20-01 Passive Income Walkthrough
Passive Income Walk-through
Let’s begin the walk-through of creating a new stream of passive income from start to finish.
The process of creating new income streams is different for everyone, so you won’t necessarily want to model my approach exactly because your knowledge, skills, and resources may not align with mine. Even so, I’m sure you’ll learn something from this walk-through.
So let’s dive right in and get started.
Pick an Idea
Your first step is to pick an idea. Hopefully this is fairly obvious.
One of the simplest ways is to grab a pen and paper, and brainstorm a list of ideas. Keep writing down ideas until you run out of ideas. Then look over your list, and pick one that seems decent.
If you need help generating ideas, read chapter 17 Generating Ideas for some advice on how to do it.
Many people get caught up trying to pick an idea. If you get stuck here, you can’t progress. So whatever you do, don’t let yourself get stuck here. Make a decision no matter what.
One of my favourite ways to choose among different options is simply to ask, Which option is the most me?That usually narrows it down quite a bit.
Worst case if you can’t decide, flip a coin or roll a die and let chance decide. You’re better off getting into action quickly than suffering useless delay and self doubt.
You’ll progress faster by getting a few projects under your belt than you will by trying to dream up the perfect idea in advance. Some creative people will advise you to fail faster, which is good advice.
Notice that picking an idea is not the same thing as whining about why you can’t pick one.
It’s also not the same as saying you don’t have any good ideas.
And of course it’s not the same as saying “I don’t know how” when you think about your favourite idea.
The truth is that good income-generating ideas are a dime a dozen. Coming up with ideas is the easy part. If you’ve been stuck in the corporate world for too long, then perhaps your creative impulses have been squashed to make you a better slave, so if that’s the case, then go ask a nearby child what you can do to make the world better for people, and listen to what s/he has to say.
Now if you’re really and truly stuck and can’t come up with a decent idea, then I’d be delighted to pick one for you and assign it to you, but you may not like it unless you’re feeling very submissive.
Suppose your idea is to create some kind of digital product and sell it, such as an eBook or audio program. You can sell this product through your own website and/or through Amazon, iTunes, and other online stores, depending on the format.
Refine the Idea
Depending on the nature of your idea, you may have some details to decide next.
For a digital product, you’ll need to determine a topic and a format.
Once again, you can brainstorm possibilities. Then pick something, and keep moving forward.
Don’t get caught up in wavering between different opinions or actions. Just decide. Your decision won’t be perfect, and it doesn’t have to be. Just pick an idea that seems pretty good, and run with it. You’ll get better at picking ideas once you complete a few projects and see how they turn out.
If you already have customers, it’s wise to ask them what they’d like to see and to use their answers to help guide you. For example, I did a survey a while back that told me that my readers would love to see some eBooks and audio programs. So if I create products in those formats, I’m aligning with what they want. It can help your sales if you give people what they want.
If you don’t have customers, then you could guess blindly, but you could also go where your future customers are likely to be found, and ask those people. For instance, if there’s an online forum where likely future customers of your could be found, go there and ask people what types of digital products they like.
Another option is to create what you like, and focus on attracting customers like yourself. That’s perfectly fine too. This is my personal approach.
You use the same approaches to pick a topic. You can create based on what people want. Or you can create based on your interests and strengths. It’s ideal if you can do both, but usually it takes some trial and error to discover how to align your interests with what people want.
I have some interests that wouldn’t align well with what my readers want. I could make a product about disc golf, which I’ve been playing regularly for many years. But how many of my readers would care?
A more sensible topic for me to choose would be Subjective Reality. It aligns with my interests, and many readers would love to see a deeper exploration of this subject. This is an area where I can make a unique contribution. There is demand for a quality product on this subject, and I can supply that demand.
Consider the lifespan of your topic and format as well. Subjective Reality is a timeless topic. But a product about processing email efficiently could seem dated after enough time has passed.
