If you’ve been exploring the world of side-hustles you may have come across the term passive income and wondered what exactly it means and if you might be able to get some for yourself. Passive income is not a zero-effort way to make money and it is not something that will make you rich, if anyone tries to sell you on an idea based on that - run the other way. For an income source to qualify as passive income it needs to provide cash flow on a regular basis without heavy continuous work. Most successful passive income streams require a fair amount of work up front, minimal active maintenance and generate a modest amount of money over time.
Examples of passive income streams include:
- royalties on previously published products
- income from affiliate marketing
- ad revenue
- continuous sales of a completed product
To build a reliable source of income that doesn’t require a lot of time spent on continual maintenance, you need to work hard in the beginning to make something valuable that people want and not just rollout a bad product for a cash-grab. A good way to set up a passive income stream is to put a fair amount of work in on active problem-solving upfront and then automate the process so that your customers can buy your product continuously without you having to do much more work on it
At first it might seem daunting to establish your own stream of passive income, but if you are interested in finding a unique source of passive income that doesn’t require an initial monetary investment you can try this useful formula:
Qualifications + Talent + Passion = Passive Income Project
You do not necessary need all three components of the equation to find success, a combination of just two of them might be where you find your project, or you might even have an idea for a project based on one of them, such as your qualifications alone. That is why it is important to thoroughly list all of the things that you can do, are talented at, and passionate about; then try different combinations of them to see if there is a service you have to offer that people might pay for. This process is very similar to how freelancers can find their niche, except that you’re trying to find something that you can put a lot of work into once and collect income from without much effort later, whereas freelancers are hoping for a steady stream of projects to generate their steady stream of income. Once you have used the above equation to decide on where you might find success, you need to decide on what type of project to do that will result in a steady stream of passive income.
Here are some projects that can generate passive income:
- written work
- blog (affiliate marketing/ads)
- how to manuals
- digital packs
- materials (teaching, curriculum, templates etc)
- online courses
- app development
- artwork / photo sales
Still not sure how it all works? Here are a few examples of how you can use your qualifications, talent and passion to figure out your passive income project using all three components:
- Example 1 - you are a qualified preschool teacher with a talent for writing and passionate about early literacy skills - you could write stories and materials that parents could buy to help them work on early literacy with their children and write lesson plan templates with an early literacy theme for teachers who teach preschool.
- Example 2 - you are a resident of a tourist destination with a passion for sharing the history of your city and have a soothing voice - you could do a podcast about your area or an audio guided tour of the sites.
Using only one or two of the components from our equation can work to:
- Example 1 - you are a vegan with a passion for baking - you can publish your own cookbook, make a handy substitution guide and make step-by-step baking videos.
- Example 2 - you are an experienced furniture builder - you could make tutorial videos to help people who are interested in building or repairing furniture as a hobby and supplement those tutorials with instruction manuals that are easier to follow and perhaps even offer online courses in basic furniture building techniques.
Using the above equation to find your unique passive income project can supply you with a stream of income that requires minimal continual effort, while helping you steer clear of things that have already been done-to-death. Before you start working on your project, it is a good idea to do some research to see what similar products are already available and how much they cost. Don’t forget to read the reviews of those products to see if there are things you can improve on when you put the work in on your project. With a bit of thought and a little time, you can find the niche where your services can help the most people and generate the most income for you. No matter what type of project you decide to take on, remember: it might be a lot of work upfront, but the time spent making a quality product that people will buy can be a source of passive income for years to come.
Passive income isn't going to make you rich, but it is a handy way to gain a steady cash flow to supplement your main career and give you a bit more financial freedom. It is a also a great way for freelancers to have some money coming in between projects or in down time. If you're stuck in a freelance dryspell, check out our tips and then spend some time updating your SageGroupy profile in order to attract the clients that are out there looking for you.