Today we’re talking all about passive income versus active income, and what that can do for your creative business.
Once you see how much time you can get back by creating a little passive income for yourself, you’ll definitely want to start down the road to making passive income from digital products, courses, or by using something like drop shipping (if you are an art-based business) to make your life easier.
We all want more time, right? And creating passive income is going to help you to achieve that.
Listen to the episode below:
Personally, I worked in my business for eight years as a photographer and web designer until a couple of years ago, when I finally made some changes. But basically, everything that I did during that time was active income. This meant that all of my time was tied up in doing client work. And I really had very little time to devote to my own projects.
I didn’t realize this at the time, but I needed to make passive income to free up some of my time. Honestly, I thought that I needed to be more productive. So, I searched for pockets of time when I wasn’t working, usually late at night, and I ended up working for hours and hours non-stop, really never letting go of anything. You know…just working from the moment that I woke up to the time that I went to bed. And this led to horrible self-care habits. I’m still trying to break some of those habits. Although, I’m a lot better than I was. But you know, always room for improvement. Habits are definitely hard to break. But I didn’t realize that there was any other way to make money at first.
I actually made a course back in 2014, but I didn’t know that I could sell it again to make more passive income. Active income does not mean that you have to be a service-based business. You can be a service-based business or you can be a business where you create something, and you are spending all of your time creating new stuff that you can’t sell over and over again.
Or you’re spending a lot of time working with customers where you should automate or somehow make parts of your process where it’s more passive.
It’s not to say that you have to be a service-based business to only have active income. It can be anyone who has an art-based business. Active income means, really, that you’re trading your time right now to make money. So when you are trading your time, and you’re making money directly from that time that you just spent, that is when you are making more active income. And you then have to repeat that process all over again with a new client or a new customer to make even more money.
So, you’re not using the same product that you’ve created once and then making money from that product again and again, without having to put in more work upfront. You’re just creating it over and over and over and over. So you’re creating something different, or you’re creating maybe even the thing, over and over again. And it’s all custom. And it’s taking all of your time right now. So, you’re basically starting from scratch each and every time.
Where I see this come into play for my clients is when they’re making a bunch of one-of-a-kind-paintings. Maybe they’re making one-of-a-kind jewelry pieces or knitwear. And they’re creating something new every single time but never figuring out how they can reuse their work to make money more passively.
When they do this, and when they’re doing the shipping side of things, maybe they have to package up all of their pieces. They have to get it all out in the mail. And this is taking away from working on things they want to work on. So they’re spending all of their time fulfilling orders from Etsy, or they are doing it for whatever type of shop that they have, rather than focusing on the other projects that they’ve had on their mind to do, like for instance, licensing their art.
Passive income means that you create something once, then you sell it over and over and over again, and you make money every time you sell it.
Depending on your business, your niche, your personality, your audience, what you create for passive income could be completely different than what I create for passive income.
Currently, I am making classes, courses, templates, and all of those things are bringing in passive income. I also do some affiliate stuff, and you might choose to do something completely different for your business. Passive income looks different for different people. It’s different for various businesses, and it really depends on you. But basically, it’s just when you make something one time, but you continue to make money from that one thing over time.
One of my favorite ways to bring in passive income is through making classes for Skillshare*. Now, you know that it can be a passive income stream when you create something once but you still profit off of that thing months or years later.
At the beginning of last year, I created 4 Skillshare classes, then life sorta got in the way of me making more classes during the second half of the year. But I still made money from the classes that I had already created. Over time, that money did start to dip lower each month, so this is not to say that you can make something and then never lift a finger to do any work ever again.
You might have to work on other things, like marketing, but let’s face it…you have to market your active income too.
What passive income does for you, is that it helps you to free up some of the time that you’d use working actively to earn money. Ever since I started as a Skillshare teacher, I’ve been able to let a few of my retainer clients go. And eventually, I hope for all of my revenue to come from passive income sources, so that I can work on what I want when I want.
It’s not that I don’t find working with my current clients a joy, it’s that I would like to work on the projects that I’m passionate about and that brings me a lot of joy.
Creating passive income might require you to spend a lot of time upfront to create something, though. Again, to continue with my Skillshare example, I will often spend one full day up to one week creating a Skillshare class. It depends on how long the class runs and what the subject is, as far as how long it will actually take me to create it.
Somethings are easier for me to create, as the subject of the class comes to me naturally. Other classes that I’ve taught have taken longer because the subject matter needed more research or because I wanted to create something really unique.
So, when you create passive income, you will likely spend a lot of time in the beginning getting something ready to sell. Then, after you’ve finished creating it, the rest of the time will be spent in trying to market that item.
Then it sort of becomes a cycle of making something new, getting it up for sale, and then marketing the item. Then you can decide whether or not to continue to market that same item over and over again, or to create your next new thing.
The biggest difference for me with passive income is that if I want to take two weeks off, I don’t have to let anyone know or close up shop with my passive income. I can continue to let things run when I am taking a small break or traveling, and the money will still continue to come in.
So, I love this model of creating money and I’ve devoted the past year to creating more passive income. This year, I’m doing the same with my business. I have several courses and programs that I’ve created that I will continue to sell throughout 2020. I’ll also focus on making more Skillshare classes to continue to build my library there.
Now, here’s a few questions to ask yourself this week:
Do you want to implement passive income in your business?
What will you do with the time that you free up?
And are there any specific products or courses that you can think to make off the top of your head? Write them down so you don’t forget them, even if you’re not going to get started right away.