Adding passive income streams to your existing business can create a revenue source with markedly different underlying economics. Typically, these income streams will have higher profit margins and can scale more easily than services or physical products - giving you more flexibility overall in your business. So if you’re looking to add more assets over liabilities to your portfolio, then read on.
Adding passive income streams to your existing business can create a revenue source with markedly different underlying economics. Typically, these income streams will have higher profit margins and can scale more easily than services or physical products - giving you more flexibility overall in your business. So if you’re looking to add more assets over liabilities to your portfolio, then read on.
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1. Dropshipping
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Firstly it helps to clarify that the title ‘passive income’ can be a little misleading. While many of these ideas have the potential to become more passive, they do all take some level of maintenance, and will also take time and skill to set-up. However the risk-reward levels are high, and they are all channels that uniquely do not rely on you charging an hourly rate.
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Drop-shipping is one of the most popular ways to start earning from wherever you are, even if you don’t have plenty of cash flow. This is not a get rich quick scheme, however there are plenty of inspirational stories - including that of Ben Francis; a former pizza delivery driver who founded the now billion-dollar business, Gym Shark, which started off life as a supplements drop-shipping service.
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This business model involves creating an e-commerce store where customers browse and buy products. What’s interesting about drop-shipping is that you don’t have to see the products you sell physically. With drop-shipping, your supplier handles everything from manufacturing to packaging to fulfilment. And since you don’t need to send money to your supplier until your customers pay, there’s limited cash risk.
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Another risk you get to avoid is the one that comes with investing in a product that doesn’t have a market. You can use a platform like the Oberlo marketplace to find trending products in different niches to sell in your store. You can also look into customer trends using platforms such as Google trends which give you consumer insights by location. Depending on the product you choose and your pricing, you can earn solid passive income and learn how to run an e-commerce business.
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2. Print Stores
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If you’re an artist, designer, or entrepreneur, print on demand can be a profitable passive income idea and monetize your creativity. It involves working with suppliers to customise white label products like t-shirts, posters, backpacks, or books and selling them on a per-order basis. Similar to drop-shipping, you only pay for the product after you sell it.
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There’s no buying in bulk or inventory needed. Print-on-demand stores are a good passive income stream because you can create and sell products incredibly quickly - just a matter of minutes, you only pay for what you need so there’s no cash tied up in surplus stock or fulfilment fees, and once your store is set-up, you can automate the marketing and sales process.
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With a print-on-demand company like Printful, you can easily create products to sell in your online store quickly. Overall, print on demand is a low risk, simple business idea you can get up and running with fast.
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3. E-Products
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Digital products are assets or pieces of media consumers can’t touch physically. These include downloadable or streamable files such as Kindle books, templates, plug-ins, or PDFs. This is becoming incredibly popular as it’s so easy to do and allows people to monetise their hobbies, especially if they enjoy writing, researching and reading.
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Digital products are great passive income streams because they have high profit margins. You only have to make the asset once, and you can sell it repeatedly online. There’s no storage or inventory needed. You can sell as many digital products as you want. Many creators scale their passive income by selling kits, printables, files, and other assets professionals can use.
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4. Online Courses
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It’s easier than ever for educators to sell courses online. Whether it’s marketing, illustration, or entrepreneurship, you can create courses and start selling with few limitations. Similar to digital products, you can sell online courses repeatedly without holding any inventory or stock. Teaching online requires some upfront investment in time. You’ll need to outline your course, record it, and make downloadable assets like templates for students to walk away with.
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As an online educator, you can choose the class size and length. You could offer one-on-one tutoring or masterminds if you prefer small groups, or offer training sessions and live courses if you enjoy working with big groups. And if you don’t want human interaction you can create fully downloadable courses that students can finish at their own pace. Overall, online courses tend to be a profitable passive income stream with low startup costs. But they do require initial time investment.
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5. Blogging
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Starting a blog can be a challenging venture, but the blogging business model is only becoming more successful as a passive income stream. You don’t need to be an internet celebrity anymore to earn money online. All you have to do is find your people on one or two platforms, then send them to your website.
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It takes a little bit of time to build a blog. But if you create quality content and promote it through your platforms, you’ll build an audience big enough to monetise. The key to ranking better with a personal blog is consistency and time. As your blog ages, the Google algorithm automatically starts increasing it’s domain ranking, providing you’ve been updating it consistently over time.
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You can have multiple out-branches from a core blog, which generate extra passive income, including: affiliate links and products, paid blog features from other brands, sponsored products, your own products and google ads. You don’t need any design or coding skills to start a blog. With a content management system and hosting service like Squarespace, you can get a blog up and running in no time.
