There are so many ways to make an income online these days I often wonder why there are so many people in debt and living paycheck to paycheck. Passive income, in particular, is a fantastic income stream, due to the fact that you can essentially make money whilst you sleep (I’ll discuss this below). Within this blog post, I’m going to introduce you to 3 passive income ideas that are probably the most legitimate ways you can create passive income online.
But before I introduce you to the 3 passive income ideas, I think it’s important you know exactly what passive income is.
What is Passive Income?
Passive income, you’ve heard the term right?
Of course, you have.
A quick Google search will show you how many people are talking about it.
Unfortunately, not every website can be deemed legit, as some claim you can make money in your sleep.
Of course, this is absolutely possible.
These borderline ‘scammy’ websites, however, fail to mention the hours of hard work, dedication and sacrifice that is required.
Generating passive income is difficult.
It’s very time consuming, tiresome and can often to be stressful. You’ll probably want to give up a few times along the way to.
Despite all that, it’s totally worth it!
So what exactly is passive income?
Passive income is income generated when you aren’t trading your time for money. Unlike active income, where you trade your time for money, kind of like that 9-5 job you loath so much, passive income is all about making your money work for you and creating freedom so you’re able to spend more time doing what you love.
So how do you create passive income?
There are tons of different ways to create passive income.
However, there are 3 passive income ideas, in particular, I really want to discuss within this blog post.
All 3 are 100% legitimate ways to earn a passive income online and many have achieved financial freedom as a result.
Take Pat Flynn for example, since 2008 he’s generated over 5 million dollars in earnings.
Before I get into the nitty-gritty and introduce the 3 passive income ideas, please remember one thing.
Success doesn’t happen overnight. All 3 of the passive income ideas I’m about to show you take time and commitment.
But if you truly want to escape the rat race, I suggest you carry on on reading.
The FP Model
Passive income idea number 1 is the FP model. This stands for Freelance to Product.
This model is all about working as a freelancer, then finding a problem that can be solved with a product.
But Nick, isn’t freelancing active income?
Well, yes it is. But let me explain.
If you’re looking to start your own business in the future but not sure where to start, I really recommend freelancing as a starting point. You’ll gain a ton of experience, develop your skills and earn a bit of money to keep you ticking over.
Another reason to think about freelancing is the amount of knowledge you’ll gain from the industry. This is where the FP model comes in.
With the knowledge and experience you’ve gained from freelancing, it should be fairly straight forward to find a problem that needs solving.
After all, most successful businesses are built on this theory.
Take Rob Williams for example. After working as a freelancer for some time Rob found out that many other freelancers were tired of wasting their time on bad opportunities, and they were tired of looking for work constantly.
Soon after Rob founded ‘Workshop’ – a hands-free lead generation service for UX design firms.
As of 2014. Workshop had 483 subscribers and monthly recurring revenue of $10,346. Six years on and I predict these figures are a heck of a lot higher.
As Pat Flynn says,
All active businesses can be turned into more passive businesses by using products you’ve already made, by using software to do a lot of the legwork, and even having other humans do some of the work to”.
You just need to find a problem, then work on creating a product that solves that problem.
Freelancing is a great place to start.
AA Model – Audience and Advertising
This next passive income idea is the AA Model, which stands for Audience and Advertising.
It’s probably the most popular form of passive income as it’s fairly straightforward to set up, but like all passive income ideas, it’s not easy to accomplish.
It essentially involves attracting a large audience and then partnering up with advertisers. You then get paid from the advertisements.
Although it sounds easy enough, attracting a large audience is difficult and will take a lot of time and dedication, the rewards, however, are very much worth it.
Take YouTube for example.
For many years YouTube has been the number 1 video sharing platform on the internet and the go-to place to procrastinate. In fact, did you know that over 400 hours of content is uploaded every minute?
It’s because of this popularity that many YouTubers are able to earn a passive income online, generated by advertisements, usually placed before and sometimes in the middle of their videos. This is why the AA Model is such a great passive income stream.
Once the video has been uploaded and the advertisements put in place, there’s not much else to do.
It’s not uncommon for some to make thousands from their Youtube channels and live a very comfortable lifestyle, all from passive income.
There is, of course, a select few who have generated millions and leveraged their Youtube success to other areas in the media industry. On the other hand, some people don’t even make enough to buy lunch.
Another way you can really utilize the AA Model is through having your own website, such as a blog. If you’re able to attract people to your blog you can place relevant advertisements throughout your website and earn money.
There are however two downsides to the AA Model.
Firstly, advertisements can be very unpredictable. Even with a large audience, there’s no way of knowing if that ad is going to perform or not. Some days you may make some money, some days you may not…that’s just how it goes.
