3 Ways To Create Passive Income For Your Business

When your primary business interest has a bad month, passive income very well may save your company from financial ruin.


Photo: Nash Riggins, Scotland-based American business journalist; Source: Courtesy Photo
Photo: Nash Riggins, Scotland-based American business journalist; Source: Courtesy Photo

When you’re first starting out in business, cash flow can be a fickle friend at the best of times. Meeting overhead costs is a severe challenge – and sometimes, just one bad month of sales could set you back an entire year.

By establishing a steady source of passive income, your company might be able to mitigate these sort of cash shortages entirely.

Passive income methods are a fantastic source of incremental revenue, because they usually require little-to-no effort. Income made through passive methods does not include earnings from wages or active business participation – nor does it include income from dividends, interest or capital gains. Bearing that in mind, it could be the perfect way to supplement the revenue stream of your small business.

Here are three simple ways to start earning:

 

  1. Affiliate Marketing

    Affiliate marketing is a type of partnership that enables you to sign up with another company in order to sell their products. That doesn’t mean you have to get out there and start flogging the products of other companies. In fact, it could be as simple as placing one link or a graphic on your company homepage or blog. You will then receive a small amount of money based upon the number of leads that link is able to generate.

    So long as you’re already working to ensure that your website is regularly generating content and traffic, this type of affiliate marketing usually requires very little effort. The key to launching a successful affiliate marketing relationship is to select a partnership with a firm that will complement your own business.

    For example, if you own a travel website, you might benefit from an affiliation with a budget airline company. Never agree to become the affiliate of a company that offers competing products or services. It will only come back to bite you.

  2. Digital Products

    If you’re considered an expert in your field, you can generate passive income by capitalizing upon that reputation. By producing an e-book, mobile app or regular, ad-driven podcasts, you’ll be able to enjoy a steady source of extra pocket money.

    That being said, creating a quality product is by no means a passive activity. If you want to create an e-book or an app that users are actually willing to pay money for, it’s going to take time. You’ll need to put a lot of thought and effort into content delivery, consider development costs and then heavily market that product post-completion.

    If your company website is already generating the right sort of traffic, marketing your company product might not require a whole lot of effort. Once the product is done and dusted, you’ll be able to sit back and enjoy the resulting income without lifting a finger.

  3. P2P Lending

    Over the past few years, peer-to-peer (P2P) lending has exploded in popularity. A P2P loan is a personal agreement made between your firm and a borrower that can be facilitated through a third-party intermediary. P2P is a fairly high risk method of passive income, because these loans are usually unsecured. If the borrower fails to make a payment, you run the risk of default.

    In order to mitigate default risks, you’ve got to diversify your lending portfolio by investing small amounts of money over a wide array of companies. That being said, so long as you choose your borrowers wisely, P2P lending can earn your business a hefty income on the side. Most lenders earn returns as high as 12%.

At the end of the day, there’s no such thing as a free lunch. Even passive income methods require some form of proactiveness. But if you’re willing to put in a bit of work to get various projects off the ground, you might be astounded by the amount of income they’ll be able to generate.

When your primary business interest has a bad month, and you’re a few cents shy of paying your bills, passive income very well may save your company from financial ruin.

 

This article has been edited and condensed.

Nash Riggins is an American business journalist based in central Scotland. He writes for The Huffington Post, World Finance, EuropeanCEO and The New Economy. For more from Nash, follow his blog at: www.nashriggins.com. Connect with @nashriggins on Twitter.

 

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