Three Steps to Building a Consistent Source of Passive Income
It should come as no surprise that people want to make as much money as they can with as little effort as possible. After all, why should anyone have to put in effort to be rewarded? No matter where you stand on the issue, though, it’s difficult to ignore the appeal of making money without really having to do much to work for it. But then, if it were so possible to do, surely there would be more people doing it! Nope. The problem with passive income, for most people, is that it seems to always require either a) active work for a few weeks or months or years before it truly becomes passive income, or b) a hefty amount of money before anything even starts to take shape. Or, worse, both. Because of these two apparent requirements, a good amount of the people who think to start doing something that makes them passive income will stop almost as soon as they begin. That terrible fate doesn’t have to be yours, though. Not all types of passive income require much, if any, money up front, and while most do require some amount of work beforehand; a lot of the time it’s much more manageable than it might appear to be at first. That’s why we’re breaking down the how’s and what’s of creating your first, second, or third—or even more, if you’re really on your game—stream of passive income into three easy-to-understand steps. After all, there’s no reason for making money to be any more complicated than it absolutely needs to be, and the same philosophy applies to passive income.
Step 1: Make Your Idea a Reality
Passive income can come from almost any industry you can name, as long as you’re able to make money off of little or no active work in that field. In order to do that, your source of passive income has to come from an idea. It doesn’t have to be your idea, necessarily, but it probably should be if you want to give yourself the best chance of success. People tend to like originality, and having an authentic product or service to sell will make the “income” aspect of passive income much easier to reach. But, before any selling can take place, you’ve got to be able to bring your product or service to the market on a consistent schedule. You may be great at writing blog posts, but if you only post once every other month without any regular schedule, it will be incredibly difficult to grow an audience. Alternatively, your time management and scheduling may be one of your best traits, but you’re not sure what you’d like to sell. In either case, there are three important rules to follow.
Be Clear in Your Idea:
While you may have a vague notion of what you want to create, sell, or produce, the details are where you’ll be best able to identify your selling niche and reach the most interested audience. Starting an generic cooking blog or an online apparel store are both good foundational ideas, but you won’t be able to hit your stride until you identify your niche and take things to the next level. Instead of a standard blog about food, maybe you focus only on healthy recipes or New England specialty cuisine. An online apparel store may be a great starting point, but it won’t take off until you start selling to a specific target market, like selling athletic wear to athletes or skating apparel to the extreme sports community. Lacking clarity in your idea prevents you from taking your sales to the next level, or bringing them to fruition in the first place.
Schedule Your Production:
Once you’ve had an idea and made it real and accessible, you’ll have the best chance to grow the income it generates by designing a schedule around it. For content creators, an upload schedule helps both your audience and the platforms themselves find your newest content. If you’re selling online, ensure that you can produce a certain number of products or services each week, so you don’t have to worry about running out of stock or missing sales. If you do real estate, schedule out the payments on all of your properties so you’re able to manage the various amounts of money coming in and keep track of everything. In essence, you’re not only building a routine around the work you’re doing; you’re creating consistency in the inflows and outflows of money.
Always Look to Improve:
There’s no such thing as a perfect system. While your schedule and product may both be excellent individually, there may be some shortcomings when they’re put together as a whole. This is where the majority of passive incomes fail. Many unsuccessful passive income ventures don’t continue to modify and improve their systems, remaining so hands-off that the idea that may once have been good loses the clear direction it once had, or the schedule that was once rigid and concise began to fall apart over time. Utilizing customer feedback and being involved enough to make necessary adjustments as times change will be a huge benefit to your income stream, and while it may take a bit of extra active work, the payoff to keeping your ideas clear and on schedule is critical in scaling your growth.
Step 2: Build Your Audience
If you’ve reached the point where you have a clear idea that is in production and making money, you have the opportunity to make a choice between growth and stagnation. Growth, as you might expect, is the preferable choice for many entrepreneurs, as it usually equates to more income and better opportunities. That said, stagnation is not necessarily a bad alternative for those who are satisfied with their main source of income and added a new source of passive income solely to supplement their bank account a little bit. It’s truly a matter of preference. For those who choose to grow, the next step for building passive income on a significant scale is to start pushing your product or service to an engaged audience. The more targeted your market, the larger the likelihood that you’ll be able to convert more people into customers. More customers will create more growth, and more growth leads to more profits.
A caution: marketing is rarely, if ever, free. That said, there are some low-cost ways to get widespread marketing that can produce some good profits over time. Social media accounts are free, globally accessible, and limitless in their reach. Even better, most of them offer targeted advertising services that are often cheap and effective, and all of them have various channels through which you can interact with people through your income source. Email marketing, cold-calling, and physical mail are other effective ways through which you can target an audience, particularly one in a geographic area or with a shared interest. While this kind of marketing may not be quite as low-cost as operating through social media, it is much cheaper than doing radio or TV advertisements, or sponsoring popular content creators.
Step 3: Automate the Process
Almost every kind of passive income is derived from automation. Whether it be the stock market operating around a series of platforms that automatically process and deliver orders for shares, or the algorithm that brings you the most random–yet somehow, most enjoyable–videos on YouTube at three o’clock in the morning, every type of truly passive income makes its money automatically. Whether it’s you that automates the product or service that you bring to the world, or it’s the platform that you put your products or services on that does it for you, automation enables you to take a significant portion of the workload off of your own shoulders. Once you’ve scaled your audience and made your production process fit to a rigid and efficient schedule, all of the necessary elements to have a fully passive income stream have likely fallen into place. All that remains, then, is creating a method for your income source to operate independently. In some cases, this might mean hiring on employees and managers to run things for you, while other cases might allow you to create, download, or subcontract automation programs that link the customer’s order to the production system, then on to the distribution system, so all you have to do is click a few keys on a keyboard or tape up a box and send it. Some good programs for sales automation are ActiveCampaign and Leadformly, which both act as useful marketing and lead generation tools for digital stores. And, while there are several other automation tools available on the market for other aspects of business, choosing how you want to automate your business or income stream is entirely up to you, but it’s definitely something worth doing.
Consistent passive income is in every way a journey to achieve, but the payoff of putting in the work and time now is unquestionably worth it. There’s no better feeling than being able to have a consistent income that you barely have to work for when the rest of your friends and family are just figuring out what passive income is. And, while it may seem like an unnecessary amount of work and effort in the beginning, there’s nothing you’ll regret quite as much as not taking the first step to financial success sooner than you did.
