Many are drawn to the concept of generating passive income, yet few can achieve substantial results. This piece will explore the reasons behind such shortcomings and provide a passive income framework that can lead to a consistent income stream. Our focus will be on cultivating passive income online.
Many of us struggle to build passive income: (1) Our understanding of passive income is limited. In reality, the concept of completely passive income is a myth. Simply establishing an online or offline source of revenue with the expectation of a lifetime of income is unrealistic. True passive income only refers to income streams that require minimal effort, not zero effort.
(2) Everyone wants the money, but no one wants to work hard: Building a steady and reliable passive income stream from an online presence will take about 3-5 years. We must regularly help others and build a trustworthy presence without expectations during this time.
(3) I hate to say this, but very few of us have something useful to offer! To make people buy from us, we must provide something useful. If we do not have this ability, then we must develop this ability. In my Earn From Skills course, I point out that the right time to start monetizing is when your readers/viewers write to you saying, “I will buy whatever you are selling.”
(4) Popularity is not the key to success! In our current society, one’s number of subscribers, followers, or verified account status is often used as a metric for judging people. Unfortunately, these metrics have little correlation with online income. Popularity draws in a crowd; as a rule, crowds do not think critically. On the other hand, attracting an audience of intelligent readers or viewers will increase the possibility of monetary gain and lead to referrals to others who appreciate quality content.
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We can only build simple, low-cost products for beginners by aiming for popularity, and the competition would be intense. A specialized online presence can easily make more money with fewer followers, and the competition would be significantly less. You can build a strong competitive moat around your online presence.
A template for passive income
So how do you go about building passive income?
- Stop thinking about the money! Our goal should only be to educate ourselves and to reach a point where we can help others. When this happens often, money-making opportunities will arise automatically.
- There are two possibilities. You may already have a skill or ability to solve a specific problem.
- For example, you may know how to set up an e-commerce website;
- You may know how to create a financial plan;
- You may know how to lose weight etc.
- Or you wish to know more about a particular area. Dig deep, learn about it and share it. For example, when I started to use Excel for my financial planning, I knew nothing about Excel or financial planning. I studied, focused on a single problem, solved it and moved to a higher level problem and so on. If I shared my learnings, it would provide value to others.
- Time management is essential! You must allocate about 4-5 hours per week to your project.
- Start an online presence: tweet about developments in your skill space. Write short articles on Facebook, in a blog, and on Youtube. Create a community; create an identity (even if people hate your views, they should not be able to ignore you). Polarization works!
- Develop your communities trust.
- Recognise their problems. This would inspire not only new content but also new products.
- Do not start selling anything until people write to you saying: “I want you to help. How do I pay?”
- Recognise all this will take years and years to gain traction.
Theoretically, active or passive income is the overlap of skill and utiity. Practically it is all about consistency
Passive income is based on two key ingredients: value and trust.
- The value here refers to how well you satisfy the requirements of your followers. A good amount of this value should be offered for free without holding back so that your readers appreciate your expertise. How else can you convince them to buy your products?! Value alone is not enough.
- Trust here means no matter what, you will always provide unbiased content. Any sponsorships or affiliation from product manufacturers will break this trust with your readers/viewers.
The more trustworthy value you provide, the more members of your community will be ready to pay for your products. Notice that we have so far not talked about how you must create a passive income product! When you offer trustworthy value regularly, product ideas will come to you!
What matters the most is building trust and offering value regularly: At least once a week – consistency is everything in this business! To be consistent, you need to manage your time efficiently!
Patient effort – without expectations – that helps others and therefore teaches us to become better.
This is the secret of building a passive income that would last a lifetime. We have a detailed video course covering all the steps mentioned above and more to help you build such an income.
Sricharan Monigari, an Oracle HCM cloud solution architect, has to say the following about the course: