One of the best examples I can think of is a grocery store. And having more than one is obviously even better. You increase the base of customers and therefore the stability of your income!
Think about what it is like at your local supermarket. People are going in and out all day long. Each time they go through the checkout, you may not make a profit of hundreds of dollars at one time, but you make a little each time.
The same people come back again and again. Since there are a lot more of them, you don’t have to worry about one or even a few dozen of them hitting financially hard times and having it negatively impact your income in drastic way. (Think of the earlier RE (Real Estate) example.
Since you are taking a smaller amount from a far greater base of people, you income stabilizes in a very cool way. The bigger the base, the more predictable the income.
Yes, financially hard times may cause people to cut back, but even in that case, you business is in far less danger than in the RE example.
Earn a little from thousands of people instead of a few hundred from a dozen or so people, this is the idea.
And of course, in the grocery store example, you have a lot more people looking after YOUR income. In other words, you have a lot more employees. This gives you the ability to scale your operation as needed. If there is a decrease there is a lot of cushion between your bottom line and any loss to your income.
In other words, if you are feeling a crunch that is too uncomfortable, you can adjust your staffing levels. However, I hope that in financially hard times, you would think of the people on your staff and try to keep as many as you possibly can employed. – But that is another story.
Think about some of the big super store chains such as Aldis in Germany or Walmart in the US. These companies make a little bit of profit from a whole LOT of people, they really are in far better shape than a person who’s passive income comes from a few dozen people paying rent, wouldn’t you agree?
Something to think about, isn’t it?