I had a meeting with a friend and his business partner last week. The request was to “pick my brain” on the best way to move forward to generate some passive income streams online.
These two particular people are like a lot of people I know. They’ve got tech skills, they know the Internet well and they have lots of ideas for cool Internet business applications and websites.
Unfortunately they’ve managed to dig themselves into a situation where they spend all their time working on client jobs, running what you might call a “consulting” tech firm, completing various programming and web development projects for other people’s businesses. The money in this business model can be good, but it has some serious downsides too, namely –
Those points aren’t necessarily true across the board, but I’m pretty sure any person who has ever consulted or done any kind of web development work for clients will know what I’m talking about.
My friends are smart enough to realize the path they are on is not going to lead them to where they want to go, so they’re looking to make some changes.
The goal is to develop some form of income stream, or several, that could replace the need to take on client work. As always, the relationship between time, money and freedom of choice is heavily integrated here, as my friends are looking to make more money without drastically increasing their workload and eventually freeing up their time so they can do what they want to, rather than what they have to.
I’m about to reveal what I talked about during our meeting with my two friends. In terms of what I suggest you do if you are looking to make some passive income online, I don’t want people to get too caught up on the idea of “pure” passive income.
The methods I’m about to talk about are not pure passive income sources, however they have the potential to be low work, high return income sources that can potentially become very close to pure passive longer term. The fact is, it takes time to develop these income streams, but we all love the phrase passive income so I’ve decided to use it here in the title of my post.
So to clarify, what we are looking to do is start up completely new projects that have the potential to become good sources of near-passive and possibly pure passive income, it just might take some time to get there.
One of the first things I discussed with my friends was taking their present situation and turning it into something that’s less work for them. Sometimes the “lowest hanging fruit” is just a simple adjustment to the business model you are following now, transforming your core skill from labor intensive, to hands-off delivery, or at least much less work.
Here’s some examples of how you might do this –
If that’s still confusing you, here’s another example: Think of it as the difference between a general website developer versus a developer who only makes blogs for real estate agents. Don’t be an everyman, specialize (read this for more advice – The Core Reason Why Your Business Lacks Momentum)
I’ve covered what you can look at without drastically changing the market you are presently in. The other option is diving into something completely different from what you do now. You can choose a different business model, in a different industry and a completely new path, or even start several different little businesses and see what takes off.
This option will likely be more difficult to implement because everything will be new, but sometimes it necessary to start from scratch if you what you are currently doing is not working and you want a clean break. This obviously is the only option if you don’t have a business at all, so if you’re new to making money online, listen up – this will be helpful.
This is perhaps the easiest method to find yourself the owner of a profitable website business, but there are serious downsides – it costs money to buy assets and if things go terrible you could lose everything you invested, though that is very unlikely.
After my blog started to generate dependable income I decided to take that money and reinvest it into buying as close to passive income returning websites as I could find.
I won’t go into too much detail regarding how I did this, as I explained my strategy already in some depth in this article –
At the end of that article are links to other articles from this blog that will teach you more details about buying and selling websites, so it’s worth a bookmark if this interests you.
The great thing about this strategy is if you have enough money you can be the proud owner of a dependable online income stream in a matter of weeks.
Speaking very generally, for every $10,000 you have to invest in websites, you should be able to acquire at least a $1,000 a month revenue stream. If you’re clever about what types of websites you buy, you can easily improve your return in a matter of months.
It’s important when investing in websites that you…
The best scenario is to pick a model that you “get”. If you know software, find an online business or website that deals in software, like for example you might seek out a website that sells a script in a coding language you understand so you can improve and maintain it. If you know blogs and how they make money, invest in blogs. If you like ebooks, find profitable ebook businesses and buy them.
The less ambiguity in your mind the better. If you know the market, the product and can see yourself running the website, that’s a good buy. If you lack experience, then pick small websites so you can become familiar with how things work before investing thousands of dollars.
