Imagine lying on a beach, sunlight hitting your face and sand between your toes. You grab your phone and check your bank balance to find that it’s increased $500 since sunrise. This may seem like a fantasy, but for some savvy entrepreneurs, it’s the reality of their passive income streams.
To be sure, it’s not all sunbathing and dollar signs. “Passive income” simply refers to money that you earn on a regular basis with minimum effort to keep it trickling in, a state of affairs that isn’t always easy to bring about. Plus, the extra money you earn passively is usually supplemental–it’s rarely enough to live on full-time. But it can still prove a crucial tipping point. For hobbyists looking to take their passions to the next level, it can generate enough capital to launch a new business, laying the foundation for eventually ditching a day job.
No matter your end-goal for a passive income stream, you’ll need to put in some upfront work before you can reap a return on your investment. That might seem risky, but many–myself included–find that investing in some of those setup efforts now can prove lucrative later. Here are a few ways to start.
There are a number of third-party services to help entrepreneurs and hobbyists alike sell physical products, while outsourcing the logistics of fulfillment and shipping to a platform, which then takes a cut.
Daniel Caudill, founder of Merch Strategies, jumped head-first into the world of merchandising after taking a health-related leave of absence from his job. He says he now generates around $14,000 in passive income per month.
“How I’ve been able to do this is through e-commerce sales with Merch by Amazon and RedBubble, which are third-party suppliers that handle fulfillment,” says Caudill. “One fantastic thing about building passive income is that every action you take in the process can result in massively inflated returns over an extended period of time.”
You just need some patience, he suggests, but you don’t need to reinvent the wheel. The fulfillment sites Caudill has relied on make it easy to get started. You just set up an account, upload your designs, and can create your own digital storefront in less than a few hours.
Over the years, I’d toyed with this idea but couldn’t justify buying large batches of products, storing them, and then shipping them. After weeks of research, I came across a site called Printful that not only prints high-quality designs but also automates the fulfillment process through an API integration. By using an automated distributor, I can sit back, relax, and let them handle the fulfillment logistics.
You don’t need to make physical goods, though. Sharon Tseung, founder of Digital Nomad Quest, started built a passive income stream to support her travels. “I love doing graphic design work on the side. After discovering that Etsy allows you to list digital products, I created editable Photoshop templates, such as media kits, greeting cards, and resumes, and published them on the platform.”
The design work took some time at the beginning, but now Tseung can more or less sit back. “Other than some maintenance and customer support, this income stream has been quite passive and can be managed anywhere with Wi-Fi,” she says. That means she can maintain her digital Etsy shop while she’s on the road.
“When it comes to passive income,” Tseung adds, “my advice is to always remind yourself of the long-term benefits. There may be substantial upfront work, but the time and freedom you can obtain makes it all worth it.”
If web development is your forte (as it is for many digital nomads like Tseung), you can consider building a software product that brings you a recurring monthly revenue. Dustin Nay, a website consultant, did just that and now generates thousands each month wit his automated web management and support tools.
Building a software product may sound like a daunting feat that only full-time startup founders would want to tackle. But Nay points out that those with day jobs can chip away at even the biggest projects incrementally–the key is just to keep the momentum going. “Start taking action right now, and don’t stop. You’d be surprised how much money you can earn without having all of your proverbial ducks in a row.”
If you’re willing to dedicate time to daily writing, setting up a niche blog or website can be a great place to start earning passive funds with minimal overhead costs. If you can establish an audience for your content, you can begin selling products, finding affiliates, and hosting ads on your site, all of which can bring in some steady passive revenue.
Monetizing a content site isn’t easy even if you have a sizable reader base, but Travis Ketchum, founder of Contest Domination, recommends starting an email list so you can provide value and build relationships with cold prospects automatically. He suggests linking to helpful tools and services that pay a commission related to your niche.
Jared Romey, writer and founder of Speaking Latino, estimates that he now pulls in around $3,000 to $5,000 monthly through his series of ebooks. “I’ve been selling 12 books that I’ve written and published, as well as a website selling materials and resources to Spanish teachers,” says Romey. “The royalties were great, and eventually the books became my start to blogging online, which helped expand my online revenue stream even more.”
There are a number of platforms for self-publishing ebooks, from Amazon’s Kindle Direct Publishing and CreateSpace to independent options like Lulu and Smashwords. As Romey puts it, “Just get started, make mistakes, adjust, make more mistakes and keep moving forward.”
Some entrepreneurs are finding success producing podcasts and leveraging advertisements from sponsors. Bilal Zaidi, founder and host of Creator Lab, produces weekly podcasts where he interviews entrepreneurs, designers, educators, and artists.
Like Romey and Nay, he also emphasizes the importance of just diving in and learning to swim once you’re already in the water. “Get your idea out of your head, and start to commit to your revenue stream by forcing yourself to tell others about what you’re doing,” Zaidi says. “You don’t have to know every detail before starting.” Podcasting is about conversations, and conversations evolve as they unfold–you’ll get the hang of it once you get started, he suggests.
Whether you’re looking for a way to monetize a side project or create an additional revenue stream in order to fund a business, setting aside time now to create passive income can help you rest easier in the future. You may even be surprised how even a few extra dollars a month here and there can start adding up.