Whatever your business sells, whether it’s handmade products you individually craft, or services that you provide (like coaching or holistic therapies), your business is usually based on exchanging your time for money. Very much like employment. Which sucks. Yes, you have the freedom of choosing your working schedule without the worry of sick days or flexible arrangements, but it’s still specific when it comes to your income:
The more you work, the more you earn.
You and I both know that it isn’t physically possible for you to sell more than so many timeslots in one day for your service-based business.
Or to create more of the products that you lovingly craft than you’re currently producing.
Whatever anyone says, there are still only 24 hours in the day.
The key isn’t to work harder or for longer; it’s working smarter. Changing the way you look at where your income is generated and how you do business.
The ultimate goal: to diversify where some of the income in your business actually comes from.
Your Current Income Ceiling
I’d like to know; if you were creating and selling your most expensive product, consistently, (by working your butt off for eight hours a day, seven days a week) – how much would you earn?
Work it out. I’ll wait.
Not as much as you thought? Why, because your income is capped. It hits and ceiling because there are only so many hours in the day.
Next question: how does your business earn money when you’re on holiday?
Do you even go on holiday because you lose money during the time you’re away?
Do you work when you’re ill because if you don’t, you don’t get paid?
When was the last time you took a break and got paid for it?
My point should have hit home by now. And, just so you know, this isn’t all about the money. It’s about what the money offers you – a lifestyle choice that brings joy and fulfilment to you, your family and your life. That’s the most important part.
How do you think those making huge amounts of revenue in their business are actually doing it? I promise you; they have not got a time machine to create more hours in the day and they don’t have some magic tonic that makes them work at a thousand miles an hour!
So why am I babbling about capped income, holiday pay, sick leave and rich people?
Because it’s important to understand WHY you should add passive, scalable and automated income into your business. Because it is possible to diversify where the income in your business actually comes from. The more income streams you have, the higher your turnover, the more customers you can reach and the better your life balance is!
Did you know that millionaires usually have seven or more passive income streams at any one time?
This process doesn’t have to be difficult or complicated. It’s just about applying your creative imagination from a new angle. How does that sound?
When you stop believing that you need to exchange time for money, at least some of the time, you can begin to generate revenue from streams that manage themselves. This is called passive income, and it’s one of the best ways to get more cash into your existing business.
Passive income is certainly not a new concept. For generations, financiers have been insisting that the wealthy generate passive revenue by investing in property, stocks and high interest savings schemes. This is compounded in the bestselling book, Rich Dad, Poor Dad, which made seemingly scary monetary concepts accessible to the masses.
The digital age broadened the horizons of passive income; with everyday business folks and hobbyists able to reach millions of people through the power of the internet. Not only has this revolutionised the way many do business, but it has also allowed millions of people to become entrepreneurs from the comfort of their own living room. The Book, The 4 Hour Work Week by Tim Ferris took entrepreneurship to the next level, allowing businesses to come alive and thrive on less than a full days “work”.
So, what am I telling you this for? Well, for starters, I need you to know that the way you’ve been doing business so far is not wrong. Far from it. If you were doing everything wrong you’d have been out of business a long time ago. What I am trying to tell you though is that there are options for your existing business that you may not have considered.
The exchange of time for money does not have to be the “be all and end all” of your income. Your bottom line could be made up of a number of sources of revenue on top of what you’re already creating, with little effort. All leading back to a bulky bank account that leaves you impassioned to continue to create wonderful things with the time you do choose to exchange.
There are so many options for passive, scalable or semi-passive income streams that are relevant to your business. You are simply expanding on, or changing, the delivery of your specialist skill or knowledge.
Create something once and let it produce revenue for you while you sleep. On autopilot! Or deliver your knowledge in a different way, reducing the hours spent labouring and amalgamating the audience.
Here are some options you could consider:
The full list is pretty long; this isn’t even the tip of the iceberg!
Passive income is being paid for something over and over again, after the work is done. You invest an initial time and effort, for continued rewards that pay dividends while you work, rest or play. One of the best feelings is waking to more money in your bank account from sales you’ve made overnight!
Perhaps it’s time to start thinking outside of the box for your own business?
How to Get Started
Think of these – What:
The possibilities are endless, and this is just the introduction!
Lies and Damn Lies About Passive Income
We’ve all heard it; passive income is a myth. This mindset is all too common, limiting and quite honestly, tragic.
The truth: Passive income is the future of business, and life and money and actually gives you a chance at living your best possible life.