A good place to start your initial research into website buying and see what is for sale is Flippa.com
Outside of established websites, you can also buy domain names, which are very easy to maintain and can often be passive income sources if you pick up some good ones.
A person who deals in domains is called a “domainer” and generally, besides profiting from buying and selling of domains, income is generated from type-in traffic. Type-in traffic is people opening up a browser and directly typing in a domain name. The domain name itself might not have much of a website in place, but if you have enough type-in traffic simply displaying a few ads on a basic page could be enough to generate some nice passive income.
Building up a portfolio of domains is a strategy you can pursue, just remember due to the ease of which you can get into buying domains, competition is fierce, so like with real estate, do your research before investing.
A good place to start domain trading research is DNForum, however look around as there are many other communities discussing this money making method.
If you have some serious capital to invest buying fully established online businesses is an option. With $50K to $100K to spend there’s no reason why you can’t buy yourself into a nice full time income stream in one hit, or diversify and purchase several websites that in total result in a full time income stream. The challenge is maintenance, as running a large e-commerce site or many smaller sites can be a lot of work.
I sold my proofreading business to a couple, who, assuming they didn’t break everything, were essentially buying a solid income stream in exchange for a lump some of capital. The business was reasonably automated when I was in control, although the new owner had to familiarize with how the ship worked, it pretty much sailed itself.
If you don’t have capital to invest, or you prefer to learn a system from scratch yourself, and you’re prepared to spend time studying and implementing, following someone else’s proven system is a good option.
There are literally thousands of ebooks, courses, membership sites, other information products and mentoring programs you can purchase that all propose to teach you a system for making money online. Here are some example business models to choose from…
All these systems are taught by various people who, in most cases, have already figured out how to make money using a certain technology or method or system, and now offer to teach that same system to others.
Unfortunately, most people who take training programs that teach how to make money, don’t. I’ve gone into detail regarding why this is in many posts, but for the sake of simplicity it’s safe to say the biggest problem is not the system, but the person who’s trying to use it.
It might look like lack of tech skills, or tough competition, or poor execution, or any number of on-the-surface reasons why people fail, but in the end most challenges can be overcome, most people just don’t try hard enough.
If you look deeper, the reason why most people don’t try hard enough could be all kinds of things, but usually it’s simply a mindset issue. Motivation, a willingness to learn new things, take action and never give up stem from how you think, so if you can get on top of that you’ve won the biggest battle. The rest of the equation is simply a process of testing and tweaking until you find out what really “floats your boat” creatively and gives you rewards intrinsically.
But I digress, this is not meant to be a motivational piece on mindset (or maybe it is…). If you want help in that area, read this – How To Remain Productive When You Feel Like Giving Up, and this How To Become Comfortable With Yourself.
The fact is, there are systems out there that have proven to work and there are people who explain how these systems work. The information is available, all you need to do is commit to a plan of action to execute the system.
It can take some work to spot the frauds, especially because they often have the best marketing, but since you’re reading my blog you’ve already been guided to a handful of resources that are run by people who walk their talk and are actually teaching what works. There are no guarantees, and ultimately you won’t know until you try, but I do guarantee that taking action will always benefit you in some way, even if you never make a cent. Each system that doesn’t work for you takes you closer to one that does.
My advice is to do three things first if you’re looking to start a new online business with the goal of developing a stable online income stream –
And as a fourth step, presuming the first three steps work, you can then outsource the implementation of the system to others, who either maintain and grow what you have done already, or replicate it in other niches.
I do recommend you go through a new system once yourself before outsourcing it entirely as it helps to really know how something works before you have others do it for you. Outsourcing is a great way to make a business much less labor intensive and create truly passive or very near passive income streams, but for most people this is a process of learning, then doing it yourself, then handing it over to others.
There’s a key point of distinction that needs to be made here when comparing say starting a consulting client-based type business and then hiring people to take it over, verses buying a training program and then having other people take it over. The training program you choose to implement will be a much better business model when it comes to making it hands off for you.
