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Many people venture out starting their very own business, but a few actually turn it into a business. What exactly is a business anyway? A business is nothing more than a system in place. A business and self-employment are two different things. Most people go into self-employment and get stuck because they don’t have a system in place, and don’t have different income streams within their company. To build a business that builds freedom, one must diversify their income streams to where they aren’t always exchanging time for money. In order to do this, one has to build systems within their company.
The cashflow quadrants
In the book Rich Dad, Poor Dad by Robert Kiyosaki, Kiyosaki has built a graph with four quadrants. The four quadrants are employed, self-employed, business owner, and investors. On the left side are the employed and self-employed while the right side are the business owners and investors. The left side is known to be exchanging their time for money while the right side is known to let their money or business work for them. If you’re going to be on the left side, why work so hard to be self-employed when you can just be employed and be guaranteed a wage, health benefits, and 401k benefits right? The right side is where we all want to be if we want to attain a life of freedom.
Now I used to do graphic design and wedding photography. Art and design is my forte, but I began to hate it because I had to keep exchanging my time for money. Rather than having more time to myself because I thought I owned a “business”, I was losing a lot of time. It soon became tedious and I started to hate it. If I knew what I knew now, I could have turned that self-employment into a business that generates different income streams, not just an income stream where I am exchanging my service for money.
There are several income streams, but there are two most common income streams that you can generate. One of the two income streams is active income where you are exchanging your time or service for money. The other income stream is passive where you can create it or build it once and keep generating income from it.
Active & passive income streams
Active income stream is very common. A workplace usually pays their employees for the time they put in. If you don’t go to work, then you don’t get paid. A self-employed person usually provides a service in which they get paid once the job is completed. An example of this would be a graphic designer creating a package design for a company. Each design is always custom and will always need time to get the work done in order to get paid.
We will use a graphic designer from above in the next scenario for building passive income. In order for a graphic designer to make passive income, he or she must create a done for you design that they can sell to the masses. They can sell these done for your products on marketplaces like Etsy or Creative Market. They can also create a course teaching people how to design, and they can sell this course in masses. The point of passive income is that it can be built once and continue to create income passively.
Other types of income streams
Other types of income streams include high-ticket sales and residual income.
High-ticket sales are usually products or services that are over $1,000. If you’re going to be doing active income generating activities, you might as well make them high-ticket right? The premise is that the marketing and sales efforts that go into selling something that is high-ticket is the same as a low-ticket item. High-ticket can also be passive. You just have to sell something that is high in price that you’ve created once. A good example of this would be a course.
Residual income is an income type that keeps coming. It could be active income or passive income. Residual income is usually subscription based. Using a graphic designer example from above, the graphic designer could provide monthly social media graphic templates. They can sell these monthly social media graphic templates to the masses. They would only have to create one set a month and give it to all their paid subscribers. Because social media graphics have to be created once a month, this would not be a form of passive income.
However, there are residual income that are passive such as car insurance, and health insurance. You keep paying for these memberships. Another example of passive residual income is multi-level marketing. Multi-level marketing company handles the shipping of the products to your customers monthly for you so you don’t have to spend time on that at all. MLM also pays out team bonuses that are just residual and purely passive. Like MLM, affiliate marketing also has subscription-based products that can build passive residual income for you.
How to build passive income streams online
There are many people skeptical when it comes to passive income. Can it really be done? Absolutely! It can be done in any business model and industry. As mentioned above, you just have to create your product once in order to make the passive sales.
Now if you have a tangible product, you can somewhat make the process passive for yourself by hiring people to do the fulfillment for you. Your product is already made from your supplier, so there is not much work for you to do there. Someone just needs to press a button every time an order is made to fulfill the order. There are places like Amazon that does it all for you. You just have to list your products on their site or hire someone to do it for you. Check out this free book to learn more about selling on Amazon. Of course you can sell your own products through your own website with platforms like Shopify.
Evergreen marketing is a type of marketing that is always around, similar to evergreen trees that always have their leaves. Evergreen marketing isn’t like social media because with social media, you are constantly posting to beat the algorithm. With evergreen marketing, people do a search on Google, and they can find you. People aren’t looking to be sold to on social media. They are there to be social. Google is used to find a solution to a problem.
Blogs are found on Google. People are usually searching for solutions to their problems, and if you happen to have a blog article with the correct keywords then your blog will pop up on Google. Blog articles are something you do once, and they are forever on the internet. These blog articles can direct people to the product that is being sold with potential to make passive sales. This is a great marketing effort to focus on as it can generate sales for years to come. Don’t have a blog and want to learn how to start one? Check out this blog post on how to start a blog that makes money.
Like blogs, YouTube is owned by Google and will pop up at the top of Google when someone is searching for a solution to their problem. We use Google to gain more info about a particular topic. We also do the same with YouTube. YouTube is hitting two birds with one stone in that someone can search on Google and find the YouTube video or someone can search on YouTube and find the YouTube video. These YouTube videos are always around and can make sales passively because it is another form of evergreen marketing. It’s a great marketing tool as people can really get to know you and your brand authentically as they can see you.
Both blogging and YouTube can also generate income by having Google Ads on these platforms.
Running ads to your products is another way to build passive income. By running ads, you have full control of who sees your ads and how often. You are able to easily scale your income by just increasing ad spend. If you make a dollar profit from each dollar you spend, that scenarios is already a million dollar scenario. Russell Brunson, creator of ClickFunnels always says “whoever can spend the most money to acquire a customer wins.” Successful ads are built on sales funnels. Sales funnels usually guide a customer through a series of web pages that have upsells and downsells. It is said that a confused mind never buys and that is why a sales funnel works so well. There is no confusion in a sales funnel. The customer is presented with a product, they either want it or not and depending on the answer they are given and upsell for saying yes to the product or a downsell for saying no to the product. If a page was thrown together with multiple items to buy, chances are the customer gets confused and buys nothing because of an indecisive mind. You can read more about sales funnels here.
How do you start building different income streams?
So what exactly do you need to do with all this information? Well, you simply can start implementing a little at a time. If you’re a service-based business now and only getting paid when you provide a service, you might want to start brain storming on how you can turn your service into something that sells to the masses. If you have no business or want to start one, Legendary Marketer’s 15-Day Business Builder Challenge, teaches you think, act, and start online business like a real entrepreneur. The 15-Day Business Builder Challenge teaches you how to build a lucrative high-ticket and passive income business. You also have a chance to talk to some business advisors on the phone during your challenge so you can get all your questions answered. Watch the video training here if you’re ready to take the challenge.