5 Smart Passive Income Ideas for your Business (o How to Get Money for Nothin)
Whether or not you’re a Dire Straits fan, you’ve likely heard the lyric “Money for nothin’ and chicks for free.” It’s become one of those iconic phrases that people whip out, even if they don’t know the origin. And, let’s face it, they’re talking about the dream life, aren’t they?
So, in this article, I’m going to teach you how to get your chicks for free. Just kidding.
What I am going to talk about is how to get your “money for nothin’.” Through a little thing called “passive income.”
What’s Passive Income?
To fully understand passive income, let’s first take a look at what qualifies as “active” income…
Active income is money that you have to earn actively. (Makes sense so far, right?). Money you make from your “job” is active income. As is any money you have to be present for to earn.
You perform a service once, you earn money for it once. It’s the income model we’re all more-or-less familiar with.
Now, what qualifies as “passive” income will vary from place to place (so check up on your local laws!), but the basic gist of it is this: it’s the exact opposite of active income.
Passive income can be earned even when you’re not around – it can run on auto-pilot. It’s money earned with little-to-no effort on your part.
You perform a service once, you earn money from it multiple times. With no additional work from you!
Sounds pretty good, right? Now, imagine setting up multiple revenue streams, all passive. Each of these “revenue streams” will take effort to set up initially; however, after they’ve been put in place, you could potentially earn more money than you earn now…for doing nothing at all.
Passive Income: Getting Started
No matter what type of business owner, solopreneur, or freelancer you are: earning passive income is a very real possibility for you. If you’re willing to put in the extra effort – and finances – to get the ball rolling.
That’s right. Living the dream doesn’t always come cheap. At least not at first. (Sorry to burst any bubbles). Creating a viable way to earn passive income takes work. But it’s so worth it.
Now, in the old days, the most common form of “passive” income was renting a house to someone else. You own the house, you let someone else live in it, you sit back whilst the money comes rolling in. However, the onset of the Internet Age has brought about several new opportunities for those of us who aren’t landowners. Here are five worth looking into:
1. Affiliate Marketing
Let’s say there’s a product or service you really love… With affiliate marketing, you strike a deal with the company/person who owns the product or service to let you sell their product/service on your website. If someone buys it through your site – through the specialized URL the company provided you with – then you’ll get a cut of the final sale.
Pros: You get to inform others of a service/product you truly love, ensuring that it sticks around for the long-run (and you get that “feel good” sensation of sharing valuable knowledge with others). You also get to earn money off of work someone else has done! I’ve had a lot of luck with affiliate marketing myself, though it’s not my main source of passive income (more on that later).
Cons: If you don’t have a large following pre-established, you’ll be spending a lot of time marketing. You also need to have other valuable (preferably free) content available on your site as most visitors to your site won’t be there just to buy affiliate products. You’ll also be putting your earnings in someone else’s hands – and, depending on the affiliate program, that could mean waiting several weeks to several months for the final payoff.
By selling ad space or allowing pay-per-click ads on your website, you can indulge in one of the original Internet-based passive revenue streams. Ads work similarly to affiliate marketing, but tend to be a little less personal.
Pros: It’s easy! In the case of pay-per-click ads, you literally get paid “per click” (if a visitor to your website clicks the ad, you get paid), whether the advertiser makes an actual sale or not.
Cons: To make any decent money through ads, high website traffic is pretty much a “must.” You also run the risk of turning off potential “real” customers should they find ad use tacky. Not to mention many web users have installed ad blockers, so they may never see your ads to begin with.
One of my personal favorites. I’ve had tremendous luck creating and selling e-books, and I believe you will too should you put your mind to it. E-books aren’t just for writers – anyone who has something relevant to say (and can find a way to get it written down, either by themselves or via a ghostwriter) can stand to make a major profit.
Pros: E-books are a viable option for nearly any field of work (SEO consultants can create SEO guides, designers can write about basic design concepts, etc.). If you create a piece of evergreen material, you can essentially do the work once and make money off of it…forever. E-books have a high return on investment when it comes to work put in versus profits made. They also offer plenty of opportunities for networking – expert interviews are an incredible way to add value to your material!
Cons: There are a lot of e-books out there, so for yours to stand out, it will need to be top notch. E-books also require a lot of initial work (and may require updating later on, depending on your topic choice).
4. Graphics, Templates, and Themes
Whether you sell your creations to a marketplace or create your own webstore, the possibilities are nearly endless! If you have the know-how (and the gumption) to get the job done.
Pros: WordPress is a hot commodity right now and users are scrambling for themes that stand out from the crowd. Stock photos, Photoshop filters, and other design-related templates are also in high demand.
Cons: Again, for this to work, you’ll need to create something that stands out from the crowd. Are you up to the challenge? Plus, depending on what you choose to create, technical support may be required (especially at first).
5. Teach a Class
This is another area that I have personal experience with. I created an online course based on my first e-book. (That’s right: some of your passive income streams can be recycled to serve double duty!).
Pros: Teaching a class is rewarding, and can add a good bit of prestige to your resume if it goes well. Once you create the modules, e-books, and worksheets for your first round of classes, those materials can be reused for every class that follows – it gets easier each time you do it.
Cons: Unlike the other items on this list, your passive income will fall on the “little” effort side of the scale (rather than the auto-pilot “no” effort options). Teaching a class also requires the most initial work and financial investment. Plus, like e-books, the material may require updating over time.
In addition to those five, you can also earn passive income by creating premium memberships, communities, or forums. Look at your current skill set – and what you do to create active income – and see how you can use those skills to create a passive revenue stream.
However, while passive income can allow you to work less (and keep you above water during those inevitable slow months), I wouldn’t recommend giving up your active income completely. Think of passive income as a valuable addition to your business, an extra stream of revenue, not the end of your business itself.
Your turn. Are you already earning passive income? Or are you thinking to give it a try? Let us know in the comments!
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