Developing a Passive Income Business

Summary

This article will define a passive income business model and present four popular, online passive business structures to the reader.

Developing a passive income business [part I] – What is a residual income model?

A residual or passive income asset is defined as a financial stream of income, that upon successful, initial set-up, is able to support its owner with a long term influx of money. This model of operation does not require an active approach from the business owner thus producing non-active income.

The pros/cons of this business plan include:

  • Able to generate a consistent stream of funds
  • Does not require an active approach after initial set-up (leaving the entrepreneur with more time on his hands)
  • In comparison to an active stream of income, a passive one does not require heavy maintenance, diminishing the expenses of the business owner
  • Initial, successful set-up is often times hard to execute, heavy research is an absolute must

Developing a passive income business [part II] – Online residual income models in use now

The residual income model has gained a solid online foundation, with the Internet presenting ever more opportunities to its user-base. An online residual income stream holds many advantages, such as the simplification of the original set-up process, overall inexpensiveness and the speediness of the set-up, over non-active income streams of the past.

Four of the most popular online passive income business models are:

  • Affiliate marketing
  • Information trade
  • Selling information products
  • Selling advertising space

The first of the four is the most popular choice of many entrepreneurs. Affiliate marketing is closely associated with multi level marketing, yet it is quite different in many regards. Both of them amount to referring new clients and finding new sales leads for the service or product that is being promoted, however affiliate marketing programs offer real services and products that solve needs and can benefit the consumer. MLM networks, on the other hand, are not stable passive income business models, as the product or service promoted within them is not the primary vehicle behind a sale, thus no new wealth is generated.

Affiliate marketing consists of associating oneself with a product or service provider and then setting up a promotional campaign to push this product out into the masses. The affiliate marketer gets paid on a commission basis. A successfully executed promotional campaign is then able to generate residual income for the affiliate.

Another popular passive income business model lies in the trade of information. Here several instruction-type resources are set up by the entrepreneur, these receive an ongoing royalty-based commission or can be of promotional manner, thus binding in the previously mentioned business model. This type of passive income business model is attractive because of its simple initiation. It is however not the most efficient way to generate residual income, despite its non-complicated nature. Article marketing (as it falls under this type of business model), for example, can be very “slow-moving” and it might take up to 4 months to see some profits.

The next passive income business model is the most effective of the four but is also characterized by the most difficult initial set-up. The typical Internet user is a very “information-hungry” entity. Selling information products can be very lucrative, if an entrepreneur is able to provide a unique, sought after solution or upgrade an already existing one. This business model requires an immense knowledge base, as well as a good grasp of Internet marketing and product creation. Not to be attended by beginners.

The last passive income business model becomes feasible in combination with an already established, popular Internet resource. This a source of non-active income if a blog or website generates a healthy amount of traffic. A popular niche blog, for example, can successfully sell advertisement space for about 1k-2k a month.

Conclusion

There are several ways to develop a money making non-active income source. It is crucial to start out with the simplest option available, get your feet we and then proceed to more advanced passive income business models. Try to gain as much information as possible, either through Google or an educational resource of your choice, in order to avoid the possibility of costly mistakes.