Fall in Love With Your Idea
The next step is to fall in love with your idea.
A mistake people often make is that they look to their ideas to give them confidence, as if an idea itself can provide that. In reality almost all ideas are going to feel fuzzy and uncertain at first. It’s your job to inject them with confidence.
Your relationship to your idea will largely determine how far you get with it, and this relationship is under your control to a great extent.
Where does your relationship with another person exist? In your mind. Where does your relationship with an idea exist? In your mind.
If you start thinking ill about your relationship partner and succumb to doubt about your future together, what does that do to your relationship? It kills it. On the contrary, if you hold lovey-dovey thoughts towards your relationship partner, does that not improve the relationship? Of course.
With an idea it’s even simpler. Treat your idea as if it’s the most amazing thing ever. Respect it. Honour it. Fall head over heels in love with it.
Don’t look to your idea to provide you with inspiration and motivation. Don’t try to suck your idea dry like you’re sucking an orange. You must let the inspiration flow the other way. You must feed and water and nurture your idea, helping to give it form and substance. You’re the creative conduit here, not the idea.
If you don’t fall in love with it, why would you expect anyone else to? An unloved idea will lead to a crappy result that no one will want.
Have fun with this. Be playful about it.
Treat your idea as the greatest idea ever.
Who cares if that’s actually true? It’s fun and motivating to inject your idea with positive expectations. Self-doubt is only going to slow things down, so don’t even go there.
Once you’ve selected your idea, the evaluation period is over. Like a newborn child, you’ve named it and claimed it and taken it home with you. It’s too late to decide whether or not it’s a good idea. It’s yours now. You’d better learn to love it.
Devise an Income Stream for Your Idea
Some ideas are easy to adapt to income streams. Others require a bit more finesse.
In this step your goal is to map out an end-to-end system for promoting and selling your product, so you can generate sustainable income from it.
In the case of an eBook or audio program, you could package these as digitally downloadable products and sell them directly via a website and/or through other websites like Amazon.
What if you don’t have a high-traffic website like I do? In that case you need a simple marketing strategy to generate attention for your product and/or your website. You can throw money at this problem (such as by buying advertising), or you can throw time at it (by doing your own marketing). Either will work, so take your pick.
If you’ve fallen in love with your idea, you’ll have the motivation to do this part. But if you don’t love it, I’d bet money that you’ll drop the ball here.
I see a lot of would-be online entrepreneurs create and release products they clearly don’t love. They’ll usually spread the word for a few weeks, and then they give up and let the income stream die. People can tell when you don’t believe in what you’re selling, and they won’t buy. With a product you really love, however, you’ll be able to push through and keep putting the word out again and again.
Use Jack Canfield’s Rule of Five approach to marketing. Do five things every day to promote your product. Take the weekends off if you want. Do this for at least 6 months for a new product. Keeping it up for 12-18 months is even better. This can take as little as 30 minutes per day. The benefits are cumulative though.
It’s not enough to just create a cool product and hope people will buy it. You have to let people know about it. A great way to do this is to release a portion of your product for free and give it away. Share the freebie wherever you can.
Once you build enough momentum, your sales may become self-sustaining, but don’t assume this will happen automatically just because you created something and put it on the Internet.
Expect to spend at least as much time marketing your new product or service as you do creating it. If you don’t love your creation, marketing will feel forced, and you’ll quit too soon. If you love what you’ve created, then getting the word out won’t be so bad because you’ll be sharing value with people.
Remember that you don’t need to design your own income-generating process from scratch. You can borrow someone else’s fully developed system, such as the ones I shared in Passive Income Systems.
Notice that before you even create the product, you need to figure out how you’re going to sell it. That’s important. It’s a waste of time to create a product that you don’t know how to sell. If you create the product in the dark first, you’ll probably create something that doesn’t sell.
