CHAPTER TWO
The Plan
A lot of gurus out there are probably going to tell you that an online business designed to generate passive income can be done by anyone.
Well I don’t agree. I think you need to judge for yourself whether this is a good fit for you. The fact is that building a business (online or offline) takes hard work.
As I explained above, not everything I have done has been a booming success.
In fact, not too long ago I found myself tens of thousands of dollars in debt because of some ill-informed business decisions. Like most people out there I was wondering around aimlessly, getting attracted to every new shiny object that promised me a great income with very little effort on my part. Now I’m smart enough to differentiate legitimate opportunities from scams… but even the most legitimate business isn’t always going to be the perfect business for everyone.
So after several months of hitting my head against the wall in the Wild West of Internet marketing business opportunities, I decided I needed to focus on developing an honest-to-goodness game plan. And that’s just what I did. I found businesses and income opportunities that were aligned with my interests, skills, and most importantly, my ethics.
“Passive” means that you need systems to do the work for you. We’ll get into the specifics of some of the businesses I chose as my vehicles for generating a passive income in a little while. But I want to point out that the thing they all have in common is that they are built around systems.
One of the reasons I failed in so many of my earlier efforts was due to my lack of systems and lack of discipline. Part of it had to do with my succumbing to the “shiny object syndrome” that so many newbies seem to suffer from. But much of it was due to the lack of a well-conceived system to support my business activities.
Build your system. Don’t get distracted. Be consistent.
That’s my mantra. Having a great system in place means nothing if you don’t stick with it and consistently apply it. I learned this the hard way of course. But now that I know it, I’ll never forget it.
So what do I mean by a system? Well, when I talk about systems I mean having something in place that will be a guide for both you, in operating your business, as well as your prospects as you lead them down the path to becoming customers… and then retaining them as customers.
The first thing I do when considering a passive income opportunity is to see if there’s an existing system in place already. If there is I take time to carefully analyze it, and learn how successful (or unsuccessful) it has been for others. If there’s no system in place, then I consider how difficult it will be to set up before I even get involved. Ultimately, if were talking about creating a passive income, it probably is a good idea to find simple solutions, not complicated ones.
My passive income game plan relies on one line of business as its cornerstone. In this business, which I’ll introduce you to shortly, I utilize an automated sales funnel to market and sell information products online. I didn’t design this system, but I did recognize its strengths, and decided it was a good fit for me.
Periodically review and revise to improve you system.
Most of my other businesses, however, have required that I create the systems… and, as a result, I need to be a lot more hands-on when it comes to analyzing their success and refining their processes in an effort to constantly improve their effectiveness.
The point is that having a system in place is one thing… but having a “working” system in place requires that you rinse and repeat along with occasional tune-ups.
Work online.
Earlier I used the example of real estate investing as a great passive income opportunity. I’ve not done it myself (maybe someday), but a friend of mine is a real estate agent who specializes in finding homes for people interested in investment properties. He builds his business by circulating around the various networking groups in our city, and has developed a group of off-line referral partners to help find him investors. And you know what? He’s really good at it, he has fun doing it, and so do his clients. But outside of real estate investing, most
worthwhile passive income opportunities these days exist online (and that includes investing in the stock, commodities, or FOREX markets).
A few more advantages to working online:
Easy to Automate
As I’ve mentioned a couple of times, automation is one of the keys to passive income success. If you’re going to build and sell a widget do you want to be building them one by one and then selling them one by one as well? Or do you want to find a way to automate that system? Well the fact is that automation couldn’t be easier than when you do it online.
With such a wealth of marketing platforms, software, etc., virtually anybody, including those are not technically savvy, can set up some form of automation online.
International Reach
There’re some things in my life where “local” is important to me. I like to support small local businesses. I like to eat foods grown on farms near where I live. But when it comes to selling things through my passive streams of income, I want the ability to reach as far and wide as possible. Doing business online allows me to do just that.
Low Cost
Let’s look at it this way: When I bough my master franchise license, the cost was an easy SIX FIGURES. An online business, however, can be operating a few hours from now at an investment of under $1000 (and even less if you’ve got a good system in place).
The Importance of a “Passive Income Mindset”
If you asked me a few years ago, I would’ve scoffed at the idea of involving any sort of mindset or personal growth discussion in a guide to how to conduct business. But that’s not the case today.
Mindset, for me, is a vital part of conducting a successful business. There’s a great book by Michael E. Gerber called “The E-myth Revisited” which explores, through multiple examples, the importance of having the right mindset in running your business… specifically how to work on your business instead of in your business.
Mindset also requires focus and discipline to traits that are very important in establishing your own passive income game plan, having the right mindset is going to be the foundation supporting your entire passive income business model. So let’s talk about where to begin…
Vision. Motivation. Goals.
What’s Your Vision?
