Would you like to make money while you sleep? How about traveling with your family and still seeing your bank account grow? Sounds great, right? This is totally possible by building passive income!
Passive income is income that runs on auto-pilot. You initially put in the work to get your systems in place, then sit back and watch the income roll in. Passive income is what I strive for in my business and what I try to get my clients set up with.
It allows the one thing we all want, freedom. Freedom from the 9-5 grind and from debt. It allows you to spend time doing the things you love with the people you love and not worrying about how the bills will get paid.
Interested? Great! Here is the ultimate guide to building passive income.
(This post contains affiliate links which means I earn a small commission if you sign up for the programs I’ve linked below. These commissions help to keep this website going.)
Types of Passive Income
The internet and social media has made it super simple for people to gain access to sources of passive income. So as long as you have an internet connection, you’re good to go! Here are the main types of passive income.
Affiliate marketing is marketing and selling someone else products or services and receiving a commission on the sale you make. This is my favorite source of income because it takes the least amount of time to setup. Just about every company offers an affiliate program. There is typically a link to their affiliate program at the bottom of their website. You can also email them and ask. Become an affiliate for my online manifestation course! If interested, email me at firstname.lastname@example.org. I pay 50% commission not the $97 course. You can also download my list of the Top 10 Highest Earning Affiliate Marketing Programs.
Online courses are huge right now! People are hungry for knowledge that can help them with a problem they’re facing in their life. Think you don’t have the skills or knowledge to build an online course? Think again! There are courses on everything from growing your Instagram following to canning tomatoes. My course is on using the Law of Attraction. Everyone has something they’re interested in or passionate about. Teach what you know to others. My favorite platform for course creation is Teachable. It is super user friendly. They make creating a course incredibly easy and have everything you need to help you create, market and sell your course. Sign up for their free class on the 7 steps to launching a profitable course here.
Amazon has simplified publishing so anyone can do it. Their platform, Kindle Direct Publishing, allows you to create, publish and sell physical books and e-books without ever having to touch the product. They print on demand and send the books directly to the customers saving you the time and hassle of having to deal with inventory and shipping. Once you publish your book, you promote it and Amazon handles the rest.
This is where you will earn money for sponsoring a product on your podcast, YouTube, Instagram, website, etc. The company pays you a certain amount for the post. This one is good if you have an audience already as most companies want a certain number of followers before they’ll pay you to post. Get started with affiliate marketing and work your way up from there.
Ads are similar to sponsorships where you work with an ad platform like Google Ads and place their code on your website or YouTube videos and earn money per click. It is typically a few cents per click, so this works best if you have a lot of website traffic. This is my least favorite form of passive income as it can seem spammy and you have less control over what’s being shared with your audience.
Multi Level Marketing (MLM)
MLMs are similar to affiliate marketing in that you promote a company product or service and they give you commission per sale. MLMs are more complicated in their commission structure often having commissions and bonuses based on a number of factors. They also typically require an upfront investment and charge some sort of monthly fee. Examples of MLM are Beachbody, Scentsy, Isagenix, and Rodan & Fields.
Get Starter Building Passive Income
Maybe you found a couple of passive income ideas above that you want to try. Where do you begin? Well passive income requires the majority of the work be upfront to get things setup. But don’t worry, once you get everything in place, you can sit back and relax.
Forming Your Business
I suggest getting your business setup legally right from the start. The costs are typically low if you do everything yourself. Determine your business type: sole proprietorship, Limited Liability Company (LLC) or Corporation. I personally have an LLC and recommend going this route to start with. Check your state’s guidelines for forming an LLC. A simple Google search will take you to your state’s business setup page which will have the forms you need submit and any fees associated with the business formation. Every state has different requirements, so do the homework on your state.
It is also a good idea to get business insurance. Most people think they are covered if they have an LLC and won’t be personal liable if someone were to sue their business for example. This isn’t necessarily the case. Having business insurance gives you an extra layer of protection, so your personal assets aren’t at risk. I don’t say this to scare you, but I’m a believer in that it’s better to be safe than sorry. I use The Hartford for my business insurance, and it only costs $32/month. It’s well worth it for the peace of mind it provides.
