Creating a passive income stream is a goal for many people. As this blog has pointed out, it’s also easier than you may think. There are now more opportunities than ever to make extra money on the side without devoting much time to your venture after your initial work establishing the income stream.
However, not everyone is equally successful in his or her attempts to earn passive income. The following are common mistakes and mindsets to avoid if you’re interested in earning money this way. Knowing about certain pitfalls ahead of time is key to avoiding them.
Planning to Get Rich
It’s worth noting that there are people who’ve become millionaires through passive income businesses. It’s entirely possible to achieve this goal.
However, it’s not probable. More typically, a passive income stream delivers enough money on a consistent basis to make life more comfortable. People typically use the money they earn via passive income businesses to save for major purchases, enjoy a vacation, save for retirement, or similar purposes. They usually do not make enough money to quit their day jobs and live on a yacht.
You might be inclined to abandon your passive income business if you develop it with the sole goal of getting rich. As you start to realize this may not happen, your disappointment could discourage you from continuing to maintain this stream of side income.
Thus, it’s important to start developing a passive income strategy with the right attitude. Don’t look at it as a way to escape your day job. Look at it as a way to supplement your main income, create a financial cushion to rely on during lean times, or just earn extra spending money.
Not Conducting Research
Too many people interested in earning money on the side focus solely on identifying the most lucrative passive income streams. This is often a mistake.
That’s largely due to the fact that “passive income” isn’t a completely accurate description of this type of business. Most passive income streams still require some time and management on your part to deliver results. If you try to start one without thoroughly understanding what is required, it may be difficult to succeed.
Perhaps you’ve heard that investing in real estate is a smart way to earn a lot of money on the side. It certainly can be, but it requires work. You must take the time to learn about the real estate market you want to enter, the trends that shape it, the short- and long-term forecasts, and the specific properties that are available. You’ll also have to learn the logistics and legal rules involved in buying and selling property. If you forgo this research, you could wind up purchasing an asset that’s much less valuable than you expected.
In other words, don’t just consider how much money you might earn when researching passive income ideas. Take the time to learn what’s actually required to earn the money.
Not Using Resources
Again, you’ll need to invest time and effort to create an effective passive income stream.
The word “invest” is key. By taking certain steps early, you can potentially earn a lot more in the long run. One of those steps involves researching tools and resources you can use to automate aspects of your passive income business or otherwise reduce the amount of work you need to put in.
For instance, maybe you’ve decided to earn extra money by self-publishing e-books. This is a popular way to make passive income. However, you’ll be more likely to make regular sales if you implement a marketing plan. Yours might involve regularly posting content on social media, interacting with people in your field, and generally promoting your social media account. This will allow you to gain followers and establish yourself as a trusted voice in your field—and to advertise your e-book.
You could try to remember to post regularly yourself. That said, doing so is time-consuming. On the other hand, there are many social media tools that allow you to schedule posts ahead of time, partially automating your social media marketing. Agorapulse, Hootsuite, CoSchedule, and BuzzSumo are just a few of the familiar brands operating in this area. Many brands also provide other resources to improve your social media marketing, such as tools to help you determine what kinds of content are shared the most, find other influencers who can promote your content, and create calendars to keep yourself on track.
Not Having Patience
An ideal passive income stream should yield consistent income over a long period of time. However, your strategy probably won’t deliver consistent income at first.
Consider the self-publishing e-books strategy again. Unless you’re already a well-known figure, odds are good no one will purchase your book the moment it’s published. You first need to build momentum via marketing to get the attention of readers. If you’re dedicated, however, the book will start to sell regularly on its own, thanks to word-of-mouth and reviews, as well as your own diligent promotional work and that of your hosting platform. Note that many self-publishing platforms, such as Amazon, earn money by taking a portion of each sale you make. These companies want your books to perform well and may promote them accordingly.
Patience is the key to successfully building a passive income stream. If you accept that you need to do some work before you can earn regular money in a “hands off” manner, and if you keep these essential tips in mind, you can create a passive income stream that delivers money for years to come.