Passive income is defined as money generated through businesses that are created and operated in ways that allow them to essentially run themselves. Many entrepreneurs are seeking new sustainable ways to increase cash flow, financial security and long-term savings through a multitude of ventures that require little active participation. These people are in luck because anyone with property, goods or services representing value to others can establish a successful passive business. While there is a lot of appeal in making money virtually while you sleep, passive income isn’t a means to “get rich quick.” As any passive income earner will tell you, it's a long term proposition that requires a great deal of upfront planning and effort as well as updates and enhancements along the way.
Real estate crowdfunding
For those who have always wanted to dabble in the real estate market but have limited financial and time resources to invest, crowdfunding, or crowdsourcing, could be your entry in. Crowdsourcing platforms take the investments of many individuals, some as low as $5, and pool them to make commercial or residential real estate purchases like hotels, medical facilities, apartment complexes or “fix-and-flip houses.”
There are also platforms that use investor funds to finance the debts accrued by real estate owners. With the former model, you become an equity holder and get returns on your investment; in the latter scenario, you earn interest from the financing your investment provides. Beyond strong dividends, the best part for investors is that they don’t have to deal with headaches like property maintenance or rent collection. Be advised that there are fees involved and some platforms require you to be an accredited investor, meeting certain income or net worth thresholds, before qualifying to participate.
Vending machine sales
As life becomes busier again, more and more people will be back to eating on the go. Technological innovations and the pandemic-fueled shift to contactless and cashless food and beverage options have turned vending machines into a major growth category. From hospitals to college campuses to office complexes, the demand for food-on-demand is strong, and contactless options — specifically smarter, more intuitive machines that dispense healthier snacks, drinks, fresh food and more — is where the industry is headed. The internet of things (IoT), or increased connectivity between equipment and devices, allows vendors to be remotely synced to their vending machines to track inventory levels and purchasing behaviors, which allows them to optimize accordingly. It also gives them access to machine earnings without having to physically empty bills and coins on-site.
To start, you will need to identify viable locations, obtain appropriate licensing and permits, purchase your machines and stock them with the product that meets the tastes and expectations of your consumers. Profits are highly dependent on your offerings, product margins and foot traffic — so consider each factor carefully. While daily earnings may seem minimal, sales can really add up over time with minimal effort.
Affiliate marketing
Affiliate marketing, which is getting paid for promoting another brand or product within your web content, has become one of the leading drivers of online sales. The power of its influence speaks for itself: U.S. advertisers are expected to spend approximately $8.2 billion on the pay-per-performance advertising model by 2022, up from less than $2 billion in 2010.
Anyone with a strong online presence and content that appeals to a particular demographic or target audience, be it a blog, social media account or email platform, can be a good affiliate or publisher and attract a share of a merchant’s advertising dollar. For every sale driven directly from your uniquely coded link to their site, you earn a commission. You can pursue relationships with individual brands or there are several well-known networks that play matchmaker, bringing affiliates and advertisers together based on certain filters and criteria.
Tool rental
If you have a treasure trove of basic tools or larger equipment like lawn mowers, snow blowers or power washers collecting dust in your garage, you can be sitting on a gold mine. Peer-to-peer tool rental can be highly profitable and a great additional income stream for anyone with a well-stocked toolbox, well-maintained machinery, and the power tools that most homeowners need from time to time but don’t want to buy. You can start spreading the word to local friends and neighbors on social media and community apps like Nextdoor as well as through dedicated apps like Sparetoolz that serve as a platform to manage secure communication and payment between renters and providers.
Many of these opportunities are as easy as taking great photos, creating a detail-filled listing, booking reservations and then reaping the rewards.
Online course sales
If you have expertise to share with others and an engaging way of imparting your knowledge, there has never been a better time to put your teaching talents to the test. With technological innovations, a pandemic-fueled shift to e-learning and the need for continuous skill development, the global online learning market is expected to reach $374.3 billion by 2026.
