Article by Jane Tweedy, Business Advisor, Western Sydney Business Centre
Passive income involves generating income with minimal involvement from you. Even while you sleep you can earn income if you have identified relevant passive income channels.
Productise your service
Many businesses provide a service – think accountant, physio, personal trainer… A simple way to add passive income is to sell products that relate to your service, for instance an accountant may be an affiliate for an accounting system(s), or a physio or personal trainer may sell tape, exercise bands etc.
However for many firstly understand although you are focused on delivering awesome personalised service to your clients, it severely constrains you. The only way to make more from your core service, is to markedly up your prices, or up the number of hours – but that is limited. You could hire people, and that may be a valid option, but another option is to productise your service. Think of Michelle Bridge’s 12 Week Body Transformation. That’s a perfect example of turning her personal training service into an online program (clearly she’s also hired staff as her business has taken off).
Creating a product allows you to target new markets in a broader geographical area, or offer a product at a price appealing to a market that could not afford your full service. You create the product once and sell it many times over, with only occasional updates being required. These products can even be automatic downloads from your website allowing income while you sleep.
Packaging products and services
I’m not talking about the pretty box and bows in this context, but rather how we group together products and/or services in packages to offer our clients. It is desirable to offer three levels of package, or at least some form of upgrade option(s) to your standard offer. The fear of missing out (FOMO) is a great reason people take upgrades or buy a higher level package.
Utilise some of the additional products you created above to add extras to your service and charge more. It may be checklists, video series, books… whatever will appeal to your audience.
For products, add accessories or group items for convenience. For instance a new born gift set, or a gift hamper for a new business owner full of accessories that may help them as their business starts out.
Delivering one to many
Although technically not passive income, this does allow you to generate more from each hour of your time. Many service providers offer a one to one service, or product manufacturers sell to individuals. This requires a lot of effort as you need to attract every single customer to your business. So how can we change approach from one to one, to one to many?
For services consider offering group coaching or training sessions, webinars, even speaking at events. Instead of charging one person a premium amount, we can charge 10 people a third to a half of the amount, generating more overall income and therefore profit. Fill out a speaking venue and be able to charge even less, but potentially make even more. Alternatively use these opportunities to generate leads and sell your other packages.
Rather than selling to individuals can you sell to wholesalers, distributors or through affiliate channels. Instead of attracting every client you focus on attracting partners to sell your product and they attract their clients. Your margins reduce, but can be a lot less work and overall generate more money. Be careful though to make sure not to put all your eggs in one basket. Never aim for a client or supplier being more than a third of your business, preferably less to minimise risk should they need to cull your products.
Not sure how to choose and market passive income for your business, please make an appointment to see one of our business advisors for no cost with no catches! Book now!