What is passive income?
No question about it, your business should make passive income. If you aren’t familiar with the term “passive income”, it simply means income that you receive without having to do repeated work. The work is designed to be done once, with you profiting from it over and over again. It’s the very opposite of the service business model where you do the same work over and over again.
Once you have set up a passive income system, you can then let it run on autopilot and forget about it. That extra source of income gives you peace of mind, so you can concentrate on other aspects of your life and your business.
There’s nothing wrong with doing the same thing over and over again. It’s just that, as an entrepreneur who is already wearing so many hats, sometimes, you want to spend your time on more than just earning an income. As a service professional, you’re trading time for money. If you don’t work, you don’t eat. Unfortunately, with that model, the only time you earn money is when you work. When you own your own business it means that you are always working. It’s a key reason why most entrepreneurs’ lives can get out of balance.
If you can set up a passive income model, you can continue to earn money whether you are working or not. That time can then be spent raising your kids, taking vacations, or even, the occasional sick day. You become less stressed, more able to focus on other aspects of your life and thus, put more of yourself into your business.
Other benefits of passive income:
- Keeps your business afloat when you need time off or a vacation
- Frees you up to work more with clients and work you like
- Enables you to work when you like, when you want to, not when you have to
- A plan B. It’s always wise to have an alternate income source as you never know what could happen to your primary source of income
Examples of passive income
Passive revenue comes in a lot of shapes and forms. Once you find something that works for you, you can then work on perfecting it or starting new revenue streams. Consider the following means to make passive income:
- an author or musician who earns royalties on their work
- a coach who creates a home study package for clients
- a blogger who earns commission when they recommend a product
- a freelancer who teams up with other freelancers who offer complementary services so they can recommend each other
- a business owner who automates their cash flow by upselling or selling additional products right at the time of sale.
When you make passive income, you can do so much more for yourself and your family. Imagine being able to read to your kids when they want you to. Imagine being able to take a vacation and not worry about your business. Imagine being able to take time off from your business to attend your child’s recital. Imagine being able to sleep in…the list is endless.