Have you ever heard the term passive income? If you are a regular reader of this site, there is no doubt that you have. If you have not, passive income is simply an income that is continually generated through no work (or very little work) from the one receiving the checks. Much of the time, the passive income business requires a large amount of work up front with no money promised whatsoever. It is only after this enormous amount of work do the checks actually start rolling in, that is, if your idea is a good one.
East Side Lenders Examples of Passive Income
There are some passive income sources that are fairly common, yet you may not have thought of them as passive:
1) Books – Authors often do not make money until their books actually sell. So, they spend a great deal of their time slaving over their laptop with no guarantee of a paycheck. But, if the book is a success, that author may receive sizable checks for the rest of his or her life. Those checks would no doubt be considered passive.
2) Songs – This is along the same lines as books. Write a song and you own it. If anyone would like to buy the song for its use, you earn the profit. Write a song like, “Happy Birthday”, and you won’t have to work another day in your life.
3) Real Estate – Buy a property and rent out the units. Very little work needs to be done on your part and yet, because you had the money to buy the place, you are receiving the rent checks.
4) Apps – This is now one of the most popular ways to become rich and famous. Design an app and publish it and you could earn thousands of dollars per month. Develop a game like Angry Birds and you might even start getting paid for merchandise.
5) Multi-level Marketing – These are often referred to as “scams”, but there are many people who have been able to hang up their regular day jobs and cruise the Caribbean because of their success in an MLM business. Once they develop a solid line of distributors beneath them, they continually get paid and are required to do very little work.
East Side Lenders states the examples above are known ways to make a passive income, but there are plenty of other businesses that can be turned into a passive income source if you want them to be. With the book, “The e-Myth Revisited“, by Michael Gerber, there is a story about a woman named Anna (frankly, I’m guessing at the name right now, but it really isn’t important).
Anna owns and operates a bakery. She wakes up at 4am and starts baking delicious pastries and pies, which sell faster than you can imagine. The end of her day isn’t until 8pm, and she leaves more exhausted after each day. Anna only started her business a couple of years ago, but it is already a huge success. The only problem is, when she looks at pies or pastries, she almost wants to throw up. She used to love to bake; now she wishes she never opened her store in the first place. It has taken over her life and she feels trapped.
There are many people that feel trapped by their business. They work 70 or 80 hours a week and don’t see a way out. Anna made an effort to lessen her workload by hiring an accountant, but they did not get along and the accountant often did things differently than what Anna believed she should. It almost took longer with the new accountant because Anna had to double-check everything. She soon decided that things would be easier if she just took on all of the work herself once again.
How to Transform Your Income Into Passive Income
Within any business, if you want to create a passive income, you just have to take yourself out of the recipe. Anna tried to do this by hiring an accountant, but it simply didn’t work out. Anna thought the problem was the person she hired, but the real problem was the system, or in Anna’s case, the lack of one.
If you think you are the magic of your business, then you will be stuck working long hours with no vacation days in sight. But, if you believe that your work can truly be done by anyone, then you can develop a system for someone to follow and take your place. This is how passive income is created, through a system. Anna can hire someone to bake the desserts and train them with her freshly printed manual. It is full of ingredients and directions. Every possible question that might be asked will be found in this manual. With this action, Anna has saved herself 4 hours per day. Next, Anna can hire another able body to work the front counter. With another manual describing the position and what should be done in each scenario, Anna just replaced another piece of her job. With each manual/system, the business you created is slowly freeing up your time, but still providing you money.
For you true business owners, you might be thinking, “How can I possibly make any money if I’m paying so many people to work for me?” Well, it is obvious that if you are earning $75,000 a year, you shouldn’t spend $60,000 on employees. That would mean that there would be nothing left for you to live on! However, what if instead of working 80 hours a week and earning $75,000 a year, you hire some people, systematize your work and earn $40,000 a year with only 5 hours worked per week. Wouldn’t that be better?
If you’re saying no, then you don’t understand the power that I just gave you. If you can reduce your working hours down to 5 per week instead of 80, that means 75 of your hours are now free to do whatever you wish. If you don’t think that $40,000 a year is enough, then start another business to make more! If you duplicate your systematized bakery, you can earn a total of $80,000 a week (that’s $40k x 2) and you’re still only working 10 hours per week. If that’s still not enough money, go out and systematize something else! By creating a passive income, you have created an infinite supply of wealth because it is repeatable and time is no longer an issue. Systematize your work, create a passive income, and enjoy your riches.
Do you aspire to create a passive income?