(This is the 6th article in my Online business basics series. You can find links to the other posts in the series on this page: Online business basics)
I’ll let you into a secret…
It’s only recently that I really understood that passive income was actually possible. Up until then, a part of me still thought it was the kind ‘business opportunity’ being sold by dodgy get-quick-rich scheme promoters. While there are many people out there happy to sell you misleading courses – and of course we all have to be careful to avoid them – passive income is really possible.
I know that because I’m now making some myself.
For many people, passive income is the holy grail of internet marketing. After all, what could be more appealing than money coming in day in and day out with no work? Unfortunately, there are so many misconceptions around passive income that people often have unrealistic expectations that keep them from creating it.
So how does passive income work, really? What can you really expect if you want to start creating streams of passive income?
It takes upfront effort to make passive income
We’re so used to exchanging an hour of effort for a sum of money that it can take a while to really ‘get’ how passive income works. Passive income is a bit like a rocket. It takes a lot of energy to get it off the ground. Once it’s off the ground however, it requires far less energy. The effort is no longer on getting the rocket moving, but on steering it.
(The way we’re used to working is more like a steam train – each shovel of coal you put in takes you a a little way down the track.)
So to earn passively, you must be willing to put in the upfront work.
Ways to earn passive income online
There are many ways to make passive income online – think in terms of getting people to a website and getting them to buy or view something, but without you needing to be there.
So for example, if you brought people to your website and sold them an e-book, that would be passive income. If you recommended them a product as an affiliate, that would also be passive because someone else would be dispatching the product and paying you commission. There will be work involved, because you’d need to set up the website and get traffic to it (e.g. by getting it to rank highly in search engines) and maybe provide some customer service, but once you’d set it up right you wouldn’t need to be there to print, pack and post your orders.
Ways of earning online that aren’t passive would be using a blog to sell your freelance services or running an online shop. Although if you paid someone else to do your customer service and dispatch, then the online shop could be passive income too.
You can combine passive income with other ways of earning. In fact it’s a good idea to do this because passive income strategies can take a long time to learn and get right. Do you use any products in your business that you could recommend as an affiliate, for example? Could you put some of your knowledge into an e-book and sell it from your website using EJunkie?
However, it’s important to remember that nothing is 100% passive. Even if you have an e-book that can be bought and downloaded automatically, you still need to make sure your website stays high up in Google, for example. You can’t just ‘set it and forget it’. You’ll always have to do some degree of monitoring and maintaining.
Robert Kiyosaki, author of Rich Dad Poor Dad, once said: “Never get involved with a passive income vehicle you don’t love. If you do, you won’t maintain it.” That’s more true than ever online.
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