Last week I was a guest on a podcast (I'll add the link as soon as it's available). One of the questions the host asked me was how entrepreneurs can start building passive income - for many of us, the holy grail of entrepreneurship.
The idea with passive income is of course that you can build something that sells with little or no ongoing effort. There are many examples of passive income: rental properties, dividend income, affiliate marketing and ebooks are some of the most common ones.
The problem with many of these methods is that you need money to start - in some cases a lot. Despite the hype around "no money down" schemes, there are very few that actually work - and you always have to invest something up front even if it's just for the course that will teach you how to do this.
So if you don't have money to invest in real estate, and you don't yet have products or services you can use to generate passive income, how do you start?
Starting with nothing down
One of the most popular ways to generate passive income is to build a book or course you can sell online. On the face of it, this sounds like one of the easiest ways to start generating passive income - but there's a lot of hype around this particular method.
The good news is that it can be done - and the bad news is that it's not easy. It takes time and effort before it pays off, but if you can put in the effort, and you have the patience, it can work.
In this article, I'm going to look at one way of building a product you can use to generate passive income; I will cover other ways in future articles.
I'm going to assume that you have something of value. You have a skill or expertise you can turn into something people would be willing to pay for.
To turn that skill or expertise into passive income, you will need to:
- create a workshop to teach people a skill or help them do something;
- promote the workshop;
- run the workshop a couple or three times to learn what works;
- turn the workshop into a self-study ebook or course;
- create a website and automated sales processes that will sell your product; and
- market the heck out of it.
The most difficult part is in the last bits - creating an automated sales funnel and marketing the product. And many people give up at this point - they worry that they won't get the marketing bit right and all this work will be for nothing. But if you take it step by step, it turns out you can learn how to do literally anything.
Why this particular sequence?
One of the things that I've learnt from building self-study courses is that it's tremendously difficult figuring out what people have problems with. Building a course is a largely solitary affair, and you have to make a lot of assumptions about what people will just get, and what they will have problems with.
So before developing a course or ebook, you need some way to test if your methodology works. The best way to do this is with a workshop - and this particular way of doing things has some other advantages too.
Here's why the workshop approach is my recommended way of building info products (ebooks or self-study courses):
- Workshops are a lot faster to build than an info product. Because you have a live audience in front of you, you don't have to cover all the details in the workshop materials - you can answer questions as they come up.
- Workshops give you the opportunity to test what works. What you think is obvious or easy may not be for other people, and what you think is difficult may not even be relevant to them. A workshop will give you live feedback about what people really need.
- Every time you run the workshop, you will be fine-tuning your material. You will spend more time on things you know people struggle with, and less time on things that are not that important.
- And finally, by the time you've run the workshop a few times, you have most of the material you need for the DIY version. Developing the actual course or ebook is a lot faster because you know what works and you have a lot of the material you need.
So let's look at each step in turn.
Step 1: Create a workshop
The first step is to create the workshop. The most important thing you can ever know about workshops is the following:
Every workshop must start with a promise, and by the end of the workshop your participants have to walk out with that promise fulfilled.
For workshops, there are only two types of promises that make sense: you must teach them a skill, or you must help them get something done.
If you promise them X-ray vision, they have to walk out being able to see through walls. If you promise to teach them how to control fleas on their dogs, they must know what to do when they walk out. If you promise them their own custom table lamp, they should walk out the proud owner of their creations.
Once you know what you're promising, building the actual workshop is not that difficult. You have to decide what steps you're going to take them through, create the material for each step, get them to practice (or do the tasks) and give them feedback on how they're doing.
Step 2: Promote the workshop
I've learnt the hard way that workshops can be difficult to fill. If you don't have a large audience you can easily reach, the best way I've found is through public talks.
A public talk to promote your workshop is a short talk you give at a place where your target audience hangs out. These talks are typically less than an hour and talk about the topic of your workshop - without coming across as a sales pitch.
There are two approaches to creating these talks:
- The first is to compress the workshop material into a 45- to 50-minute talk. When you compress a workshop this way, you have to drop out a lot of detail and there's no time for exercises or individual attention - but you can still deliver value.
- An alternative approach is to focus in on just one or two key points from your workshop. You provide context by giving your audience an overview of what you cover in the workshop, and then drill down into one or two key aspects they should know about.
