforms, which are always changing and improving.
Inventory management connects to online ordering, connects to POS systems, connects to automated postage services, etc.
Many business owners don’t have the time or knowledge to link these pieces together and streamline their business.
Especially when working with a client doing web consultations or web-design, you could offer additional services around building and maintaining interconnected frameworks, and business processes.
Time is money, right? Explain how this service will add value to their business by automating essential components that will run without them having to think about it. They’ll be more willing to pay you if you can show them how you can save them valuable time and a lot of headaches.
Diversification and creating multiple revenue streams are essential for continued growth, peace of mind, and stability as a freelancer.
To create varied streams of reliable income, you may need to expand your client base, learn marketable skills, or offer new services.
But the growing pains are worth it when you begin to experience the freedom of a successful freelancing career that affords you the lifestyle you’ve always dreamed of.
Generating and maintaining multiple income streams is the key to securing this freedom.
Thanks for reading!
Juan Cruz Martinez
Juan has made it his mission to help aspiring developers unlock their full potential. With over two decades of hands-on programming experience, he understands the challenges and rewards of learning to code. By providing accessible and engaging educational content, Juan has cultivated a community of learners who share their passion for coding. Leveraging his expertise and empathetic teaching approach, Juan has successfully guided countless students on their journey to becoming skilled developers, transforming lives through the power of technology.