5 Ways Freelancers Can Create a Passive Income
We’ve stopped looking for the Fountain of Youth; admitted that the Holy Grail probably doesn’t even exist. Yet, taking the place of these mythical objects of ages past are the new seemingly unobtainable ideals – one of them being the passive income. All our lives, we’ve been convinced that the harder you work, the more money you’ll make. But the idea of passive income is that you receive money without having to put much effort into making it. That type of passive income is, sadly, about as obtainable as the Holy Grail for most people.
But before we go further, there are some myths about passive income that should be addressed. First, few people get rich passively. A study performed by The Harrison Group found that, of the 1% of the wealthiest people in the United States, only about 10% of their income came from passive sources (like investments or royalties). About 80% earned their fortunes through continuous hard work, by starting a business or working for a small business that became successful. So, you’re better off playing the lottery every week than counting on your one-man-show passive income operation turning you into the next Warren Buffett.
However, it’s totally possible for freelancers to earn passive income as a supplement to their primary earnings, which usually involve performing work for clients. Passive income can provide a buffer to your cash flow for those times when clients are hard to come by. So, although it probably won’t make you rich, passive income is a great way for freelancers to obtain a bit of job security in a profession otherwise laden with uncertainty.
Form a Partnership
One of the best ways to secure passive income is to identify a person that has skills complimentary to your own and to collaborate with them on a project. For example, you might use your writing skills in conjunction with a web designer to create an affiliate website. Beyond creating the website itself, your partnership could allow you to do some targeted viral marketing through tools like infographics or articles that have rich design elements.
To perform this viral marketing, create a series of infographics with links back to your site, then distribute them to blog owners in exchange for the link back. This works well for exact match domain marketing (as the anchor text for the incoming link isn’t as crucial), but as an alternative, you might consider performing article distribution yourself and have your design partner create the images that will accompany the article. If you perform article marketing, remember to include a link back to your site with the keyword phrase you’re targeting in that article. For example, if you create an affiliate site for Halloween decorations, and you’d like to rank well for “kids Halloween costumes,” that phrase should be your anchor text (just like we did there).
While there will be a great deal of initial work needed to get your site up and running, and to promote it with link building, the site will ultimately require little to no maintenance beyond the occasional link building campaign. It will also be cheaper to maintain and promote with a partner who possesses skills that you don’t have.
Create a Low Maintenance Business
One of the best ways to create a passive income is to set up a business where the same product generates ongoing revenue, like buying a candy machine to place in a movie theater or buying rental property to rent out to a tenant. In fact, one of Warren Buffet’s first businesses was a partnership with a friend that involved purchasing a pinball machine to place in a barber shop. After only a few months, Buffett and his partner had generated enough revenue to place machines in multiple shops.
When generating a passive business idea, remember that there will almost always be some light maintenance and ongoing costs involved (like fixing the pinball machine when it breaks or purchasing more candy).
Create an Emailing List
If you’re not quite web savvy enough to create a large affiliate website, or you don’t want to have a partner, you can still create an online passive income business by using a high quality mailing list. Many bloggers use single guest posts or sales pages (generally single page websites) to create large mailing lists for weekly or monthly newsletters. Most bloggers use simple sign up forms with “Subscribe for blog updates” or “Receive a Free Copy of [Insert eBook or Article] to Your Email.” Once users input their email address, they can also elect to receive your newsletter (which can be outsourced if you’re looking to do the minimum amount of work).
Once you have a list, you can monetize it in several ways:
- Include special offers for affiliate products in the email newsletters (and count on about a 1.5% conversion rate).
- Sell advertisements within your newsletter to outside marketers (usually only works if you have a large list, 100,000+ members).
- Directly promote your own products (like videos and eBooks) to the mail recipients for micro-transactions (something negligible like $1.99 to increase conversions).
Create a Widget or Tool
If you have some programming knowledge, you can make a small passive income by creating a tool or a widget that other website owners can use. A perfect example of an online tool with low maintenance is the website Copyscape.com, which allows users to search for duplicate copies of their Internet content for $0.05 a search. There was a time when I was writing full time, and I used about 100 searches every day.
Once again, you can easily outsource the programming once you have an idea for the tool that you’d like to create. Some ideas for tools/widgets are:
- Widget that allows potential college students to match their high school G.P.A. to college admission requirements.
- Tool that automatically checks an article for SEO quality (scanning for keyword phrases, proper code) – similar to the way Copyscape works.
- Recipe aggregator that automatically pulls from a database of meal options and recipes to create easy-to-use shopping lists.
Share Your Ideas With Others
Sites like SeoBook.com rely primarily on authority voices sharing their opinions and advice with others (whether in the form of a blog, website, or forum). While it can be difficult to establish yourself as an authority in any niche, it is probably one of the best ways to secure a passive income. For example, you can set up a subscription based website where visitors pay a monthly fee to access premium content created by you. Also, you could guest post on topics important to your niche. Some blog owners will pay good amounts of money for content from authority figures.
If you would like to establish yourself as an authority, start small and begin setting up a network of connections that will view you as an expert on your topic. For example, chances are good that there are some small business clubs or organizations in your local area that would be happy to have you volunteer to give a speech or presentation at one of their meetings. You might even offer to sell eBooks or other media at the event to turn a profit from the engagement.