Outline the Idea
Your next step is to outline the idea. Now this is only a rough draft, not necessarily the final outline of the completed product, but it doesn’t take long to brainstorm something like this. It's just something to get the ball rolling, something to get you started and helps you see what you want to include.
The idea is to create something to help guide you in your development process, not to lock everything down in advance. Don’t let this part bog you down. If you’re spending more than an hour on it, I think that’s too long. Just aim for something that looks halfway decent. If you can’t manage halfway decent, then settle for indecent - you can always change it later.
It’s pretty easy to get stuck in this stage, so I like to move through it quickly. If you’re building a space rocket or a hospital, it makes sense to invest in careful planning - but for a flexible digital product, over-planning tends to be the greater risk.
Create a Simple Completion Plan
Now that you’ve picked a passive income system and you have an idea and a rough outline, how are you going to get your product done?
It’s wise to map out a simple plan for completing your project.
Here’s a sample action plan to move this project forward to completion. Let’s suppose you’re creating an eBook and an audio program (two products) with the same content.
1. Each day until the eBook is complete, create a minimum of X words of fresh content for it.
2. After creating a section of content, do an editing pass to correct errors, add subsection headers, and improve coherence and flow.
3. At the end of each day, bring the content created that day to a publishable level of quality. (This is an important lesson I learned from writing software — always bring the code to a publishable level of quality at the end of each day. Fix mistakes and low quality work early since it takes longer to fix them later.)
4. When the first draft done, give it another editing pass and have a few others check it for typos and mistakes. Keep doing rounds of this till you’re satisfied that the final content is good to go.
5. Once the eBook content is done, pay someone who’s more aesthetically minded to format it nicely, including creating a cover page.
6. After the eBook is complete, use it as the script to record the audio program.
7. Pay an audio tech to edit the audio files, add intro music, turn them into MP3s, and package the results into a completed audio program.
8. Once these products are complete, create a sales page for them, add a PayPal Buy It Now button, and begin selling and promoting.
This is a very basic plan, which you can customise to fit your idea.
Now all sorts of things could go wrong with this plan. Maybe maintaining X words per day will be too much. Maybe you don’t have money to hire people and will need to learn how to do the typography and audio editing yourself. The plan can always be adapted as needed. The point of planning is to envision a path to completion.
Some people work well with daily quotas, such as time quotas (work X hours per day) or results quotas (write X words per day). Other people are more productive without the pressure of quotas. Experiment to see which approach works best for you.
If you keep making progress each day, and if you bring your work to a publishable quality at the end of each day, you’ll eventually have a completed product.
What Are Your Passive Income Priorities?
There are lots of ways to set up new income streams, so let me caution you to be careful what you optimise for. It’s easy to create unnecessary headaches if you confuse your priorities.
Many people try to maximise income or profits, but this often involves sacrificing other things in exchange for more money, such as your ability to communicate as a real human being. For instance, you may need to be a lot pushier and more aggressive with your selling if you want to squeeze more money out of people who are on the fence about buying. For many entrepreneurs this is de-motivating and makes the business painful to run.
I like doing creative projects, contributing value to people’s lives, and sharing my work in ways that are financially sustainable. I would rather not optimise for higher sales if it means diminishing my ability to satisfy these other priorities.
I like creating passive income streams because they make it easier to centre my life around learning, exploring, connecting, and sharing. So I wouldn’t want to create income streams that push me towards anti-growth experiences like trying to turn myself into a repetitive machine.
Your priorities may be different than mine, so it makes sense to adapt your passive income streams to suit your desires. Just don’t assume that maximising income is necessarily the best approach for you. It’s not an approach I’d be happy with.
I encourage you to pick an idea, create a quick outline, and determine how you’re going to move it forward to completion. There’s no time like the present!
Pitch Your idea
Hey, you're not alone - You have an idea what you want to do next! Pitch me your idea, and remember, I'm in your corner. If there is something I can help with, I'm happy to give you some of my time.