7 Best Ways to Earn Passive Income from Your Business

A little bit of up-front work can create a goose that lays golden eggs

This post was first published on my Medium blog—follow me there for the most up-to-date entries!

When I started my business, it never occurred to me use my expertise to generate passive income. Now, I believe that any business owner who doesn’t have a strategy to earn passive income is missing some great opportunities.

Passive income is often presumed to mean having investment strategies to earn passive income, such as a simple money market account, a REIT, and owning stocks that pay good dividends. Certainly, yes, those are all means by which to bring in some passive income.

But here, I’m talking about using the talent and expertise you use in your existing business to create passive income. That means a method of earning money which, once it is established, you can invest very little ongoing time, money, or effort in.

Here are 7 ways that you can use your existing expertise to create passive income for your business.

1. Create an online course

Let’s be clear on something first. Not all online courses can be classified as a means by which to earn passive income.

You can create an online course and put it on your own platform. (You might be using Teachable, Kajabi, LearnDash, etc.) But that’s not passive income. Why so? Because you will need to respond to customer support issues, problem-solve technical difficulties, pay the associated fees, and you’ll most certainly need to do all the marketing to find those customers.

To make it a truly passive source of income, you’ll need to put your online course on a platform where someone else is handling all the marketing, administrative stuff, and more. The most popular platforms include:

Udemy
SkillShare
Curious.com
Amazing
LinkedIn Learning (formerly Lynda.com, now part of LinkedIn)

An added benefit of this arrangement is that you can put the same course on more than one platform.

For a good discussion of these, I strongly recommend Vladimir Raykin’s eBook, How To Build Your Successful Online Teaching Business.

2. Write an eBook

You’ll spend many hours writing a book of any kind, and you don’t earn passive income until long after you finish writing. So this method isn’t for everyone, but if you love to write as much as I do, it might be just perfect for you.

The big question is: How much writing do you need to do to make an eBook? As far as I know, there are no rules. But somewhere in the neighborhood of 20,000 words is a respectable number of words to be published in an eBook format. Most people read about 200 words a minute, so if you’ve spent about an hour and a half reading an eBook, that’s probably a 20,000-word eBook.

Arguably, once the eBook is published, most of the work is finished, so you can earn passive income. But you might still need to put in some work to market it — and that might make the income anything but passive!

3. Write a physical book

As you look around at the books on your shelf, it might not be obvious which model of publishing the author used — traditional, self-published, or hybrid. You don’t need to have the support of a big publishing company to produce a physical book that others will take seriously. To some extent, however, the publishing model affects how passive your book income is.

I’ve done traditional and self-publishing, and here’s what I’ve learned about books as passive income.

Basically, a book must be written, published, distributed, and marketed. Self-publishing means that you’ll do all the marketing and distribution yourself, hybrid involves much of the same… and these days, even traditional publishing tends to expect a lot of ongoing marketing work from the author! Certainly, the work that goes into writing and publishing is the “up front” work. But if you end up doing any amount of distribution and marketing, that’s not passive income. Trust me!

4. Create an app

Nowadays, there’s an app for almost everything.

I have created only one app, a flashcard app with medical terms. I figured medical terminology would be the most evergreen content possible. Well, in terms of content, that’s true.

However, I soon discovered that apps need to be updated from time to time, even if the content is still accurate. Updating an app takes a fair amount of time, and maybe more money than it’s worth.

Also, when I say “I created,” what I mean is, I wrote all of the terms and their definitions and provided any accompanying images. But I did not actually sit down and “make” the app. I hired a very competent company to do it. It’s a big outlay of cash in the beginning.

Clearly, I have very limited experience with an app as a source of passive income. Do I have any regrets about doing it? No. Did I make some money on it? Yes. Would I do it again? No. Basically, it felt like it was more trouble than what it was worth.

In short, my message is this. Creating an app didn’t give me joy. If you think it will give you joy, go for it!

