A few years back I was talking with a guy that was running a commercial cleaning contracting business. He was doing OK with it, he told me he was doing about £250k a year revenue and it was paying him and his Mrs about £40k each after all the staff and running costs.
But he also was involved in four other businesses. Totally diverse, one was an events business, one was something to do with motor boat parts, one was a retailer and one was some kind of project management business.
I asked if he was spread too thin, juggling all this. His view was that someone successful had told him about "the power of five" years earlier, a concept that if you have five small companies all moving along, if one is not doing so well another might be doing better and on balance you can have a better outcome and he now has that.
This kind of stuck with me, I appreciate you can build a mega successful single business BUT if that business has slumps in the year, perhaps some months beter than others and you have a second business that does well during those slumps this sounds like a great way to get ahead!
I have not managed the power of five myself but it kind of makes sense?
Anyone else achieved this?
I’ve seen this pattern in the real world, but I’d be careful how you frame it.
What that guy is describing isn’t a magic “power of five” principle so much as a
portfolio strategy applied to small businesses: multiple income streams with different demand cycles, so your downside risk reduces and your cashflow smooths out.
That can work very well — but only under certain conditions.
1) The businesses are “simple to run” once established. Usually they’re either:
- Contracted / recurring revenue (cleaning contracts, maintenance, managed services)
- Asset-light / repeatable delivery (events with a repeatable format, ecommerce with stable fulfilment)
- Or they have a strong operator in place
If each business still needs the owner to be the hub, then it’s not a portfolio — it’s five full-time jobs.
2) Different seasonality / different economic sensitivity. Your point about offsetting slumps is spot on, but it only holds if the businesses
really behave differently. If they all rely on the same customer type or the same discretionary spend, a downturn hits them together.
3) Shared capabilities or shared customers
The best multi-business owners I’ve met aren’t “diverse for the sake of it”. They reuse:
- Sales channels
- Supplier relationships
- Back-office (finance/admin, HR, marketing)
- Management systems
That’s where the compounding happens. Otherwise you multiply complexity.
Where it usually fails (and why people don’t admit it)
1) Complexity. Five businesses means five sets of:
- Compliance, tax, insurance, contracts
- Cashflow timing issues
- Staff problems
- Customer issues
Even if each is “small”, the admin load may not be small.
2) Working capital and attention get diluted. A single operational wobble (late payer, staff issue, equipment failure) can pull you into firefighting — and then the other four drift.
3) “Diversification” becomes avoidance. Some owners start new ventures because they’re bored or because one business has uncomfortable constraints (pricing, people, systems). New business energy can mask the need to fix fundamentals.
Another way to think about it. If you like the idea, how about
“One core business + a small number of adjacent income streams, each with an operator/system.”
For most SME owners, a
2–3 stream portfolio is plenty:
- Stream 1: the main scalable engine
- Stream 2: counter-seasonal or counter-cyclical
- Stream 3: optional “opportunistic” (only if it’s not attention-hungry)
You don’t need “five” for the risk-smoothing effect. You need
uncorrelated cashflows and
strong delegation.
If I were advising someone to build this deliberately, I’d consider these rules:
- Each business must have a named operator (or a documented process) before you add another
- No new venture until the current one runs 80% without you (not perfect, but stable)
- Separate bank accounts and basic monthly reporting for each (so you can see which one is actually winning)
- Be honest about “shared resources” (your time, your spouse’s time, your bookkeeper) — because that’s usually where the hidden fragility sits
- Limit the number of “high variance” businesses (events is often high variance; cleaning contracts are typically lower variance)
Has anyone actually built a multi-business portfolio: if so
what was the turning point that made it manageable — hiring an operator, systems, or a specific structure (e.g., holding company/shared back office)?