Secondly, it can take a long time to make any money at all because you first need to build an audience. And as I’ve previously stated, building an audience is no easy feat. Although many have done it, so you can too!
If you ask anyone who has created wealth online through content creation such as producing Youtube videos or blogging, they will always give you the same answer.
You must provide value, and be consistent with whatever it is you are doing. You need to give your audience a reason to come back and a reason to share your content.
Many use the AA Model but are unsuccessful due to either not offering their audience any value or they give up too soon.
If you stick to the fundamental principle of offering consistent value, whilst remaining patient, I have every faith you can use this model to create passive income.
EP Model – Expert to Product
The final passive income idea is the EP Model, which stands for Expert to Product.
In my opinion, out of all the passive income ideas I’ve discussed, this is by far the best one.
One of the main reasons I like the EP Model is unlike the AA Model, you don’t need a big following to be successful.
In fact, according to Kevin Kelly, you only really need 1000 true fans to create a comfortable living for yourself.
Now you might be thinking to yourself, ‘I’m not an expert at anything’.
Well if you are thinking that, don’t panic!
You don’t have to be Einstein to make this model a success. For this model to work, you simply need to know more than your audience.
By providing consistent and helpful content about a topic your audience is interested in, they will continue to seek your expertise more and more. Whether you do this by writing blog posts, posting on social media or creating YouTube videos, it doesn’t really matter. What matters is that you produce content that solves a problem.
By doing this, you will begin to build trust with your audience and they will start to see you as an authority within your niche, or even better…an expert.
Within the EP Model, there are two ways you can earn money.
- Recommending other people’s or companies products or services for a commission.
- Create your own product or service.
The first way to make money using the EP Model involves recommending other people’s or companies products or services for a commission.
This is known as Affiliate Marketing.
It’s an incredibly popular and effective way of making money online due to the fact that you are promoting someone else’s products or services, which is a hell of a lot easier than creating your own. The downside, of course, is you only get a percentage of the profits.
Don’t let this put you off though.
When done right, Affiliate Marketing can be a very lucrative business and create substantial passive income.
Take Michelle Schroeder-Gardner for example. After accumulating $38,000 in student loan debt, she decided to start her blog ‘Making Sense of Cents‘ which helps people take control of their finances. Michelle started her blog around 2010/2011 and today is making on average $159,000 each month.
So as you can see, Affiliate Marketing can be very profitable.
Create your own product.
Now if you’ve decided Affiliate Marketing isn’t for you and you don’t want just a slice of the pie, you want the whole thing, then your only other option really is to create your own product or service. This is the only way you are guaranteed to keep 100% of the profits.
Pretty much all successful products or services that are created have one thing in common. They solve a problem!
Before even thinking of creating your own product, you need to become an expert within your niche, as I’ve previously touched upon.
Otherwise, who’s going to buy your product?
This is why I always recommend that you should start off experimenting with Affiliate Marketing for a while. You’ll gain valuable insight into what sort of products and services your audience likes and dislikes, you’ll increase your authority and most importantly, if what you are promoting is actually helpful, you’ll gain the trust of your audience.
Which will be a massive help to you for when you are finally ready to create and sell your own products or services.
The first thing you need to do is decide what niche you are going to work in.
Want my advice?
Choose something you are either passionate about or have experience in. Don’t choose to create content about a niche you know nothing about because you think ‘that’s where the money is’.
Creating content that people want to read, listen to or watch is difficult and takes a lot of time and effort, so choosing a topic you actually enjoy will really benefit both you and your audience in the long run.
Getting Your Content Out There
Once you’ve got your niche, the next step is deciding which platforms you’re going to use to get your content out there.
First and foremost, you should definitely have your own website. Apart from the fact that Google alone processes over 3.5 billion searches on average each day, which is one hell of a potential audience for you by the way, but being in business without your own website just isn’t normal these days.
Fortunately, creating your own website isn’t as difficult as it once was. I’ve put together this simple 10-step guide to help you.
Another amazing platform for sharing your content is YouTube.
Like blogging, YouTube is a very popular choice in the Affiliate Marketing world due to the potential outreach and the authority you can build within your niche.
As I’ve previously mentioned, there are many who earn a living from YouTube. So if your content is good enough, you can too.
After creating your website or YouTube channel, you’ll then want to set up relevant social media accounts to start building your brand.
Using the above strategies, there is no reason why you can’t create your own passive income.
- FP Model – Freelance to Product
- AA Model – Audience and Advertising
- EP Model – Expert to Product
Most importantly, remember that none of these passive income ideas can be successful unless you are willing to put the work in.