I feel compelled to mention this because it’s another option to consider. But I have not done it and have no wish to. It is the right thing for someone reading this, but it isn’t the right thing for me. SproutSocial has some helpful posts, including this one on how it works and tips for success.

6. Advertise a product

Advertising means that someone else is making and selling the product or service. You’re just spreading the word, so that’s a way to earn passive income.

If you’re already creating some kind of content — most notably, YouTube — you’re in a position to sell advertising. You might have noticed that banner ads are a popular type of advertising, so if you have a website, you can sell space on that.

Here’s why I don’t like to sell advertising:

There are ways that advertisers can advertise without your permission. I truly don’t understand how this happens, I just know that it has happened to me. An ad appeared that totally conflicted with my values and philosophy. Fortunately, I was able to rectify it, but I don’t want that to happen again.
Advertising feels sleazy. It probably wouldn’t have to be, but it just feels that way to me. I don’t want to be anyone’s shill.
The company paying you to advertise their product generally sets the advertising rates and/or terms.
Advertisers aren’t likely to even consider you if you don’t have a huge amount of traffic to your site.
Advertisers can review performance in real-time and can easily measure the effectiveness of their ad. And they might not continue with you.

7. Set up affiliate relationships

Adam Enfroy nicely defines affiliate marketing: “Affiliate marketing is the process by which an affiliate earns a commission for marketing another person’s or company’s products.”

He also explains that affiliates can get paid in different ways. Personally, my only experience has been a model where I get paid only when a sale occurs, but there are other models.

Here’s why I like affiliate relationships:

It’s the easiest way to earn passive income that I’ve ever found.
It provides me with some money for mentioning a product I’m probably talking about anyway.
There’s no need for customer service/support.
There’s virtually no risk. Sure, it’s a bit of a pain to set it up, but that’s the only real investment required.
I have a lot of control. I can mention only those products or services that I believe in, because I have (mostly) first-hand knowledge of them.
I’m rewarded for doing a good job. That includes having good SEO.
If the reader buys from my affiliate link, I get my cut for the product — but if they buy other products while they’re there, I might earn money from those purchases, too.

By the way, don’t be afraid to state that the buyer doesn’t end up paying any more. It’s a true statement, and it may help someone to overcome any reluctance to use your affiliate link.

Online Media Masters gives some steps to earning passive income through affiliate programs; I have summarized them here:

Just a word of caution on affiliate income. Ask yourself what your motive is. Affiliate commissions can be very small. I used to joke to my team, “Did we get our 27 cents from Amazon this month?” Yes, seriously, at first, we measured in pennies! Unless and until you have a big following, you probably won’t make much money.

Here are three other cautions:

Avoid affiliate penalties. Don’t write “thin content.” You must provide value.
Avoid Google AdSense. It doesn’t work well.
Don’t just target “review” keywords.

I have three rules for using affiliate links:

I try to link to books I’ve read myself, or, in a few cases, to products my friends or teammates have raved about.
I might credit a book — maybe for a quote or something — but I won’t add the affiliate link if I didn’t like the book.
I don’t aim to get rich from affiliate income. If I get enough affiliate money to buy my team lunch every month from a place like Panera or Jersey Mike’s, that’s great. If I earn more than that, I consider it a huge bonus. (And sometimes, it’s much more!)

Other

I’ll concede that there are other possible ways to create passive income from sources that typically require active work. For example, if you could pre-load all your content into a subscription model, that might qualify as a source of passive income. Another example might be blogging on a platform like Medium, where you could write a year’s worth of evergreen content and have someone else post it each day or each week.

How to choose a source of passive income?

Before you choose a passive income source, remember that “passive” means “not active”. Once you have it up and running, your toughest job should be watching the money accumulate in your account. If you need to do frequent upgrades, customer service, or problem-solving of any kind, then it’s not passive income.

Before you decide how to earn passive income, consider these factors on the front end and back end:

In many but not all cases, you’ll need to put in the time, money, and effort to create the vehicle that generates the passive income.

Action Step: Decide on ONE option you could use to earn passive income. Then, identify — in writing — what next steps you need to take.