But instantly those doubts come up as to whether or not it is something that is really possible for you. General doubts, folks that have failed and unfortunately, some people in industries like property and multi-level marketing, have given passive income a bad name. And all this has come together to make people believe that perhaps passive income isn’t for them, or perhaps it’s not something that is achievable for them.
Well, I’m here to tell you that is not true. It is achievable and even more so when you already have a business in place.
Just because some people have a different perspective on passive income doesn’t mean that it’s not possible for you, and that there aren’t options for you. As a business owner, it’s really easy to overcome by simply understanding the lies that are rife about passive income.
Lie 1: Financial Terms for Income Have the Same Meaning
When it comes to finances and business many people think that terms like passive income, residual income, recurring income, semi passive income, and all the rest… are the same thing. Well, I need to make something super clear; if you’re planning on creating a successful business AND you plan on implementing additional multiple income streams, you need to fully understand that those things are not the same.
Now, I’m not claiming to be an Accountant or Bookkeeper or to be fair, anybody who knows much about money and money management. I’m about creating wealth, not managing it; hey, I outsource everything unless it’s in my zone of genius! But, despite this, what I can tell you: when it comes to adding multiple income streams into your business, knowing and understanding the different pots of money that are available to you, what they’re called and how they work is super important.
The reason why these things are so important is simple; by having a fuller and greater understanding of the terminology of the different income streams, you can ensure that the wealth that you are creating for yourself, and your business, is the best it can be; consistent and maintainable. And also, it means you won’t get befuddled by promises of big things or suckered into something based on word-use…
An income ceiling is the maximum amount of money you can make or earn and is usually imposed as a result of exchanging time for money. There are only so many hours in the day, so without additional income streams, it’s impossible to earn more than you already do.
Let’s take an example:
You’re employed in a position where you’re paid a minimum wage per hour. You can work so many hours and be paid, plus overtime where you can be paid some more. But there’s only so much capacity you have to work, to exchange energy plus, the old mention of only so many hours available per week.
Even if that job were commission based, and you earned more for every sale you made, you would still have a cap placed on the amount you can earn because you’re only ever going to be able to make so many sales in the limited time you have. Make sense? I hope so…
Remember those sums you did at the beginning? That’s your income ceiling without additional income.
Passive Income Streams
Passive income is the generation of money through sales or receipt of money on a regular basis from something that you have created or invested time and effort into, just once.
There’s a myth that passive income takes no work, but that isn’t true; it’s just the work is condensed into a smaller period of time or is reduced massively in comparison to the financial returns. Passive income can be the creation or purchase of an asset that can be sold multiple times or produces a return on an initial investment.
So, for example, a digital product like a course or eBook that can be created once and sold multiple times without any further effort on your part would be the creation of an asset.
Property purchase would be the purchase of an asset that, when rented out or sold for profit, produces a return on your investment.
I believe that passive income is the future of business and finance, and the reason is that investing effort once and reaping the rewards multiple times is where you can stop the exchange of time for money and remove the income ceiling that you’re pressed against in your business.
There are multiple ways of implementing passive income streams into your life or business. However, what needs to be clear is that passive income is something that is possible, but it’s something that takes work in the first instance, after which point you can reap the rewards time and time again.
In a nutshell, residual income is the money you have left in your bank account after you’ve paid your bills and all the essential stuff you need to pay each month. It’s the leftovers.
Officially, according to Investopedia, “Residual income is not actually a type of income, but rather a calculation that determines how much discretionary money an individual or entity has available to spend after financial obligations or bills are paid”.
So, in super-basic-business-terms, it’s your profit, and obviously the more profit you have the better, and the more successful your business will be. There’s something that can be said here about profit and loss, turnover and lots of other financial-type words, but that’s not my area of expertise, so I’m just keeping schtum on those. What it means is a nice pot of money that you can dip into as a result of the work that you’re doing.
Many business owners mistake residual income for passive income and recurring income (see below). But it’s important to remember that residual income is what’s left at the end of the month and can also be known as surplus or discretionary income (I personally like to call it spending money…)
Recurring Income Streams
Recurring income is something that you receive on the regular; a weekly, monthly, annual or biannual payment that comes into your bank account, every single time, guaranteed. You can generate recurring income from property investment, which also falls into the passive income category, but also through the development of membership or subscription model products and services. There’s loads of ways to develop recurring income in your existing business, and the thing about recurring income is that it’s beneficial because you’ve got a guaranteed pot of money coming in every single month that boosts your residual income without extra effort.
It’s also a scalable model, so it doesn’t matter if the information you’re providing through your model serves ten or ten thousand customers, it’s the same.
At the end of the day, it means that you’ve got substantially more profit for the same work, especially if that recurring income is based on a passive income generation model like a membership or subscription service.
