How to diversify your business with a passive income strategy
Reaching and maintaining six-figures and beyond — without totally exhausting yourself and your resources — may require a diverse and passive income stream.
You’ve probably already heard the phrase “passive income” and as an entrepreneur I’m sure it stirred up a good bit of curiosity.
Passive income is an excellent example of the way real wealth works. Real wealth is when money or something with monetary value builds on itself without any incremental effort on the part of the investor, creator or entrepreneur.
Compound interest, appreciating assets (such as real estate or artwork) and even a strong personal or business brand are all examples of real wealth.
This is contrary to “fake wealth” where you have to continuously work hard and invest resources to earn money. With fake wealth, there is no output without constant input. Once you stop investing time, money or energy your earnings dry up. It is not a feasible way to build a six-figure business.
When you set up a passive income stream you put the upfront investment into building a product of high value that you can sell over and over again without any extra effort (besides routine maintenance) after it is launched.
For example, as a business and financial coach I have a ceiling as to the number of clients I can coach one-on-one. That’s because my energy is limited and my ideal lifestyle is one full of travel and simple pleasures so the time dedicated to work, no matter how much I love it, is limited as well.
However, I’ve found ways to repackage my knowledge and make it available (via online courses, for example) to a broader range of business owners and professionals who aren’t able to work directly with me but still want to benefit from my guidance.
As an entrepreneur you too should be thinking about how to maximize the value you can add to your customers while being mindful of the resources (be it money, time or energy) you are spending to do so.
Diversifying your business with a passive income stream is one of the best ways to approach this efficiently and I’ve compiled a list of different methods and their benefits for you to consider:
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Online courses are one of the most popular ways to package and distribute your knowledge as a entrepreneur, advisor or creator.
You will have to spend time crafting a useful curriculum, developing the content for each lesson, and getting the system in place to promote and sale the course.
However once you get everything in place and automated your customers can conveniently access the material at anytime, leaving you free to work on something else.
I absolutely love creating online courses — and have designed several free and paid programs for my audience. Podia is the sleek and simple platform that I personally use to host, manage and sell my online courses.
Similar to online courses, with digital downloads you only invest the upfront time in repackaging your knowledge in an easy-to-consume format and setting up an evergreen sales funnel to market automatically.
Guides and e-Books are the most common types of digital downloads but there are many other types as well. This is an excellent means of generating passive income and freeing up your capacity through self-guided resources.
Podia also has built-in capabilities to manage your digital downloads from end-to-end without any of the technical headaches that often trip up content creators.
You don’t have to limit the distribution of your knowledge to an e-format. You can also write a book that’s distributed across multiple formats including physical books.
Platforms like Blurb and Amazon have made it easy to self-publish too. Once your book is published you’ll still have to market it but, for the most part, you can sit back and collect the royalties.
A membership program is a structure where customers pay regularly (monthly for example) for access to content — typically a collection of digital products, online courses or other information (such as the gated news or articles that publishers hide to encourage readers to pay).
It's not entirely passive income as you would need to keep the repository of content fresh to justify collecting an ongoing charge, however it's an excellent way to lock-in recurring income.
You can also experiment with a variety of tactics like bundling products and offering pricing tiers to convert customers.
Podia has an incredibly streamlined membership software that makes it virtually effortless to build and manage your membership content and community.
A subscription service is similar to a membership program but for physical products. It’s technically not passive because you still need to procure products, handle operations, etc. However, it still qualifies as a good option for diversifying your income.
Subscriptions also ease the marketing burden and help you forecast your financials with greater certainty. As once you bring on a customer your business will benefit from the recurring revenue, and you can monitor retention to project how and how much you need to invest in bringing in new customers.
You are an affiliate when you refer someone else’s products and make a percentage of the sales you are responsible for. Depending on your business model, supplementing it with affiliate income is a great way to diversify.
I’d suggest partnering with a relevant brand you love and believe in, whose products complement but don’t compete with your own.
Most of the heavy lifting (product, shipping, service, etc.) has or will be handled by that brand. You only need to have an effective process for marketing to your fans and followers in a tasteful way.
Having a loyalty program is also an excellent method of driving additional sales with little effort. It’s built around offering a strong incentive (e.g. discounts or freebies) to encourage word of mouth — one of the strongest ways to build a customer base.
For example as a business coach I offer all my clients 25% in cash for every new client they refer to me. The new client only needs to tell me who referred them and I instantly send the referrer money.
Your loyalty program can be as simple or as complex as you want it but I’d suggest making the customer-facing steps frictionless and ensuring the reward is deemed as beneficial.
This article was written in partnership with Podia, my absolute favorite and most trusted platform for generating passive income virtually.
I have a special relationship with Podia because I began using their platform when we were both in our infancy — me as an online course creator and them as a course platform.
They’ve built a beautiful interface with only the essential features you need to get your passive income product up and running, making it perfect for first time content creators. Podia also offers a 30-day free trail to start.
I’m an affiliate for a very select number of business services I trust and have thoroughly vetted by using myself. I will receive a small affiliate fee for any sales (passive income!) I generate.