Passive income, as the name implies, involves making extra money on the side without much effort. As this blog has pointed out in the past, there are many ways you can go about doing this, from publishing e-books online to investing in real estate.
Most people who implement passive income strategies wish to earn a few extra bucks. That money can be used to save up for major purchases, go on a vacation, or help pay bills.
However, some people have created passive income streams that were so successful they turned into full-time small businesses. These entrepreneurs were able to quit their day job and focus on their passive income business, sometimes even becoming rich in the process.
You shouldn’t count on earning millions, but you should consider the possibility that a source of passive income may become a real career, if you want it to.
How do you know when your side hustle is becoming—or has real potential to become—a full-time career? Keep the following points in mind. While it’s never a good idea to quit your day job unless you’re entirely sure your side business is a suitable replacement, these are the signs it’s time to focus on developing and growing it to a greater degree than you currently are.
Your Earnings Are High and Consistent
Sometimes a passive income stream delivers significantly greater revenue than you expected during a particular month. If you consistently earned this amount every month, you might think you could quit your day job and spend all your time running your passive income stream as a full-time business.
That may be true. The problem is, a single month of high earnings doesn’t guarantee anything about the rest of the year. You should see at least one year of consistently high monthly revenue before you even consider quitting your job. Additionally, you need to understand why your earnings were higher than expected during a particular month. If you don’t know what factors contributed to your success, you won’t know how to maintain that success consistently.
Study your passive income stream carefully to determine why it’s bringing in more money than you thought it would. For instance, perhaps you published an e-book that is selling many more copies a month than anticipated. This might mean it’s a strong book—one that would sell even better if you focused on promoting it full time. On the other hand, it’s possible your book was similar to a major popular release that year. Sales could taper off in the future as a result. It’s also possible that a spike in sales is due to the holidays. In this case, it simply might not be possible to replicate those sales numbers every month of the year.
Whatever you find, the point is to avoid putting yourself in a difficult financial situation by studying all the factors closely.
Your Work Is Paying Off
The term “passive income” is often a bit of a misnomer. You typically need to invest some degree of time, money, and effort to turn a profit. Fortunately, this doesn’t need to be too difficult. You just need to put in the initial work to build momentum. After that, you can step aside and enjoy your earnings.
However, some people feel very passionately about these income streams. Maybe you’ve published an e-book and found that you enjoy writing books and promoting them so much that you continue to do so in your spare time.
Eventually, you might find that you’re making so much money this way that your earnings essentially match or exceed what you make at your day job.
Remember, you shouldn’t quit just yet. The advice in the last point still applies. You need to review every factor to thoroughly understand why and how you’re succeeding.
Once you do, though, you may learn that you could earn a good living devoting all of your time to your passive income business. If you’re more passionate about it than your current career, you could even improve your financial situation, because you’ll be more inclined to put in the necessary work. This is another reason you may want to turn your passive income stream into a full-time gig.
You Can Justify Yourself to Others
Everyone’s personal situation is unique. Some people who decide to quit their jobs and focus on earning passive income are only responsible for their own needs. Others must earn money to support their families.
If there are people in your life who depend on your income, discuss your plans with them before making a decision. Be sure you can justify your plan to commit to growing a passive income business before taking that leap. Obviously, you want to know you can still fulfill your financial responsibilities, but you also don’t want to put yourself under unnecessary stress if you struggle to reach your goals.
The key point to remember is that you need to be careful with this decision. Don’t quit your day job impulsively; take your time to ensure you understand what you must to do to earn the income you need. That said, some people have managed to successfully transform streams of extra cash into businesses of their own. If these points apply, you might be able to do the same.