The appeal of passive income is easy to understand, particularly if you’re a freelancer. Even if you don’t expect to make millions and retire early, it would still be comforting to know that you can earn an income from a side business during periods when you’re not working full time.
With that said, there are certain misconceptions that people have about making money this way. Those who fall prey to such misconceptions often abandon their passive income projects before seeing them through to completion.
In doing so, they could be missing out on easy ways to make extra money. If you’re seeking to develop sources of passive income, remember these essentials points, especially during the early stages of the process:
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You Will Have to Work (a Little).
True, the whole point of passive income is to make money without working. However, that doesn’t mean you’re not going to have to invest any time or effort whatsoever.
For instance, consider some of the common ways that freelancers earn money on the side. Using their expertise and knowledge, they often develop training programs or write ebooks, sharing useful information with their customers.
In the long run, this can be a very effective strategy. Some people have even been able to quit their day jobs by selling these types of materials. However, they had to work to create them first. They had to write the ebook or develop the training program. Moreover, they had to set up a website or similar platform on which to sell them. Once that work is complete, they may have to occasionally write blogs or post on social media to market their products.
Ultimately, the amount of work that they need to put into selling these products is minute. It just takes some legitimate time and effort to get there.
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You Shouldn’t Cast Too Wide of a Net.
It’s one of the most common mistakes that people make when developing passive income strategies: trying to target too many customers.
At first, this approach may seem smart. The larger your customer base, the more money you stand to earn.
There’s an essential problem with this strategy. If you have a large customer base, then the odds are good that plenty of other people are already targeting the same customers that you are. That degree of competition makes it difficult to stand out.
You’re better off focusing your efforts on niche opportunities. Maybe you’re an excellent chef and want to write an ebook sharing your favorite recipes. A general cookbook will most likely get lost in the shuffle. A cookbook with a focus on Healthy, Delicious, and Inexpensive Meals You Can Make in Your Dorm Room will theoretically target a smaller customer base, but it will be more likely to find an audience.
The good news is that it’s usually easier to create niche products. Instead of trying to build the kind of knowledge that’s useful to many people, which is no easy task, you can use the particular knowledge you already have to reach the right people.
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It’s Not Always a Get-Rich-Quick Opportunity.
While it’s true that some people have earned substantial wealth through passive income, it’s not impossible. But it’s also not something you should expect. You’re better off following the advice of people such as Tim Ferriss, the author of The 4-Hour Workweek.
Ferriss has brought the concept of passive income to the attention of many, and he’s been very successful. However, he doesn’t encourage readers to look at these types of businesses as get-rich-quick opportunities.
Instead, he promotes them as a way to earn just enough money to pursue your own interests. If you’re stuck in a job that doesn’t allow you time to engage with your passions, then you’d significantly improve your quality of life if you had a form of passive income that allowed you quit your day job. Even if it doesn’t provide you with enough money to buy your own personal island, it could at least allow you to devote more attention to what you really care about in life.
Looking at passive income from this perspective will make you far more likely to commit to a strategy. People who abandon their projects because they don’t believe they’ll become millionaires from them are approaching passive income with the wrong attitude.
Again, none of this is meant to discourage anyone from developing sources of passive income. On the contrary, these points should serve to help ground your expectations in reality. When you are honest about how much work you will have to put in and what you can achieve as a result, you will find that maintaining your enthusiasm is much easier.