If you’re the sole proprietor of a service-oriented business, your offering is you. So, when you aren’t actively working, your earnings take a hit.
Having a business model that requires you to labor constantly to generate income is a tough one to sustain. What happens if you get sick or injured? Or have a family emergency? Or want to take a vacation? How do you build a business that works for you as much as you work for it?
Here are five ways to create a stream of passive income which, once produced, will bring in money on its own.
1. Write an e-book. What is your area of expertise? Are you a graphic designer? An electrician? A landscaper? Just about any type of business can benefit from an e-book. You can publish and sell your e-book on Amazon, Lulu, and other websites. An e-book also helps to establish you as an expert in your field, which can expand your client base.
2. Start a blog. Similar to writing an e-book, starting a blog lets you reach out to your current customers. Once you’ve established a reader base, you can monetize your blog through advertising, affiliate programs, or other means. You could also use the blog to promote your e-book.
The most popular blogging platform today is WordPress. It’s free, and you can install it directly onto your website or use its platform. (Tip: Host your blog on your company’s website for consistent branding.) As your blog’s popularity grows, follow the lead of bigger businesses and get help producing content.
3. Build an app. Many businesses could capitalize on the rapidly growing mobile app market. For example, perhaps you offer tours or plan events. Could you build a branded smartphone or tablet app that allows people to find information about activities in your area?
Meanwhile, are there parts of your business that could be automated? Could you create an app to collect customer information that you would otherwise have to pull together manually? If you don’t have the technical expertise to write code, hire a software developer.
4. Hire an employee or freelancer. As a business grows, its owner typically transitions from the main earnings driver to managing a team of employees who produce income. Even if you don’t think you have enough business to hire a full-time employee, you can hire somebody on an as-needed basis to pick up your slack or to add another service.
For example, if you’re a writer, having extra help could enable you to bid on editing projects. Or maybe you’re an accountant and could extend your reach into financial planning. Hiring help could be the first step toward managing your growing business rather than being its only employee.
5. Invest. In order to retire comfortably one day, workers have to invest in an IRA or other tax-advantaged account over a long period of time. A business can essentially do the same thing. Your business can invest in stocks, bonds, exchange-traded funds, and more. You can use your business savings account or open an account through a broker.
Regularly deposit a set amount of business earnings into this account, just as you would your personal retirement account. Work with a financial adviser if you don’t have experience making investment decisions. Be conservative and commit to a long-term plan.
Savvy small-business owners know that diversification is key. If money only comes in through one channel, the business and your income are at risk. Find multiple revenue streams to assure long-term survival.