Avoiding Income Gaps Like Pro Athletes Do
The reason that job downsizing is painful to people is often because they did not plan ahead for the income gap! Very few people think about being downsized and most don’t get income protection in place ahead of time.
When did Noah build the ark? Before the rain…
It isn’t just corporate middle managers that walk up to the edge of the income chasm and look for options. The athletes you watch on TV and from the stands as well as the leaders of companies all over America face pay gaps as well. Many of those top figures are leading examples on how to create a portfolio of income streams. For some that may even include a salary from a job. They do this planning because they know they will have pay gaps and they want to avoid the pain.
This multiple income stream approach may be how you ought to consider creating a base of income that will support you in up markets, down markets, between jobs and through retirement.
So, what can you do to follow the example set by those leaders?
First move from an employee mentality to a portfolio mentality. What I mean by this is that successful income stream building will require backup plans in the form on multiple cash flows so that if one is experiencing trouble that you have others to provide for your needs. Here are some ideas of acceptable cash flows:
- Salary from a job
- Fees for consulting
- Rental income
- Income on stock or bond portfolios
- Income from one or more businesses you own
Notice that I did not include your retirement fund, it is not an income stream until you retire so I don’t count it here. There is a way to use it to fund your business without the tax or penalty so you may be able to use it to your advantage to grow income streams.
In the past we would tell most candidates that if you were going to own a franchise that you had to be ready to run it every day. Over the years, franchise companies have gotten pretty good at identifying those business models that could be manager run so that the owner could own those businesses and keep their job or run another business at the same time.
Examples of semi-absentee or absentee business options, but not every brand in these spaces offers this ownership model:
- Hair Salons
- Massage businesses
- Fitness concepts
- Real Estate property leasing operations
- Some Restaurants (get expert advice)
- Clothing stores
- Educational Franchises
- And many more
The game plan:
The most important step in your plan needs to be forming the foundation or launching pad for long term growth. For some this is their job, for others that are not currently working (or soon to be unemployed) this might be their first franchise.
In this foundation step you want to play it safe, gravitate towards things you are already trained to do or where your skill set lies. Using the skills you have built is critically important in this first stage, you have worked to long and hard to walk away from your money maker! The right foundation gives you flexibility to build from and you may swap it out when you have other income streams that replace it.
A quick example, I had a candidate that had a great corporate job but wanted to build something bigger than he could as an employee. Since he had a job that formed the foundation of his plan we moved on the add the first income stream, a low cost high margin service franchise that was manager run. His involvement would be about 10 hours per week, but not necessarily all in the operation. He would check in on his team, monitor the cash deposits and financials as well as oversee business growth and all while he worked his corporate job.
While he was initially opening one location he had committed to 5 total so that he has the locations needed for this step in place under his name. The goal was to build out these 5 locations as a stand-alone income stream alongside his job income. Once all were up and settled into mature operations he could then quit his job and leapfrog that first business to start another. The first semi-absentee business would always be semi-absentee; it will never need him full time.
Here’s the good news, almost anyone can do this! The key is having the right plan for you and your family.
When we build these plans for our candidates we look at what they have in place now, what we could add as a next step and what the step after that might be. This is much like a game of chess where you have to be thinking about the steps in the future to make sure the early steps are not putting you in a bad position to grow the portfolio you want.
What do you want to be doing in the future? What does that lifestyle look like? How do you want to work? Will your family be involved? Do you want to pass the portfolio down to your kids?
With the right planning and advisor, you can be in pursuit of your greater goals now. We build these plans every day they can be wise paths to the portfolio and lifestyle you desire.
What is your success story? Let’s go find it!
George Knauf is a highly sought after, trusted advisor to many companies; Public, Independent and Franchised, of all sizes and in many markets. His 20 plus years of experience in both start-up and mature business operations makes him uniquely qualified to advise individuals that have dreamed of going into business for themselves in order to gain more control, independence, time flexibility and to be able to earn in proportion to their real contribution. Contact the Franchising USA Expert George’s Hotline 703-424-2980.