The key in both cases is to provide value. Your audience should walk out with something they can put to use right away, but knowing there's a lot more to it.
And that's where you pitch the workshop - at the end of the talk. My approach to this is to mention the workshop at the end, provide an easy way for them to get more information about it, and sometimes offer discounts.
But remember your talk is not a sales pitch - you're there to provide value to the audience, and promoting the workshop at the end should be relatively low-key.
Step 3: Run the workshop a few times
Every time I run a workshop, I learn something that makes my next workshop just a little better. Based on what I learn from the participants, I will tweak my material, allocate more time to difficult topics and even drop out or add in parts as I learn what my participants really need.
It's only when you've run a workshop at least twice that you start seeing patterns emerge. Questions from participants tell you what they like, don't like or have trouble understanding. Every time you tweak your workshop, you get a little better at delivering on the promise you made at the start.
So now it's time to learn, refine and learn some more. Run the workshop at least two or three times, keep notes and adjust your material to better deliver on the promise.
The good news is that as you're running the workshop, you're learning to market and sell your product - and you're also generating income. You may even find that your workshop is so valuable you decide to keep offering it.
Step 4: Create the DIY version
With the workshop under your belt a few times, you can now develop the DIY version. There are many options for doing this - from something as simple as a PDF to a multi-part course with supporting video, downloads, exercises and quizzes using a platform like Udemy or Thinkific.
I can't cover all the specifics of creating a standalone course (where you're not facilitating in real time) here, but the basics are the same as creating your workshop:
- start with the promise;
- break the course down into as many modules or chapters as you need;
- create the material for each module (or chapter);
- add exercises, downloads or videos; and
- test the course with a number of volunteer students.
There's a lot of work in creating a course or book - and in some cases a steep learning curve. If in doubt, start with the easiest version, a PDF your students will be able to download. The learning curve in doing this is a lot less than creating a multimedia online course. If you have the time to go through the learning curve, opt for the more interactive versions with video, quizzes and downloads. Or start simple and upgrade the course later.
Step 5: Create a website and an automated marketing funnel
With your ebook or course ready, you can start selling it. The simplest way to start is with a website dedicated to the product - products like Leadpages make it easy to create good-looking websites with a small investment.
This is where things get difficult.
If you've never learnt how to write sales pages before, you're in for a steep learning curve. You will have to study what works, what doesn't, how to drive traffic to your website and how to create compelling copy (the text on the website) that converts visitors into clients.
The good news is that you don't have to be an expert to start. You can learn as you go, and even a simple web page is better than nothing. You can fine-tune things as you learn and adapt to what works and what not.
The next step in the learning curve is in creating the marketing that eventually leads people to buy your product. Remember, the goal here is to automate as much of the process as you can so you don't have to deal with every client individually.
If you're building a course on a platform like Thinkific, there are built-in marketing tools that can help you. Alternatively, look at products like ClickFunnels which help you do a lot of the work. And of course, if you want to it yourself, you may want to look at email marketing tools like ConvertKit.
There's a steep learning curve here, but the promise is that if you get it right, you can create a steady source of income with little ongoing effort.
Step 6: Market the heck out of it
Finally, you have to drive traffic to your website so people can see what you have to offer. With everything else in place, this is where the money really comes from - getting traffic, otherwise known as lead generation.
Like everything else, marketing is a skill that can be learnt. But like so many other things on the Internet, there's a lot of hype and promises of instant success - but the reality is that it's going to take time, money or both. On the Internet, "overnight" success usually means it took a couple of years.
The best advice I can give without turning this into a fully-fledged treatise on marketing is the following:
- Start small. Don't try too many things at the same time - start with one channel to market and learn how to use it to drive traffic to your website.
- Learn as you go. Even with traffic to your website people may not buy. This is where you have to figure out what's not working - your copy (text), the price or something else.
- Don't rely on online promotion only. Use every real-world opportunity to market and promote your product. Mention the product in your talks, or networking events. Write articles and get them published in magazines where your target audience hang out. Keep pushing - eventually it will pay off.
This seems like a lot of work
It is. Creating a top-class product that people need, and learning how to market and sell it, is pretty much building a business from the ground up.
So don't think this is an easy or fast way to riches. But at the same time, don't think you can't do it. Remember that as difficult as it seems, everyone started from zero. Not everyone makes it to hero, but if you don't try you'll never know.
Good luck building your business.