By having a full understanding of these terms, you can ensure that you have money coming into every single part of your business model. Whether it’s recurring income that comes into your business every single month, guaranteed, or whether it’s passive income where you’ve created an asset that delivers returns for you, time and time again; they all add up to smash through that income ceiling and give you more residual income into your bank account each month.
Lie 2: Property/Real Estate Is the Only REAL Passive Income Option
Rubbish! Rubbish I say! And I’ll say it again for good measure! Rubbish, rubbish, rubbish!
Yes property investment can make you a multimillionaire. Yes flipping houses can make you plenty of cash but no, no, no – it is not easy, straightforward or without work. Again, this is an investment and an opportunity to make huge returns, but it can also bring lots of hard work and heartache (trust me, I’ve been there!)
Property is definitely something to consider when it comes to making investments and growing existing wealth but please, don’t think of it as the only option for creating passive and recurring income.
Lie 3: There’s a right time to think about passive income
Even more rubbish! If you have your own business, passive income is an option for you. There will never be a right time, a good time or the perfect time. The best time to do it is right now. Start working on your business instead of in it!
Truth: You Can Do It
Now we’ve gotten over the doom and gloom and blasted those lies into the next century, let me make it abundantly clear:
Passive and recurring income is still possible for you.
Increasing your bottom line with further residual income is possible for you.
Leveraging what you already do well, to create passive, semi-passive and MORE residual income is possible for you.
If you already have a business, you have the seeds from which an entire field of income streams can grow.
Why Ideal Clients Are Not the Best Thing in Business
Truth bomb: You have been lied to repeatedly, insistently, shamelessly by the mindset of a business system that we’ve outgrown. Lies like; Find your ideal client and sell your product or service to them. Learning how to nail your ideal client and make more sales is genuinely seen as the best possible thing you can do for a successful business.
And I’m not saying it’s not a good place to start. Hell: saying you’re selling to everyone definitely means selling to no one. That’s one thing I’m absolutely confident of.
Doing JUST that is exactly what has kept business owners stuck with a limited, tunnel vision of what their business is capable of, what it can offer, who it can help and how it can make more sales.
I want to share a little secret with you:
Right now there are people who watch you. They follow your business but can’t buy from you for one of (usually) 3 reasons. These clients are currently left out in the cold, with nothing to do but watch from the side-lines. They’re watching, waiting, but not buying. I call these your periphery clients; you know, hanging around on the periphery of your business.
Learning to identify and serve these clients is the best possible way to introduce new and lucrative income streams into your business without changing your business model and repelling your actual ideal client.
There are three types of periphery customers, two of which you don’t want to cater to. These two are:
However, there is one type of periphery customer who you must discover and nurture, as these are the key to your passive and semi-passive product lifestyle.
These customers are ‘like’ your ideal client in many ways BUT they are incapacitated or restricted from buying from you for one of three reasons:
How To Engage and Convert Periphery Customers
So here’s your opportunity to find these people, find a way that your business can serve them and create something they can buy.
You must not change your business model to do this. This isn’t about moving your store to a different location, changing your postage processes or reducing your prices. Definitely not! You also want to avoid niching up, as opposed to niching down to your ideal client. Niching up means to expand your niche to include these periphery people but in doing so you could actually alienate your existing, paying, ideal clients and decimate your business.
You do however want to consider what your periphery clients are asking for. What do they say they want? What questions are they asking you? Figure out what they need.
You should absolutely consider how you can serve them and make more sales, WITHOUT reducing your prices, compromising your time or compromising your business values and integrity. This usually means with a passive or semi passive, scalable product that you can create once and sell on autopilot, time and time again.
This means that not only will you benefit from the sales from your ideal client, you’ll also be serving and profiting from the ‘not-so-ideal’ periphery clients who need your help!
To successfully implement a new income stream into your business, you need to ask yourself the following questions:
Remember though, just because you can do something, doesn’t mean you should…
Make sure your plans are aligned with your business goals, vision and values, or you could break your business altogether and if you’re not sure, ask someone outside of the business for an objective point of view.
If you have an accountant, they should be your first stop for business advice. If you don’t have an accountant or they can’t help, BuBul has a wide range of experts available. For more advice on creating passive income streams, contact our expert* Joelle on:
Free Workshop: https://joellebyrne.com/periphery
*We’ve picked experts we know and trust who are good at what they do. All of them will give you at least an extra 30 minutes free advice if you contact them and would then charge their normal prices. They don’t pay to be on BuBul and don’t give us any money from anything they earn as an expert.