Getting a business bank account and credit card is a good idea as well. This helps you keep your business expenses separate from your personal expenses and income. This will also help during tax time. Keeping a simple Excel spreadsheet from the very beginning to document expenses and income will come in handy down the road.
This may all seem like a lot, but it’s far better to get things started the right way than having to go back and fix everything in the future. When in doubt, you can always consult with an attorney. Once you have income coming in, most of your expenses can be written off. Consult with a CPA for specifics.
Promoting Products and Growing Your Audience
There are multiple ways to promote products and services and grow an audience. It is SO important to give value BEFORE asking for the sale. Want someone to sign up for your email list? Give them a freebie to opt in. Want someone to read your blog article that has affiliate links? Make sure you are giving them a ton of valuable content for free to make them want to read more and click on the links. When you give away a ton of free content that’s valuable, you’ll leave your audience dying to know what kind of crazy goodness is packed into the stuff you’re selling. Now that the point is made clear about giving before asking, let’s dive into the different ways you can promote your products and build a trusting audience that’s ready to buy.
This method typically has the highest conversion rates, which is why you will want to start growing an email list from the very beginning. Through email you can build up trust with your customers, and they are more likely to see your content. Current stats say someone needs to see something 14 times before taking action! By nurturing your email list, you can get in front of your audience on a regular basis, which will help them take action. Try ConvertKit free for 14 days to get started. If you have a larger audience, you may want to go with Constant Contact.
I am personally a fan of Instagram. It’s a visual platform and growing rapidly. Building an Instagram following is a great way to build a loyal audience. IG stories and IG live can convert to a lot of sales when used correctly. I recommend posting valuable content and saving the promoting for the IG stories. They’re only up for 24 hours and you can dd multiple calls to action with the swipe up feature and GIFs.
I’m personally not the biggest Facebook fan, but I do think Facebook groups are a powerful way to build trust with your audience. If you create a group, show up for it! Go live once a week, engage with your audience, and of course, give a ton of valuable content.
This is probably the most overlooked marketing method out there. Pinning is a totally FREE way to market to an audience that is ready to buy! I started my Pinterest business account and within one month, I had 49,000 monthly visitors! And I was only pinning a few times a day! It is now one of my top converting platforms. I suggest using Tailwind, a platform that allows you to set your pinning on auto-pilot. Perfect for us passive income folks!
You may think you need to build a big, fancy website for your business, but landing pages are way easier, cheaper and actually better for converting to sales. Why? Because there are less distractions. No popups or other links to click. Just one page with one clear call to action. I recommend starting with a landing page first, You can always build a website later. But if you aren’t planning on blogging, a landing page will do.
This is where you will need a website! Blogging can be an effective way to make passive income. The key is to be consistent in your posting, give a ton of valuable content and only sprinkle in a couple of affiliate links per post. Promoting your blog on Pinterest will help grow your traffic tremendously. To get started with your blog, you’ll need hosting. Try Bluehost to get hosting for only $3.95/month by using my link.
I could spend all day talking about the different ways to market products and could write an entire post on each, but for now just start with one or two. Build them up, get very familiar with them and add from there. If you try to do everything all at once, it’s easy to get overwhelmed and give up. So focus on your top one or two and grow from there.
*It’s also very important to note that when you are promoting through affiliate links, you must state that it is an affiliate link. It is a law and you want to be upfront and honest with your audience.
It’s important to remember that building a business and growing a trusting audience takes time. Don’t compare your beginning to someone else’s middle. When I got started, I had 200 followers, no email list and no blog or website. Now I have multiple sources of passive income that are giving me financial freedom. Put in the work upfront, be patient and you’ll reap the rewards. Persistence is key. Providing valuable content to your audience is key. You WILL make mistakes. We all do. Learn from them and move on. Don’t let a mistake veer you off your path towards financial freedom. Keep your eye on the prize!
Affirmation – I have mutliple streams of passive income that are exponentially growing.