All businesses require work, there is no get-rich-quick scheme here.
If you were suddenly hit with a $500 unexpected bill, would you be able to cover it?
If the answer is no, you’re not alone. Some 38% of Americans could not come up with $500 in cash without selling something or taking out a loan.
An extra 500–1000$ every month can be super beneficial towards paying for any unexpected repairs or reducing your credit card debt. Starting a side hustle might be the solution.
Instead of wasting time on the weekends scrolling mindlessly through social media or snoozing, you could devote a few uninterrupted hours to a side project. Think of it as a learning experience, there is not much you can lose anyways. We all know someone whose side hustle has turned into a cash cow.
I am not writing this article for you to escape the 9 to 5. If anything, having a fixed source of income is always a smart decision until you have a minimum of 6-month salary saved. (Not as easy as it sounds)
The problem is that passive income gurus don’t tell people that. They often characterize passive income businesses as money machines. Once the money machine is built, they say, all you have to do is check your phone a few times a day, and you are free from the indignity of labor.
In my experience, that’s just not accurate. I started an online jewelry store where we sell Demi-fine jewelry for Gen-Z and Millennials. Initially, I and my business partner worked 100 hours a week. Some weeks we worked forty or less. The passive income machine required a lot of upkeep no one warned me about. I underestimated what it took to sell and create brand awareness. We had to continually make changes to our website and Instagram until we found our aesthetic.
If you’re anything like me, you wanna maximize your effort and invest your energy and time into things that make you money without your physical presence.
“You are not going to get rich renting out your time. You must own equity, a piece of the business to gain your financial freedom.”- Naval Ravikant
The principle here is that you’re inputs are directly correlated with your outputs. In most salaried jobs you get paid hourly which means you’re not earning when you’re sleeping or on a vacation or retired.
Also, renting out your time means you’re essentially replaceable. You’re much more likely to be doing a job that can be eventually replaced by a robot, or by an AI. And it doesn’t even have to be wholesale replaced over night. It can be replaced a little bit at a time. And that kind of eats into your wealth creation, and therefore your earning capability.- Naval Ravikant
True passive income comes from income generated from investments. (Rent from real estate, dividends from stocks, and interest from bonds). The other income sources I mention in this article are scalable income.
The good news is that there are some businesses that don’t involve you to get sucked into MLM’s or require you to invest a huge lump sum amount upfront:
Diamond Creator Award (For Motivation purposes only)
If you’re looking for ways to make fast cash, this might not be the best option for you; however, if you’re interested in a way to build life-altering passive income, pay attention. Youtube is the world’s second-biggest search engine, with 2.3 Billion users worldwide and 79% of internet users having their own YouTube account.
Millions of people are curious as to how much money a YouTuber makes. In order to earn ad revenue, a YouTuber has to have 1000 subscribers and 4000 watched hours of content on his/her channel. Once you do that and your channel passes YouTube’s review process, your channel is eligible to be monetized.
YouTube pays content creators based on the CPM, or Cost Per Mille, on their video. This number represents how much YouTube pays per 1000 views. Different niches have different CPMs, on average CPM is $7.60 per 1000 views. However, YouTube keeps 45% of that for itself and gives content creators 55%. This means that your actual payout from ad revenue from a YouTube video is $4.18 for 1000 views on average. This indicates that in order to make $1000, your YouTube channel would have to gain the requisite 1000 subscribers and 4000 watched hours, and then have another 240,000 views. It’s challenging but doable.
I would suggest you choose a niche you are passionate and innately curious about. Consistency is the key here. There are multiple ways to monetize on your YouTube channel (apart from Adsense) such as sponsorship deals, affiliate marketing, selling courses, selling merchandise, speaking engagements, etc.
Creators on YouTube leverage their existing audience to grow on other platforms (IG, Tik-Tok, Twitter) and vice-versa.
Pro Tip: Spend an equal time planning your Thumbnails and Titles as much as the video as they act like billboards and they help viewers to decide which videos to watch.