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6. Hand-made Crafts
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There’s never been a better time to sell stuff online. With over 4.6 billion people connected to the internet today, the opportunity to build and scale an online business is massive. Platforms such as Etsy are only rising in popularity demonstrating another consumer trend - the desire to support smaller, local business, find unique goods that aren’t available on the high-street and to know where your purchases come from.
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The upfront investment is two-fold. You’ll need to invest in materials and time to make and sell DIY goods like pottery or clothing. You’ll also want to create an online store to house your products. Post-pandemic, some of the top consumer purchasing trends have included baby clothes, virtual classes and experiences, exercise equipment, sustainable household goods, beauty products, groceries, athleisure and pet supplies. Selling from your own store reduces the amount of fees you pay on each sale, plus, you can create a brand for yourself. The benefits of building a brand compound over time as you build an audience and connect with more customers.
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7. Affiliate Marketing
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Affiliate marketing involves recommending a product or service to an audience. It’s a great source of passive income because you earn a commission whenever someone uses your referral link to buy the recommended product or service. It’s also a growing industry, and one that’s fairly easy to execute. You only need to handle the marketing side of things, as with drop-shipping, it’s fairly low risk and it’s scalable. Earning money with affiliate marketing can be a rewarding way to add new revenue streams to your business. All it costs is your time. Once the hours are invested, you can reap the rewards continually.
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8. Stock Photography
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One of the biggest drawbacks to running a service-based business like photography is that you get paid for your time. You must be at an event or photoshoot to make money with photography, which, even if you’re making a killing, can be tiring after a while. If you’re a full-time photographer or own a good camera, you can create an extra revenue stream by selling photos online. Stock photo sites like Pexels, Shutterstock, and other online media houses will pay for high-quality photos and videos.
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There’s no inventory to keep around the house besides your camera and laptop. These websites do the marketing for you, so once you load your photos onto the platform, getting your work out there and selling it is done for you. If you run your photography business on platforms like Shopify, you can also easily tie in digital products like prints or print-of-demand products like shirts and hats, giving you even more passive income streams so you can work less and make more. These websites are also a great form of free advertising if you have photos of products that you’re trying to sell.
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9. Rental
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Real estate investing is one of the oldest ways to build long-term wealth. If you have enough money, you can buy and rent out apartment buildings or some other form of real estate. But since the job of being a landlord is pretty active, you can hire property managers to manage tenants and collect monthly payments or rent.
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If you don’t have enough capital for your own investment, you can still earn money on real estate. With a minimum investment of £500, you can use a real estate investment trust (REIT) platform like Fundrise to invest in different real estate assets and earn passively when the assets appreciate.
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Do you have an extra room in your apartment? Or are you going on a three-week road trip and don’t want to leave your house empty? You can partner with a rental company like Airbnb to put your free space up for rent. Airbnb connects homeowners with people who are looking for their next getaway. Many people prefer Airbnbs because they’re usually cheaper than hotels, meaning a high demand for your free space as an Airbnb host.
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Your free space is not the only thing you can use to earn passive income. You can also offer your car up for rent with a service like Turo. If you already use your car for Uber, you can sign up with platforms like Carvertise or Wrapify to earn extra money as you take trips around town. Another option is to look for someone who needs a car for Uber or Lyft. So instead of actively driving around in your free time, you can pull up a Netflix show while your car works for you.
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10. Investing
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Although the stock market might have a steep learning curve and can be confusing, it’s a great way to build lasting wealth. A common mistake most people make with stock investments is thinking short-term instead of playing the long game. The goal for investing in stocks is to diversify your portfolio and reduce risk. You can do this through investing in exchange-traded funds (ETFs) and high-dividend stocks that earn you income slowly over time. To start investing in the stock market, you need to open up a brokerage account and fund it.
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Have a lot of cash that’s not working for you? Try Peer-to-peer lending. P2P lending involves lending money to borrowers or small businesses. To make the process easy, you can sign up on a website like LendingClub, Prosper (for individuals), and Worthy (for businesses) that connects borrowers with lenders. These sites usually host loan requests along with interest rates based on the borrower’s history. The return on these loans is usually around 5%–6%.
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For shopaholics - cashback reward sites like Swagbucks, MyPoint, and Rakuten allow you to earn money when you shop online. After signing up, you don’t have to do anything extra, aside from shop, to make money from these sites. The more you shop online, the more points you gain. And the more money you can make.
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There is only so much time in a day, and finding ways to scale your income in more efficient ways can give you flexibility in your business to hit the next level. That level might be taking a vacation, hiring more help or ordering new inventory, but whatever it is, adding streams of income with different underlying economics can give you the freedom to explore it.
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