As someone who owns and operates a service-based business, I know all to well what it’s like to have to trade time for money.
Since we are all capped at the same 24 hours in a day, providing services, one-on-one coaching or any other time intensive service can be difficult.
Passive revenue is defined as the revenue your business generates that you aren’t trading your time for money for. This can come in many different forms, as you’ll see throughout this blog series.
Passive revenue also allows you to earn revenue when you aren’t active in your business. For example, selling e-books when you are sleeping, selling a self-study program while you are on vacation or even selling an on-going membership while you focus on other things.
Passive revenue does require some setup and each of the various areas I am going to cover require different time investments. However, once you’ve put some time into setting up the passive revenue stream, you can benefit for a long time afterward.
It’s extremely important for entrepreneurs to give heavy consideration to setting up multiple streams of income. As I’ve mentioned, we all have the same 24 hours in a day and the same 7 days in a week. Realistically, we can only work about 15 hours per day while still fitting in sleeping and eating. That’s not even touching on maintaining downtime and a social life.
So, most of us cap out around 8-10 hours per day. Since we do have that cap, our earning potential is limited. If we have an hourly rate of $50/hour, our daily maximum is $500. However, most of us can not maintain a solid 5 days in a row of 8-10 hour days. Life happens and things come up that we weren’t planning for. Plus, there are so many areas of our business that we aren’t paid for. New product development, bookkeeping, marketing, sales calls, etc. If you do not outsource these items, it begins to dip into your daily earnings.
By having passive revenue setup and in place, you are ensuring that even if you only work your 6-8 billable hours, you will have other places where you can earn revenue. It begins to alleviate some of the pressure and it changes how you work inside of your business.
The other benefit is that not every entrepreneur learns in the same way or consumes products from us in the same way. Some of our clients and customers will want an e-book whereas some of them might decide that they want an audio program. Others learn better in a one-to-one format and some prefer a group.
Understanding what your clients want and need and then offering a plethora of options means that you can cater to more clients. Catering to more clients expands your reach which means more sales all around.
Without multiple streams of income, your business stays flatlined and uninteresting to some prospects.