Develop a course or series of courses that leverages your professional success or personal passion. Create a course outline that covers every important element that is integral to your target students’ mastery of the subject matter. The top online course marketplaces will help guide you through the entire process as well as provide a built-in base of prospective students, typically for a percentage of course sales. Once your lessons are produced and live on an e-learning platform, all you have to do is enjoy the sales that your course generates.
Car, home or pool rental
The very things you take for granted may be the things with the greatest potential to amp up your income on the regular. Peer-to-peer car, home and pool rentals are each their own revenue stream. They are the assets that many live without and can be of great value to those in need. There will always be a neighbor who has a kid home from college for the summer and wants a car to drive without purchasing one of their own. Or, travelers who don’t want to pay car rental prices or prefer the comfort and space of a home in their destination. Your pool could be just the thing that local certified swim instructors need to hold private classes or clinics.
In addition to word of mouth and local advertising, there are apps for that. You can make money with Getaround by renting your car while you’re not using it. You can list your home or investment property on Airbnb when you know you won’t be there. You can use Swimply to let others pay to feel like they're on vacay with pool access when you are busy doing something else. Many of these opportunities are as easy as taking great photos, creating a detail-filled listing, booking reservations and then reaping the rewards.
Dropshipping
The allure of dropshipping is that you can set up an online store curated with a niche selection of products without the hassle of stocking inventory, packing or shipping to customers. In this e-commerce model, you merchandise and market an assortment of items in an online storefront and your suppliers handle the backend and fulfillment. Globally, the dropshipping market was an estimated $100+ billion industry in 2018 and is expected to see a compound annual growth rate of nearly 29%.
To start, research what’s trending in the e-commerce dropshipping landscape. Once you’ve identified where the greatest opportunity lies, much of your success is in the hands of your partner suppliers, so be selective and fully informed about each operational element that will have an impact on your business and reputation from quality control to communication and consistency.
Downloadable digital art
There is a huge market for printable art — whether it be home and office decor, party supplies or graphics for online or social media aesthetic — and art-on-demand can be a great passive pursuit for digital artists. Whether your art form is photography or typography, you can use your original designs to create and sell art prints, stickers, party invitations, patterns, journal pages and more, all without having to print, stock or ship your goods. Your art exists as a digital file that others can purchase, download and print based on their needs. Create it once and it can sell forever within a marketplace like Etsy where many flock for unique art downloads.
Those with the greatest success in this space know and create to their niche, like boho wedding invitations and signage or interesting photos of coffee culture. Google Trends is a good place to identify genres or categories that are generating buzz in real time.
Storing others’ stuff
If you have unused space in your home, garage, attic, shed or business, why not rent it out to others in your area who are in need of clean, safe, accessible storage nearby? Approximately 13.5 million Americans rent self-storage units which cost an average of $89 per month; an expensive proposition for many. In the peer-to-peer model, charging 30%-50% less than what a traditional storage unit would cost someone could significantly boost your income if you have ample unused space for others to use. Sites like Neighbor and Stache are dedicated to connecting neighborhood renters and rentees and manage everything from payments to communication, and even insurance protection, for a fee. Beyond indoor space, your driveway can be a money-maker too, when you allow others to park a car, RV or boat, at a fraction of what they would pay for more traditional options.
App development
By 2023, mobile apps are expected to reach $1 trillion in revenue. App development is a hot and highly competitive category, but despite the popular assumption, there isn’t always “an app for that.” Approximately 30% of Gen X and Millenial mobile users report opening apps 21-50 times every day. If you can offer something innovative and trust-building, you can attain solid success in the app world. While the majority of effort is spent upfront conceiving, designing and building the app, you will have to make upgrades and improvements over time to keep your audience engaged.
Passive “appreneurs” take note: the overwhelming majority of apps and app-related revenue come from free vs. paid downloads, with monetization primarily tied to ads and in-app purchases. One major growth area to consider: on-demand apps where instant service and immediate gratification are always on tap.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
Follow us on Instagram for more expert tips & business owners’ stories.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
Join us for our Small Business Day event!
Join us at our next event on Wednesday, May 1, at 12:00 p.m., where we’ll be kicking off Small Business Month alongside business experts and entrepreneurs. Register to attend in person at our Washington, D.C., headquarters, or join us virtually!