The rule of any business is you buy low and sell high. If you literally have zero capital to start with, you could go to Facebook Marketplace. Find free products other people want to get rid of. Sometimes it’s a side table or a couch or coffee table with a few scratches. You repair it for a few bucks, and you resell it on Craigslist or OfferUp.
I have personally bought and sold three cars through Facebook Marketplace and made a minimum of 1000$ on each of them after driving them for at least 6 months. Pro Tip: Stick with Toyota’s and Honda’s. Stay away from the BMWs. Flipping cars requires some patience and foresight, as it’s like looking for a diamond in the rough. You should use websites like Carfax to check the value of the car before you negotiate with the seller.
Arbitrage is the practice of taking advantage of a price difference between two or more markets.
Airbnb in Austin, TX
So your goal is to find a trending market for Airbnb (Austin, Texas currently). You lease a house, furnish the property, and list the house on Airbnb. You would need to hire a cleaning company that you can work with on a regular basis and they clean up after you’re tenants. Initially, you can be the property manager yourself until you make your initial investment back. I would suggest you hire a property manager down the road to make it more passive.
Similar thing with Turo. You can lease a car on a monthly basis from websites like Fair and then rent it out on Turo. I’m not familiar with the insurance and paperwork for this, so make sure you do your due diligence.
Fiverr or Upwork are platforms that provide freelancers an opportunity to offer their services to customers worldwide. If you’re a graphic designer, website developer, or freelance writer these platforms provide a great opportunity to work directly with clients. Top sellers on Fiverr make upwards of 50k+ a year. Here’s an example of a lady who made $378k a year on Fiverr working as a freelance writer.
Fun Fact: Fiverr’s Stock has 10x’D in the last year. (Demand is growing as more and more people work remotely)
The content creator is easier than ever. A few years ago, you can only monetize your content via YouTube. Currently, there are hundreds of platforms with which you can make money by having an audience.
Tik-Tok has a creator program, Twitch has a creator program, and even Facebook has one too.
Those platforms have a big audience that is only growing. If you manage to start a popular channel or page that gets many views, you could make a lot of money from it.
In order to promote Spotlight, (Snap’s Version of Tik-Tok), Snapchat is paying out $1 million every day to creators that post viral content.
You won’t make money quickly through Blogging or Podcasts. But it can be quite rewarding in the long run.
Podcast ads pull in around $20 for 1,000 downloads on average. Think about all the great conversations you will have after starting a podcast. (Hard to put a price on that)
Udemy (Another example: Skillshare) is another platform apart from YouTube, but instead of scattered content, teachers structure videos into courses. Many of these courses are priced at $59.99 or above. However, with Udemy’s year-round promotions, most sell for $9.99.
Anyone can upload a course, and if it sells, you get half the royalties. Udemy collects the other half in exchange for promoting your course. If you want to market courses yourself, you can use referral links and receive 100% of the profits from each sale.
Creating a course requires a lot of work upfront. You would need to plan a course curriculum, write a script, film and edit your course and promote it. But it requires zero efforts once published and margins on these courses are enormous.
Make sure to build an email list:
I cannot emphasize this enough. Most people skip this step and later wonder why their social media audience doesn’t convert. An email list is the only thing you control. You’re not subject to any algorithms, policies, and changes of the heart of social media providers. While only ~5% of people will see the smart observation you post on social media 30–50% of people will see what you send them via email.
You can start a Shopify store for as little as $30/month. It only takes a few hours to get your website up and ready. Shopify has made starting an e-commerce store so seamless. (This used to cost millions two decades ago)
Dropshipping is another model differing from the retail fulfillment method where a store doesn’t keep the products it sells in stock.
Instead, when a store sells a product using the dropshipping model, it purchases the item from a third party and has it shipped directly to the customer. As a result, the seller doesn’t have to handle the product directly.
