AN INTRODUCTION TO ONLINE PASSIVE INCOME
Hey, it’s Jake here, Founder of The Freedom Chaser! If you want to start an online business of your own but don’t know where to start, this page is for you.
My goal is simple: To share the truth about what works and what doesn’t when it comes to generating income online.
I focus on online passive income, which involves building digital businesses that take advantage of automating processes and outsourcing basic tasks to allow growth without requiring a real-time presence. This is an ideal business model for people seeking an alternative to the 9-to-5 daily grind. I like to call this collective of people the ‘life-stylists’; in the same way as an interior stylist adds their own touches to create a space that is functional yet personal, a life-stylist seeks to create their own unique version of day to day life. Like any niche profession, there only a handful of accomplished life-stylists in the world. This is because no university, training college or school offers the opportunity to consider becoming a life-stylist as a full time profession. Thankfully that’s where resources like The Freedom Chaser can help!
TYPES OF INCOME
Active Income follows a simple equation, whereby one’s income is product of a pre-determined hourly rate multiplied by the number of hours work. A typical working scenario is the 40 hour work week. For example’s sake, let’s say your hourly rate is $40, which means you will receive an income (before tax) of $1600 each week. This also means that the daylight hours of every weekday are 100% committed to work, leaving you with limited time to focus on your personal, wellbeing, relationship, family, health and financial goals. Another important aspect to remember is that active income stops when you stop working, in most cases, immediately!
The good news is, there is an alternative.
My definition of Passive Income, is a regular income stream which requires significantly less time to maintain than ‘active income’ in the long-term. I say in the long-term, because there’s sometimes a perception out there that passive income is a magical tap that you simply turn on, and out streams the money. Unfortunately I am yet to find one of these magical money taps!
The truth is, you will need to commit to a significant body of work upfront to create a business which generates a consistent stream of passive income. By following the guiding principles on this site (and other thought leaders in this space, such as Tim Ferris’s 4 hour work week), eventually you can reach a point where a passive income stream is activated and profits will continue to flow, allowing you to focus on other things. If you so desire, you can then choose to stop working on this income stream and an income will continue to flow through regardless. This is the beauty of passive income streams.
Unlike its ‘active income’ counterpart, the equation for passive income is a non-linear; the hours invested into a passive income business are skewed towards the early stages of set up, during which the earnings will be limited, however which is offset and overshadowed by the ongoing earning potential. Once you have successfully launched a sound passive income generating business, you will keep getting paid whether or not you do any meaningful work.
In other words, passive income business owners do not trade time for money.
WHAT PASSIVE INCOME IS NOT
There’s some common misconceptions that I’d like to clear up before we move on.
1. Overnight success stories
Get-rich-easy schemes aren’t my jam. My first online business took about two years of trial and error (and sacrificed a lot of my own leisure time) before it was generating a reasonable passive income. Needless to say, I have learnt from my mistakes and am here to make sure you don’t make the same ones I did, to streamline your path to profitability! That said, it’s still important to remember that generating a passive income does not happen overnight. With a solid plan, you can start forging a path towards a passive income with just a small yet regular commitment of time towards your business each week.
2. Easy like Sunday morning
For 99.9% of humans, life isn’t easy. Neither is creating a successful online business. Generating passive income is not easy and takes a lot of hard work. But if you apply yourself, you can do it!
3. Forever income
Passive income doesn’t mean a permanent income. Some forms of passive income may last a few years, others may keep going for decades. All forms of income eventually dry up for one reason or another, and for this reason you not only need to be realistic about the longevity of your business ventures, but also about saving and re-investing your profits to ensure your long-term goals can be achieved.
Despite what you may hear from critics, generating a passive income is far from impossible. The most common reason for this attitude is a lack of belief in themselves; giving up too early or not even trying at all. I believe in you, so you should believe in you too!
WAYS TO GENERATE PASSIVE INCOME ONLINE
There are literally hundreds of ways to make a passive income online. One particular option that I’ve had repeated success with is creating profitable blogs.
There plenty of other options too, including:
- Ecommerce dropshipping
- Amazon FBA
- Affiliate/referral marketing
- Online training modules
…just to name a few.
You can find more information, plus tips and tricks, about the various online passive income options I have experimented with on the blog.
YOUR WEBSITE IS YOUR #1 TOOL
A website with a built-in blog is absolutely essential for almost every online business to grow and thrive. While there are plenty of options available to build your website, it’s important carefully consider which platforms you commit to before making a decision which could prove fatal to your business success.
Think of building your website like building a house that you may one day wish to sell for a profit. To maximise your profits, you want to choose the best the block of land you can find, in an area that will continue to grow steadily in popularity over time, and to build a nice house that gives you the option to expand upon as needed. In this case, the block of land is your website hosting provider, the location is your domain name, and the house is your blogging platform.
So here’s a piece of important advice; steer away from the free blogging platforms that offer you a blog hosted on their own servers, such as Blogger.com, WordPress.com, Wix, Weebly, Medium and Tumblr. While they will lure you with promises of a free blog, you are ultimately giving away the flexibility to grow your business. Here’s three reasons why hosted blogging platforms like the ones mentioned above should be avoided.
1. You don’t own all of your IP – Your brand equity is in your domain name. Usually a free blogging platform will be based on a URL like www.yourname.blogger.com, which means that they own your brand, not you! Not really an ideal situation when you are seeking to be the sole owner of the business assets, is it?
2. Your visibility will suffer – Free blogging tools are usually harder to find. Whether it be in Search Engine results, or simply getting people to remember your complicated website address, your site will be hard to locate and remember by many of your potential visitors.
3. Your flexibility is limited – Flexibility on these platforms is limited. Often, you are not allowed to include advertisements on free blogging platforms, and you are also quite limited in how you can tailor the design, layout and colours of your blog. To make matters worse, if in a few years you decide to sell your business, it may prove to be virtually worthless, since you are unable to sell a website design and domain name that is unique to your business.
This is why I recommend a self-hosted WordPress website. And for this, you will need your own domain name and a trustworthy website hosting provider.
A2 HOSTING: MY TRUSTED HOSTING PROVIDER
I host all of my blogs and websites on A2 Hosting. Their customer service is outstanding, the quality of their product is extremely high, they are optimised for WordPress and their pricing is among the best on the market. I highly recommend A2 Hosting for your first website, and you can get started right away for less than $10 per month.
Disclaimer: There are obviously other hosting companies available, but this is my recommendation based on my experience with the company since I started doing business online.
Passive income isn’t for everyone. You, and only you, have the power to make a change. If you have the motivation, you can make it work in your favour.
I would love to hear about your journey as you work towards your goals. While I may not be able to respond to every email straight away, I’ll do my best to get to it soon.