According to Gallup, one out of every five new businesses closes within its first five years. What's worse, eight out of ten entrepreneurs shutter their business within the first 18 months. While these sobering statistics should not discourage you from living your entrepreneurial dream, the numbers make a good case for creating multiple revenue streams. It takes back up bucks to fund your back up plan.
Regular extra income can help you mitigate marketplace risk and protect yourself from being put out of business by an unforeseen industry disruptor. Ideally, your side gig, once you get it going, should be low maintenance.
Author and marketing maven Dorie Clark, who wrote the best-selling books Stand Out and, most recently, Entrepreneurial You, excels at building passive income streams. For her, the advantage is not just financial. Sidelines, Clark notes, can help you "move away from the treadmill of overwork and burnout."
1. Monetize Your Mind
John Lee Dumas, executive officer of Entrepreneur on Fire, recommends starting your passive income ventures by answering three questions:
• Who do you want passive income from?
• What is valuable enough for them to pay money for?
• How can you create or offer that value?
The first step on the path to passive income is often to develop a following. Clark suggests building trust by offering free content, podcasts, blogs, contests, videos - whatever you are most drawn to. Start with content creation and monetize those channels through advertising and sponsorship opportunities. You can also generate affiliate income through your blog by sharing your contacts with other like-minded professionals.
Developing a membership community for your followers is a great way to share your knowledge and stay connected. A membership model helps build your expertise. Why let people "pick your brain" for a cup of coffee when your expertise is worth so much more than a cup of Joe?
2. Actively Build Your Passive Income Stream
A passive income stream is like a pipeline: You have to do the work up front for the money to start flowing. Write a book, start an online course - choose ventures that will allow you to receive residuals over time without too much additional effort.
Joe Puluzzi, author and founder of Content Marketing World, found his opportunity in audiobooks. "I have three audiobooks right now that exclusively sell through Audible. " Puluzzi explains. "As more people consume audio content, creating an inventory of audio products provides an ongoing revenue source while you sleep."
3. Turn Your Followers Into Customers
Content creation is one of the best ways for people to get to know and learn to value your perspective. The content can be a series of blog posts or articles for an online magazine or trade publication. Don't have the Hemmingway gene? "Try something else that taps into what you are good at," suggests Clark. "Like doing an interesting video series, interviewing experts on a podcast or creating an online course about a topic that will interest you and your audience."
4. Interview Others to Build Your Influencer
Podcasting is one of the fastest ways to grow your network and your net-worth. Not only do you build up your street cred with followers and new listeners, you can make some great connections by inviting influencers to come on your podcast
"My podcast has been a great tool for my business," says Thom Singer, founder of the podcast, Cool Things Entrepreneurs Do. A professional speaker and master of ceremonies, Singer says, "Having a regular audience for the podcast exposes people to my speaking style and the variety of topics I cover"
Singer's podcast has helped him cultivate valuable influence. "While I do not make much money from advertising, the show has opened up many doors that have lead to direct business. People who listen to the show and other podcasters I have met have referred me to speaking opportunities."
5. Establish Yourself as a Thought Leader
Clark recommends building an audience of dedicated followers and leveraging your network to grow your influence and eventually, your revenue. She hosts regular dinners with clients and friends, where she expands her network, connects her connections, and becomes the nexus for other thought-leaders to connect. Forging a reputation as an expert and an influencer will help you in all your business ventures, whether it's a sideline or your passion project.