Here’s a list of products that have been on the trending list for Drop-shipping 2020–21:
- Dog beds
- Couch covers
- Minimalist jewelry
- Beard straightener
- Massage guns
- Baby Strollers
- Mesh shoes
There is a YouTube channel called Learn with Shopify where they explain all this in incredible detail for free. (You don’t need to buy a course for dropshipping)
Most people make the mistake of thinking they are special and they can beat the market. As an active day trader in 2017, I made this mistake and lost all my savings in the first 6 months. Now I invest in Index funds (ARK Invest) and companies with strong fundamentals (AMZN, AAPL, PYPL) anxiety-free. The less I check the market, the happier I am.
My investments ran on autopilot so I didn’t waste thousands of hours checking something I couldn’t change. This is dollar-cost averaging, where you put in the same amount every period in the same area. When the price is low, you buy more and when the price is high, you buy less!
Another option is to invest in high-yield dividend stocks where you get paid every quarter. (A sum paid by the company to its shareholders every quarter as a token reward). This is riskier than investing in ETFs as the stock can plummet.
With currently millions of blogs on the internet, it seems hard to believe that you can still make money writing one. However, many people still become successful writing on the internet every day.
The Medium Partner Program allows writers to earn money for the content they publish on Medium based on engagement from Medium members.
Here’s how it works:
- Enroll in the Medium Partner Program
- Make your stories eligible to earn money
- Earn money based on member engagement
That’s because there is little quality information around the internet.
So if you are unique and original enough, you can stand out quickly. Only a few blogs get to earn relevant amounts because people are unwilling to put out quality content if they don’t see short-term gains.
Here are a few of my recommendations:
- Find a niche you like to write about. You don’t have to be an expert, but you must be passionate about what you do.
- Promote your blog on other platforms to get initial traction. Make sure to title your blog with keywords from google trends. Write with the intention of adding a lot of value to your readers.
Affiliate marketing is basically get paid to recommend products. You don’t need to have a large audience to start, and you don’t even need to buy any product.
This business has always been one of the most popular and effective ways to make money online, and that’s not about to change anytime soon.
It’s how many people first get started online because of its simplicity. In fact, this was the alternative I got instead of creating my own Amazon or Shopify store.
In this way, I could know how good I was at selling products for a commission without having an inventory. If I could get at least 10% of my followers to buy the products that I had on the list, then I can launch my own store later when I get more followers.
To start recommending products, Amazon only requires you the URL of the page where you are going to publish the products. Currently, amazon gives between 2–5% commission. But if you learn quickly how to get sponsors from other brands, you can get up to 25–30%.
These are problems that face passive income businesses in any industry. If your passive income play is to purchase a rental property and take on a tenant, you will have day-to-day annoyances like building maintenance, renovating dated properties, and getting cars that are illegally parked towed out of your parking lots. You will also have industry responsibilities, like staying aware of the latest laws affecting landlord/tenant relationships, pet ownership, and changes to zoning in your area. You will also have market responsibilities, like staying aware of the rental market in your area so your properties remain competitively priced for their quality.
Here are a few recommendations:
- Look for distressed properties where the buyers want to liquidate immediately
- Researching areas where rent was quite high, but home values were low.
- Understand Property Taxes & HOA
- Have a contractor you can trust.
- Do a background check on your tenants.
I will be writing a separate article on this topic, as there is a lot to cover.
Reducing your living expenses is better than increasing your passive income. If you truly want passive income, you need to examine your spending habits too and decide if anything is a luxury you are happy to be without. Paying down credit card debt to avoid future interest payments can also be considered as an income.
Currently, there are good ways to earn money online. Focusing on what is really worthwhile and learning correctly can help you run a great business from home. Passive income lets me work on passion projects without pressure. Self-employment fulfills me with meaning.
The key here is consistency. Every business has its own cycles, you just have to stay long enough in the game to capitalize on it.
Before starting a business. Ask yourself: How much is your future worth? What dollar amount do you put on your freedom, flexibility, hell, your sanity?
Millions of people are going to lose the jobs that they perform today — this is a fact.
But many overlook the opportunities in front of them. Take what passions you have and leverage that into a self-sustaining business, with little financial obligation needed to start it.
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