Opinions expressed by Entrepreneur contributors are their own.
When we think about a diversified business model, it’s almost always followed by thoughts of multiple streams of income. Sounds wonderful. Wouldn’t we all love money coming in from many different sources? Better yet, let some of those sources be passive income streams and we can just sit back and watch the money roll in, right? It doesn’t exactly work like that, though.
If you’re like many entrepreneurs, you probably also spend a great deal of your time and energy on parts of your business that you intend on being future income streams that aren’t paying off quite yet. They may be efforts that aren’t currently bringing in the dough but are what you intend to be the future of your business and primary income sources.
For example, take the consultant-turned-author who aspires to be speaking on big stages giving keynotes. Now, we know it’s going to take some time to achieve that lofty goal. In the meantime, a disproportionate amount of time and energy is going to be spent trying to get those gigs while it brings in very little money in the short-term.
Or take the launch of a new product or service that you’re confident will pay off eventually. Perhaps it’s marketing efforts like an ongoing newsletter, having a podcast or writing a book, all of which require a tremendous amount of time and effort upfront long before they ever pay off.
Unlike an income-driven business model where you’re basing your decisions as to where to put your effort in proportion to what’s bringing in the money, an impact-driven business model is putting your time, energy and resources towards the impact you want to make in your business and trusting that the money will follow.
This is an important distinction, because without realizing the difference, many entrepreneurs and business owners wonder if they are wasting their time — because the effort they are exerting and the time they are devoting is far exceeding the income. With a traditional income-driven model, you prioritize by income. With an impact-driven business model, you prioritize the work you want to do and the difference you want to make, even if the income isn’t there yet. An impact-driven business model is particularly important today as more people are driven by a passion and purpose and need a business model that reflects that.
However, their effort isn’t entirely passion-driven, forsaking future income. In fact, the intention is for this effort to eventually lead to substantial income. The problem is that for as long as people believe they should focus on an income-driven business model, they are going to question whether they are wasting their time or feel like their business model is broken, because traditionally, businesses have focused on income first. Don’t get me wrong — Income is imperative to a sound and profitable business. But far more business models appear to be impact-driven today. Leading with impact, trusting the money will follow.
What’s important about this is knowing where to put your time and effort at the moment. With an impact-driven business model, it’s okay, even expected, that you’ll be putting in more effort to grow that part of your business than the income it currently provides. If you are focused on an income-driven business, you would likely make very different decisions as to where to put your effort.
This shift from income-driven to impact-driven business models is likely due in part to who’s starting businesses today: Older business owners (mid-lifers, you could say), people who have left their corporate jobs in recent years or the millions who would be considered part of The Great Resignation and are starting their entrepreneurial journey a bit later in life. These are business owners who are driven by making a difference in the world, impacting an audience that means something to them and making some serious bank, because they still have a long life ahead of them. Yet they are also patient. They are in it for the long haul, so leading with impact makes sense. They know the money will follow.
So, as you plan out your year and future years of business, it may be wise to adopt an impact-driven business model. As you lay out your current and future income streams, consider that where you put your effort today may not be where you expect the greatest amount of income yet.
I like to look at it as levers on a control panel. Get clear on which levers you want to ramp up and put more effort into, proportionate to the impact you want to make. And which levers do you want to moderate or pull down, because those income streams, perhaps even significant income streams, simply don’t require as much effort at this time? This way, you’re making decisions based on effort and impact and not solely on income, trusting the income will follow. Considering it a control panel, you can ramp up and pull back any effort anytime you want. What I believe this offers is clarity as to where to put your time, effort and energy.
If you make all your decisions based on which efforts provide the greatest income, you may gain the money, but have you met your real goals? Have you made the impact you set out to make?
With an impact-driven business model, you get the best of both worlds: the satisfaction of knowing you made the impact you set out to make and ultimately being rewarded financially with a strong income stream.