Before we even get to goals, I want to talk about identifying your vision. A vision is something far more substantial than a goal.
A vision is what drives you.
A vision is what defines you and the work that you do.
My vision, for example, is to be someone who is respected for teaching people and sharing information that can help improve their lives. I do this many ways. Sometimes I teach people cool things that I know about, like wine. I also, as mentioned before, put people into business for themselves with their own franchise. And I guess you could say I do that online too, by providing the tools and guidance to help people generate their own passive income. So that’s my vision… What’s yours?
What Motivates You?
What are you trying to get out of by reading this report? What’s behind your desire to establish a passive income? And don’t tell me it’s to “make more money”… that’s just a copout.
Money, after all, is simply a means to an end. What we’re really trying to find out is what will that money allow you to do?
Maybe you’ve heard the question asked this way: “What’s your WHY?”
Perhaps you’re at a place in your life where you’re trying to make a change–you don’t want to continue to be in the situation you’re in… and you know there’s something better. Take the time to articulate what that “better” is. Once you have defined that WHY, it will be your inspiration and motivation in doing the work that’s ahead.
I cannot stress the importance of this enough.
For more on this topic, get yourself a copy of Simon Sinek’s book, “Start With Why.”
Setting Goals
Goals are really important. Not having goals is the root problem behind most people getting caught up in that endless cycle of being nonproductive and getting distracted by new shiny objects all the time. I know. I’ve been there.
You need to have goals if you want to succeed. As a friend of mine likes to say, “if you don’t know where you’re going, how are you possibly going to get there?” Earlier we discussed reasons why you might be interested in creating a passive income. Let’s revisit that now.
Here’s an assignment: define your goals.
And here’s a question: Are you just dabbling until something “better” comes along?
Remember that shiny object syndrome we discussed earlier? I’m bringing it up again because so many of us, myself included, suffer from distraction, dabbling, and an inability to focus on or commit to just one thing. It’s rampant in the world business opportunities.
I say this for two reasons: first, so that you can recognize in yourself, and second, so that you can avoid it. Knowing your goals is really important, but so is staying on track and not getting distracted. If you find yourself going off course, make sure to regroup and get back on track as soon right away.
You need to make a commitment.
There are hundreds of books written about having the mindset for success. You can find chapters upon chapters on the topic in books by Napoleon Hill, Tony Robbins, Robert Kiyosaki, to name just a few. Recently, in re-reading the New York Times bestseller “Secrets of the Millionaire Mind,” by T. Harv Eker, I came across a passage where he discusses the differences between wanting and committing to being rich.
Now this is not a report about how to become rich (though I’m not stopping you from making that part of your vision). The point I want to make is that merely wanting something probably isn’t going to get you very far. Desiring it certainly suggests something stronger… But committing to realizing your vision, has a whole different meaning. When you make a commitment you are saying “I will do this… I will make this happen.” And it’s that which is so crucial in making your desire to have a passive income a reality.
Let me give you an example about commitment. A couple of years ago, after our daughter started going to preschool, my wife thought it might be a great idea to start biking to work and dropping our daughter off at school, a few blocks from her office. We live in one of those progressive cities where people bike a lot. Now she could have done one of two things: a) she could have chosen to be a fair weather biker, only doing it when all the conditions were just right (it rains a good bit in Portland, after all)… or b) she could have made a commitment to do it no matter what. She chose the commitment route, something that makes her feel great about herself and which, I’ve got to say, impresses the heck out of me too.
Diversify Your Passive Income
Diversifying income streams, passive or otherwise, is usually a pretty smart move. And, because of the simplicity of passive income concept, it seems like a no-brainer here. Let me explain what I mean.
Why do people diversify their investments? They diversify for protection. They diversify for insurance. That same notion holds true in creating passive income streams.
I run in circles with lots of bloggers, who, because of the very nature of the way they have monetize their blogs, need to ensure they have multiple streams of income running simultaneously. For example some of their money might come from ads on their blog. Some of it may be the result of referrals and other affiliates links on their site. And perhaps a third income stream is the result of paid editorial content. For bloggers, each of these income sources on its own may be enough… but when combined they are much greater than the sum of their parts.
Setting up a business.
Assuming we’re not talking about a hobby here, then you want to make sure that you actually go through the necessary steps of setting up a real business. You want to establish a business entity like a sole proprietorship or LLC. And then make sure that you have the proper bank accounts and professional service providers enlisted to help you.
Why is this important?
We, in part, not having a true business entity set up can easily destroy one’s mindset. That is one of the many reasons that network marketers fail or give up so quickly… they don’t treat their new endeavor like a REAL business.
But even more important to note is that, as a business, you have MANY advantages that an individual simple does not have. Not the least of which is a huge TAX ADVANTAGE.
I’m not to go into this too much because there are plenty of practical guides out there to teach you how to set up your own business, but I wanted to make sure I mentioned it.