All the systems I listed above have the potential to become very hands-off, whether it’s because they take very little time to manage (like spending a couple of hours a day writing a blog post), or can be given to others to do (for example having assistants do market research and set up websites and write articles in niches for you).
Consulting and service based businesses often depend on a specialized skill that can’t be outsourced, are very time consuming to do or have very little potential for leverage. If you choose the right online business model then you will have a much greater potential to make a lot more money and work a lot less.
While the promise of quick riches is usually a ploy for scammers to get you to part with your money, there are some great training resources online, many of which cost under $50, that will teach you some fundamental skills that can, in time, make you a very significant amount of money, which can even become passive income if you follow through long enough.
Here’s a few resources you might want to begin your research with –
And when you’re ready to begin outsourcing and systematizing your business…
If you’re not in a position to purchase a website asset and you don’t like the idea of following someone else’s system, then you can always go it alone and attempt to create a business from scratch by yourself.
There are many stories of successful online entrepreneurs who figured it out without buying any training programs or doing any formal study. In most cases the reason why these people succeed is passion. They’re prepared to keep throwing things out there again and again until something sticks. Along the way they learn a lot and assuming they eventually come across a winner with the right business model, can become financially independent.
There are a lot of traps along the way with this path – and trust me on this one as I’ve walked this path for most of my business life too. Only in the more recent years was I wise enough to invest some money into training programs. The consequences of this is a much longer learning curve, often plenty of wasted time and some failed projects. The plus side is, when you do find what works, you can become a true expert as you’ve done your time and lived the experience, rather than just studied what someone else did.
That’s the core reason why my blog is successful and in some cases, this might be the best path for you. If you want to read my own story regarding why my blog is successful and what ingredients you need if you want success building something yourself, read this – Sometimes You Have To Reinvent The Wheel.
To end with, here are some ideas you can go after if you decide you want to build something yourself –
I’ve never liked the word “failure” as I perceive a strong negative association with that word, like it’s a bad thing. I’ve always looked at any experience, whether you achieved your ultimate goal or not, as a good thing. You have to believe this or you will give up long before you reach your destination.
If you don’t consider every “wrong” step a process to go through until you find the right path, then you will not enjoy that wonderful moment when you realize you reached the goal you were striving for. Although, when you get there, it probably won’t feel even close to how you expected it to feel because of what you went through on the way. That’s okay of course, it’s meant to be like that. That’s how we grow and if you expect your awareness to remain static then you’re in for a shock.
You may realize what you wanted back then from your business, or from your life in general, is quite different once you’ve spent some time chasing the dreams. Dreams evolve too, because as a consequence of finally living something you previously desired, it changes – you change. What you want is never the same when you have it. That’s why it always seems rosier on the other side of the fence right up until the point you jump over.
Understand this as it relates to your goals for passive income. If I was to stop and talk to the person I was before I built my business to what it is today I’d say to my previous self that what’s important is to be motivated by the journey more than anything else. Yes, the dream of passive income, lifestyle freedom and never doing a job you hate is important – it will keep you motivated – but it’s not really the endgame you think it is now. Every path walked leads to another selection of doors to open.
Remember to spend some time today and tomorrow and the day after that moving towards what you want and eventually you will have it, it just might not look and taste how you expect it to. In the case of building your own online passive income streams, take the motivation you had to finish reading this article from top to bottom and continue moving forwards. Pick a strategy, a next cause of action and follow through on it.
You might decide to transform what you do now into something more passive by changing the model or hiring people. You might start researching the possibility of investing your capital into online properties and buy into new income streams, or perhaps you will begin the process of finding someone else’s system to follow to build new revenue sources. Maybe creating something completely fresh from scratch is more desirable for you, or it could be that you’re ready to look into outsourcing and building systems as the path to more money for less work.
Whatever the case, I wish you good luck. I love it when people taste the freedom that being able to choose how they spend their time on this planet brings.
And learn how to build a better blog.