The Pursuit of Online Entrepreneurship
Podcast Episode 033 – Passive Income Is Not Passive
Passive Income Is Not Passive
Passive Income. If that expression isn’t music to a business owner’s ears, I don’t know what is.
Joking aside, you’ve probably heard a lot about passive income already—after all, it’s turned into a bit of a buzz word these days! But for all the chatter about how great passive income can be for your bottom line, there’s very little talk about how you can actually make generating passive income part of your business plan.
That’s where I come in. See, I started questioning my business’ potential to generate passive income a few years ago. And I’m elated to tell you: Passive income CAN be a reality for service-based business owners. Today, I’m going to show you how.
But first, we have to get clear on a couple things:
- Passive income is NOT passive.
- What is passive income, and where does it come from?
Passive Income Is Not Passive
Now, I know what you’re thinking. “But Veronica, isn’t the whole point of passive income that it doesn’t create more work for me??”
You’re sorta right. Passive income is a fantastic way to monetize your time and efforts as a service-based business owner because it allows you to make extra money without doing much extra work.
That doesn’t mean you don’t have to do ANY work though. Rather, it means you’re going to put in the work up front. Then, if you play your cards right, you’re going to enjoy the fruit of today’s hard work for a loonngg time to come. Make sense?
What is Passive Income, and Where Does it Come From?
At its most basic definition, passive income is money you earn while you’re not working. You could be sleeping, lounging on the beach drinking margaritas, or just relaxing at home while money shows up in your account. Pretty sweet, right?
Traditional passive income avenues include investing in stocks, bonds, real estate, and even royalty generation.These all involve making some sort of investment or cash outlay in order to generate a return. While these are certainly options if you’re interested, they aren’t the kinds of passive income we’ll be talking about.
My favorite style of passive income allows you to leverage resources you already have access to and start making money today. All you need is a solid game plan.
My Journey With Passive Income
Have you ever heard of the “20 books to $50K” concept? If not, here’s the gist: If you have 20 books earning $7.50 each per day, you can make $50k per year without doing extra work.
Let’s be clear: You don’t have to write 20 books in a year to enjoy passive income. In fact, you don’t have to write books at all. And that’s what got my wheels turning.
See, I wasn’t necessarily interested in writing 20 books. But I WAS growing more and more interested in producing digital products (see Episode 32 for more info on this). The only difference? I knew I didn’t need 20 products to get started, and I knew I didn’t have to sell them for $7.50.
So I set myself a goal: $150 a day in passive revenue. My goal wasn’t to completely replace my active income—just to supplement it and expand my opportunities for growth in the online space. And from that goal, I evolved my three-tier stackable passive income strategy.
Tier One: Affiliate Links
One of the simplest ways you can go about making passive income is by becoming an affiliate for the products you use and love. For me, that meant championing the books that I read, the audio equipment I used for recording, and even the notebooks I used to organize my work schedule. I simply shared links for these products with friends/clients/whoever I felt could benefit from this info, and I enjoyed a small commission for the referral.
Tier Two: Digital Products
These have really become my passive income bread-and-butter. I won’t dive too deeply into this, as we just covered Digital Products in last week’s episode. Suffice it to say that Digital Products (or Digital Service Products, as I like to call them) have been a game-changer for me. If you haven’t already, check out Episode 32: What Is a Digital Product? for the whole scoop.
Tier Three: Program Affiliate Links
As my business grew and I saw success with digital products, I began to invest more in myself. This meant taking online courses, signing up for new programs, and exploring online business tools.
This allowed me to revisit and revamp Tier One—while product affiliate links typically earn very small commissions, the commissions you can earn from referring folks to online programs have the potential to be more substantial.
Stacking these three tiers allowed me to reach my goal . . . And then some!
How To Start Earning Passive Income
The basic premise behind digital products is the same as for your online business. You need three things for this to work:
- A product
- An audience
- A method of promotion
What Will You Sell?
This is an obvious question, but it has to be your starting point. What can you sell that will provide VALUE to your audience?
It’s not enough to simply think of a product that might be likely to make you a few bucks. I’d encourage you to really spend time pondering how you can approach digital products from a place of SERVICE. And yes—when you’re serving and providing products that people need, you will inevitably see better financial results.
Start by either promoting or creating a first product that you KNOW will provide value to folks in your network. Provide quality visuals of this product, talk about it consistently from a perspective of service, and pay attention to any feedback you get along the way.
If you’re drawing a blank, check out Episode 11: 5 Digital Product Ideas to Sell Online to jump-start your creativity!
Who’s Your Audience?
Ask yourself: Who are your products for, and how can you reach those people? Again, you should approach this in the same way you’d approach figuring out who your business’ ideal clients are. Think about who you can help. Think about who might need what you’ve got. Then, move on to the third step.
How Will You Promote Your Products?
Once you’ve established WHO you’re trying to reach, the next step is figuring out where those people hang out online and how you can connect with them.
Social media makes this almost TOO easy. If you’re on Facebook, Instagram, Twitter, LinkedIn, or any other social media site, you’ve already got a GREAT platform for connecting with people.
If I could give you only one piece of advice, it’s this: Online marketing is all about forming genuine connections with people. People buy from businesses they know, like, and trust. You can’t come at this from a What’s in it for me? mindset. Rather, you have to spend some time building relationships and figuring out how you can SERVE the people you’re connecting with.
For the full rundown on how you can build a successful content marketing strategy, check out Episode 21: What Does Content Marketing Do For Your Business?
That’s a wrap! I hope you’ve enjoyed reading about my stackable strategy for passive income. While it might not be 100% passive, my strategy IS a realistic and manageable way to start tapping into your passive income potential.
I can’t wait to hear what you’ll try first! Be sure to let me know how you plan to start building your passive income stream.
Also, if you haven’t yet, would you mind leaving a review on iTunes? It only takes a few seconds, and it would mean the world to me—I really do take time to read each and every review, and I’d love to hear your thoughts about this podcast!
Thanks so much for your time. I don’t take it for granted. Hope to see you again next week!
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