Today is the final post in the 4 part series of The Power of Passive Income. Parts 1 & 2 shared some of the lessons I have learned in the process of building passive income and Part 3 began the 12 practical ways to create passive income streams for your life. In Part 4 I will share my last 6 ways to create passive income. My hope is that you will find at least one that you identify with and can begin taking the steps needed to begin building a future of financial freedom.
This is another great way to use your knowledge instead of cash to earn passive income. Many of us have specialized knowledge in the fields in which we work. This knowledge can be harnessed to create a product or services that can be sold providing a stream of passive income. Most of us have hobbies that we enjoy. For me it is Hunting and Fishing and I can think of many products that I thought of prior to seeing it in a store. If I would have taken the time to create these products I could have earned passive income while doing what I love! The great news is that today’s technology allows us to do things that were cost prohibited in the past. Simply search the web and you can find many companies that can help you design and produce any product you can think of!
Royalties are the money made from licensing out a product or intellectual property and franchise fees are fees paid to you by franchise owners once you’ve turned your business into a franchise. I have taken the concept of this type of passive income and implemented it at MacDoc Realty. As mentioned in Part 1, we redesigned our brokerage to maximize passive income streams for our agents. Because I know the power of passive income and the freedom it brings I felt it extremely important to create an environment that would facilitate this income. This income is called Lifestyle Income because it allows you to create the lifestyle you have always dreamed! If an agent introduces another agent to MacDoc Realty they will receive Lifestyle Income equal to 10% of the gross commission earned by that agent. Assuming an agent at MDR introduced 10 agents to MDR and those agent grossed on average $100,000, they would earn $100,000 of Lifestyle Income that year (($100,000 * 10) * 10%) Pretty powerful! And done with no money invested! Think this would change your lifestyle?
If you have a business that generates sales for another business you may have the opportunity to enter into a marketing agreement. For example, if a car dealership was continually sending clients to a local insurance agent, the car dealership could negotiate a marketing agreement with the insurance company where they would advertise them as their preferred agent. In return the insurance agent would pay a marketing fee. The car dealership would advertise the relationship on their webpage and other marketing materials and in return they may receive lets say, $1,000/month from the insurance agency. A simple way to make money doing what you’re already doing and a true win/win for each party!
I have done this several times in the progression of my business. I started MacDoc Realty because Foundation Companies was selling enough houses per month to support a brokerage. It saved us a ton of money to simply eliminate the third party and start our own brokerage. Immediately we saw increased revenue for Foundation Companies (the home selling business), however MacDoc Realty has now turned into its own revenue center that utilizes several of these passive income streams to increase its margins.
That’s right, I said it! The infamous MLM! If you look past the general stigma that can accompany MLM you will find a great way to earn income with very little “skin in the game”, a.k.a. cash. Businesses like Pampered Chef, Avon, Thirty-One, Rodan + Fields and countless others can provide great income with great freedom. There are two things to remember when starting a MLM business:
1. It is a business, not a hobby. If you treat it like a hobby you will not be successful. No matter how many seminars you attend, if you don’t work the business it will not produce!
2. MLM requires work. Thats right, its not as simple as some may want you to believe. MLM takes time and persistence
However, if you keep these two thoughts in mind you can make good money. While the money may be earned income in the beginning, it can quickly turn into passive income requiring much less work in the future. Referring to MLM, Harvard Business School stated, “If the company has less than 100,000 distributors, we consider it to be a once in a lifetime opportunity.” There are plenty of millionaires in the MLM business!
I really hope this 4 part series was helpful to you in learning how to create passive income streams and why this is vital to establishing financial freedom. If you have any questions regarding any of the lessons or ways I have suggested to create passive income, please don’t hesitate to ask them by leaving a comment below.
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Which of these practical ways to create passive income appeals most to you? Do you have any methods you would add to this list? Click here to leave a comment or question.