Income Crushed And Thousands Of Dollars Lost Thumbnail

If you’ve read my blog you know that I am a big advocate of diversification in most things we do in life, especially our income streams.

Something BIG happened very recently that reminded me of the importance of diversification and further reinforced my perspective on why I believe we should establish multiple streams of income.

Uncertainty doesn’t knock on the door before paying us a visit. If you have a professional career as an employee, the pink slip can surprise you at any time. If you are a small business owner, a new legislation in your industry may make you unprofitable and force you to shut doors.

For someone like me who generates most of their income online, a minor tweak to the Google Panda update can bring my revenues down significantly overnight.  One such event happened very recently that I’d like to share with you.

UNCONTROLLABLE CHANGES

On October 13/14th, the Google Search Engine team pushed an update that affected half the internet from what it initially appeared at least. Every blogger in the search and money niche was talking about the sky falling. I too was affected.  Initially, only two of my niche websites were affected; ironically the two oldest and most established.

I posted a query immediately in the Yakezie forums to see if anyone else was in the sinking ship with me. Not surprisingly, others were too.  A week later, 5 of my other niche websites tanked significantly. Here is a screen shot of one of my niche sites, which went from averaging 2,200 daily unique visitors to just over 1,000. That is a more than a 50% drop in search traffic.

50%+ Drop in Traffic from Google Panda Update

Before I explain what happened and how it impacted me, it is important to cover some background information.

Of all the income streams I have established over the years,  a big chunk comes from a portfolio of niche websites.   Although each of my income streams have been subject to some volatility, or fluctuation, most have been generally very lucrative for me over the years.  But what happened recently was the worst I have experienced and definitely worth discussing and getting your feedback on.

My portfolio of niche websites generate enough income for a family of five to live on more than comfortably.  Because of such a large drop in traffic in several of my niche websites, I saw this income stream diminish more than 50% literally overnight.

I don’t want to get into why some of my sites tanked while others didn’t, and what I will eventually do about them, rather I want to focus on the importance of income diversity and what more than a 50% drop in one of my largest passive income sources means to me.

CONTROL WHAT YOU CAN, LET OF WHAT YOU CAN’T

After such a blow to the gut, I could sit and cried about it, worst yet go into depression, quit all materialism and banish into the forest like a monk.  Alternatively,  I can reflect on my experiences and make changes to attributes I can control to mitigate any potential adverse effect of such unpleasant surprises in life.  I favor the later.

If you are earning your living online and are heavily reliant on search engines, it is critical to understand that we CANNOT control what the engines do, when they do it and how they do it. Even the best of the best SEO firms are perplexed and by default have turned into Occupy Google protesters.

The lesson learned here is that one must be diversified enough to sustain such hard blows every now and then as they are inevitable for many. In my personal case, having other niche websites helped, which were not affected by the Panda update. Owning other income producing assets also helped, which makes me less reliant on my income from niche websites.

But I can’t imagine what this could do to someone like Spencer Haws of Niche Pursuits who makes all his income from Adsense websites. While Spencer is just an example, the broader implication applies to anyone who relies on just one stream of income.

While there are measures one can take to prepare for such events, such as establishing an emergency fund, or living a minimalist lifestyle to keep expenses low, having an alternative source of income just has a completely different effects on one’s finances, psyche, emotions and even physical well being.

CONTINUE DIVERSIFYING THAT INCOME

It is exactly because of events like these that I continue to remain an advocate of income diversity.  And although I favor passive income streams, this discussion is not about that. Whether passive or active, this discussion is about the effects that income diversification can have on an individual when times in certain trades or industries turn sour.  There are just way too many externalities beyond our control, therefore we should try to influence those things that we CAN control.

Will I work hard to get those sites their ranks and profits back? You bet. I will work some. How much I don’t know. There always comes a point of diminishing returns, and it may be wiser to move forward and create more income streams with my limited time instead.  The good news is that although Google has stung me very hard this time around, I am fortunate in knowing that the sting could have very well been a bullet.

I’m thinking what if niche websites are all I had and my income dropped 50% overnight? What if my consulting business is all I had and half my clients severed me due to budget cuts? What if I had a 9 to 5 job and had to take a 50% salary cut or got laid off.  What would I fall back on? What would YOU do? Is income diversification important to you? As a busy professional, what do you see as the most conducive way for you to diversify your reliance on your primary stream of income?

Sunil
Prepared