How to Create a Passive Income: Part 1
When you’re working really hard to build your small or medium business, passive income might sound too good to be true. Depending where you hang out online, you could be forgiven for thinking it’s all a scam and not possible.
But passive income isn’t new and it’s certainly not a myth. A well-run business can give you a passive income. A good system that’s set up well can give you a passive income. You don’t always have to swap your valuable time for money.
So, in the first of a two part series, let’s look at some ways that you can build a passive income.
1. Building software as a service you can sell
If you’re in business or even in a job, you’ll no doubt have spotted some places you can really add value and possibly an area that needs a software solution to fix a common pain or high labour issue.
How about when you’re invoicing your clients? Does that invoice automatically get added to your bookkeeping ledger and create a chasing email for late payers whilst also allowing you to run reports and link it with your other cloud-based systems and your accountant?
Xero does. Xero are not an accounting company – they’re a software company that created software to fix a problem. You could do that. Well, not the coding – but the idea you have could be created into a useful piece of software.
How is this passive? If it solves a problem like Xero did it could become a whole company in itself. Or you can simply license the software for use elsewhere in other systems. This is very common. Where do you see problems that can be solved?
2. Subscription Groups
Online seems to be the place to build a passive income and membership sites or subscription groups are one of the best ways to do this.
A membership site is a place where you build content, training and resources. You create a big bank of content and training and then charge people to access it. The best part about this is that you’ll create the content once and sell it over and over again.
You’ll need to market your group but often successful groups will begin to market themselves by word of mouth as well. Charging a monthly or annual fee means that you’ll have money coming in all the time and the more people you add to your site, the more you’ll earn for the same work. What are you an expert at? Who can you share that knowledge with?
3. Support and Maintenance Contracts
Managing clients and customers invoice to invoice can be a tough gig. But building them into a contract for support or maintenance gives them peace of mind and you a passive income.
You’ll need to deliver on the service when it’s needed, but much like insurance you might not be called on much by some clients. Adding more and more clients and customers to your contract will generate more money but relatively not that more work for you.
The risk is on you if all of the contracts need your service or maintenance at the same time, but chances are they won’t; they just want the security of knowing they can call on you if and when they need you.
4. Subscription Services
Magazines are a great example of a subscription package. Now in the digital age, apps and platforms that require a monthly fee can work well for your passive income streams.
Years ago you may well have subscribed to a monthly magazine and the annual fee was heftily discounted to tie you into a year. Then the renewal most likely went through without you noticing, because when you agreed the Ts and Cs you agreed to be charged again.
The bonus to this is of course that you created the content already so the more who buy it, the more you make. Generating money in this way is a true passive income mindset that can help you if you currently sell your time for money for example.
5. Network Marketing
Network marketing is a great example of a passive income. Building a team of people who sell your product or even the products of another company helps you to earn a commission on the sales of your team below you.
Effectively it’s like any other business when you think about it. The shareholders and CEO earn money each time the employees and workers create and sell products or services.
The difference with network marketing or multi-level marketing is that there is usually a range or products that you’re invited to sell yourself or (with a passive income mindset) you build a team to sell the products for you and also recruit more people to do so, too.
Each time anything is sold in your ‘team’ or ‘group’ you’ll earn a passive income.
Done well, network marketing can give you a passive income even when you stop, as your team carries on recruiting and selling the products, earning you a percentage each time. The trick is to build a large and successful team. If you enjoy networking and selling, as well as building teams and training people, this could be for you.
6. Write a book
If we’re talking traditional passive income then a book is pretty much up there with writing a song. Writing an entire book is a big task to attempt, but once you’ve created and published your book, you’ll be able to reap the rewards forever.
Obviously to make this a true passive income that will last for years you’ll want to create a book that will stand the test of time. You could update your book or create more, but generally speaking the idea is to create it once and sell it many times.
As the old saying goes, there’s a book in everyone. If you’ve written content blogs, emailed clients, presented courses, given talks, or created articles online then you might well have the beginnings of a book already. It might take less work than you think.
7. Produce an audio book
Audio books are a key marketing tool now, as well as a really great passive income product. Just like a standard book, you can create the content once and sell it over and over again. The great thing about an audio book is that you can create it from the traditional book which you create first so that you now have two passive income products.
So there you have it. Seven ways to build passive income in your life or business. Create content once and sell it over and over or start delivering one to many instead of one to one!
We’ll be covering another seven passive income strategies in our next blog.
For now, good luck with your ideas and if you need a system to track all the leads and enquiries from your new passive streams then SalesRadar can certainly help you.