Last Updated on December 29, 2021 at 11:58 am
The idea of passive income excites many of us. However, very few can get significant passive income. In this article, we discuss the reasons for such failure and present a passive income template that can be used to build a lifelong income. We shall restrict ourselves to building an online passive income.
Why many of us struggle to build passive income: (1) We do not understand what passive income really is. There is no such thing as truly passive income. That is, you cannot set up something online or offline and assume it will pay you an income for life. It just does not work that way. Passive income only means low-maintenance, not zero-maintenance.
(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. During this time, we must regularly help others and build a trustworthy presence without expectations.
(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.”
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(4) Being popular does not help! Today we judge people by how many subscribers they have, how many followers or whether their account is “verified” or not. This has little to do with online income. Popularity only attracts a mob, and a mob, by definition, does not think. Instead, if we attract intelligent readers/viewers, they would be ready to pay for a good product and refer us to their friends.
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. That is, you can build a strong competitive moat around your online presence.
A template for passive income
So how 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 with which you can 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 will need to 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, 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 trust among your community
- 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 do 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 kind of 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 get to offering trustworthy value regularly, trust me, the products ideas will come to you! All passive income products of freefincal: Robo advisory, Two video courses, calculators have all come naturally due to providing such value for years.
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:
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