There are several different ways to generate passive income and make money online, and in this post I’m going to share four completely different legitimate strategies that you can choose from to build a passive income business of your own.
Since 2000, I built several different businesses that have utilized one or more of these business models.
Those four models are:
- The Freelance to Product model
- The Audience to Advertising model
- The Expert to Product model.
- The Reseller Model
What are those?
Well, I’ll tell you in this post, but the real trick is finding out which one best suits you. To help you, I’m going to give you a real life example of each of these and how to get started. Let’s talk passive income.
What is passive income?
Well, there are many different definitions of it, but my definition and the way that I understand it is…
“Passive Income is building online businesses that can work for you, and allow you to generate income and grow in scale without a real time presence.”
In other words, we don’t trade our time for money. You build something up front that can continue to work for you over time. Is this even possible? It’s definitely possible.
Is this something you can do without investing a boatload of money on like real estate or investing in the stock market? You can build something with relatively little to no money that can continue to pay you over and over again, and finally…
Is this something that’s easy to do?
No, definitely not. Passive income is not easy. Some people are going to tell you otherwise, they’re going to tell you about a magic button or formula or a blueprint where you can get rich all by doing nothing, and don’t even get me started on the people who say that this stuff can happen overnight. It doesn’t, and if that’s what you’re looking for, well, I’m sorry you’re in the wrong place because guess what? It does not happen overnight. It takes a lot of hard work.
You’ve got to put in the hours, you gotta work hard now, so you can build these assets that can continue to work for you later. Once you start to build that passive income stream, you start to have a little bit of flexibility. Freedom. You can have more time to do more things, or do less things, or building even more passive income streams. As I introduce these four business models to, you do realize that they take time, but also it’s very much worth it.
Cool? Cool. All right, let’s get started….
The Freelance to Product Model
The Freelance to Product Model, is when you start with freelancing and then finding a problem that can be solved with a product. Freelancing is working for different companies and getting paid for certain skills they do have, that they need. Now you might be thinking, “What the heck? You said this was about passive income, well Freelancing is active income. You are trading your time for money. What’s the deal?.”
The deal is, we’re just getting started, so hear me out….
First of all, freelancing ideally, is the number one way to get started in building a business of your own. You’re going to learn a lot of skills running your own business as a freelancer, and not only that, you’re going to get paid much quicker than if you just started with trying to make passive income first, because that’s a great way to fail.
You need to start with the active income first before you can convert that into the passive income later. But beyond that, my absolute favorite reason why I recommend freelancing to start is this…. You’ll get to know the industry that you’re in quite well, perhaps so well that you can find the holes, meaning the opportunities for you to create a product based passive income business, in other words, by working in the space you have interest in, you not only have the opportunity to make money from your skillsets, but you also have the chance too find the opportunities to build products that can continue to help you earn money over time.
Let me tell you about Brian Castle. He too was once a freelancer who was only making money by building client after client.
Here is what Brian said…
“I actually used to build per project. I come from a background as a freelance web designer. I used to kind of build per project and occasionally by the hour, but either way, it was still very much tied to my time. I can only fit in a certain number of projects, and I was basically living like project-to-project throughout the year”.
After doing web design for years, he eventually found a huge need for website and design, in the restaurant and food truck space. Then, after getting tired of working with client after client, he decided to turn his service based business into a productized business.
“I kind of wanted to move away from that, and get into a more standardized, predictable service, you know, essentially a productized service that just does one thing extremely well. It solves one problem exceptionally well. And then, it’s really designed for one particular client and that just removes that whole discovery negotiation from the tables, that I can just focus on providing a great service and, and kind of leave it at that.”
So what he did was remove all that individual client work, and then create actual templates and products that would serve that market. They would pick a product, he would serve it to them, either by just choosing it and having an already available, or having other freelancers actually create those things for those clients.
All active businesses can be shifted and turned it into a more passive business by either having products that are already made, or by having software do a lot of leg work for you or even using a Reseller Model do that work.
Now, let’s talk about another incredible passive income model.
The Audience and Advertising Model
It’s one of the most used forms of building to become online. However, it does come with a fair amount of warnings, which I will share with you in just a minute. If you’re a making money through Google Adsence, then you were following the Audience and Advertising model, because you’re building an audience and then generating an income through your viewership. If you’re a blogger and you’re getting a lot of traffic to your website and you are making money through advertising and or sponsorships, then you’re also following the Audience and Advertising model. A podcast with sponsorships is also the Audience and Advertising model.
You get the idea, you have this audience, you have advertisers, we want to get in front of that audience and you marry the two and get paid for it. When I started building my Internet Marketing related business back in 2000 online, my first dollar was actually made through advertising. I’d spent months building credibility in this space and actually getting traffic to my website, and then, I offered advertising on my website and made my first dollar online.
It wasn’t a lot of money, but that wasn’t the point. The point was the fact that I actually was able to build something online, and actually make money without me having to do anything. Although it took several months to create that, but the point being, it was possible. It motivated me to move forward, and eventually I offered more ads on the site. Traffic started to grow and I was earning anywhere between 30 and $50 a day just through advertising alone.
Although I’ve done advertising and sponsorships in the past and made hundreds of thousands of dollars doing so, the truth is that it takes a lot of time for this business model to actually start to generate an income for you, because you need to build that audience first and it takes time to build an audience. More than that, what happens when you build this audience and a following on a platform that ends up changing their algorithm or how often you actually get seen in front of this audience that you’ve built. Super stressful for a lot of people, which is why I always recommend that in order to build an audience, you need a platform. You need to have something worth following, something worth sharing, and valuable to others, and that of course takes time. Now, that’s not to say that you can’t build a huge audience and a very short period of time. A lot of people have become quite famous in a short time period.
But the cool thing is, you don’t need a huge audience in order to generate passive income and make money online. That’s why if I had the choice, I’d actually go with the next model…
The Expert to Product Model.
Now, don’t let the term “Expert” scare you away, because it’s probably not what you think. Most people think an expert is somebody who is a master at something. Somebody with a special degree or special training. Somebody who’s put in those 10,000 hours who is just great. That’s not the kind of expert I am talking about.
I’m talking about the fact that you can be an expert in the eyes of somebody else just by knowing a little bit more, and guess what? You have experiences, you have ideas and opinions that are all unique to you. The goal is to become an expert, to earn the trust from others so that they can want to learn even more.
The Reseller Model
The Reseller Model is one of my favorite, and I have made hundreds of thousands of dollars with this model.
To keep it simple, a reseller business is when you sell products and services to your audience, without you having to create, buy, or stock in advance. You find a supplier to do all the heavy lifting for you, including creating the product, storing the product, delivering the product, and even taking care of all of your client support.
Reseller business is not an affiliate program, because you own your own brand, and you collect the money from your customers. As the orders come in, you simply contact your supplier and place the order with them. Profit margin for the products and services are substantial so you will make a profit.
There are two types of reseller businesses that I am found of.
1. The Dropshipping Business: You can start a Dropshipping business from anywhere in the world. All you need is a computer, an internet connection, and a desire to market your website / brand. This is a business where you don’t need any stock, or any upfront investment to buy stock. When a customer buys from your online store, you simply place an order with the supplier. The supplier will then ship out the product anywhere in the world under your company name. Your customer pays retail, and you pay bulk wholesale price! You collect them money from your customer, and keep the rest as your profit. Read more about Dropshipping businesses that you can start.
2. Selling Digital Marketing services: If you are to succeed on running a business from any location on your laptop, this would usually be a reseller business. To put it simply, you own a Website where you act as the go-between from your Customer to the Supplier of Digital services. Read more about Digital Marketing Reseller businesses that you can start.
Remember, you do not need all these qualifications and credibility. You’re gonna have to do the leg work, put in the time, put in the hours, but of course it’s about building something now, so you can reap the benefits later because using software, using tools, using automation, using other people that you hire, you can actually turn this business that helps solve people’s problems to something that can be automated for you so you can generate passive income to.
Now, quick question for you to answer below in the comments section before you leave, and that is this…
Which of these business models makes the most sense for you, and if you implement that business model and earn an additional, let’s just say $500 a month, what could an extra $500 a month generated passively do for you?
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