If I would not have been successful establishing passive income streams as an entrepreneur, I definitely would’ve been a full time freelancer rather than sticking it out as an employee in Corporate America.
I don’t mean to imply that freelancing is relatively inferior, and that working in Corporate America is an absolute sin, but rather that MY personal preferences are different.
In fact, I recently took up an offer with a publicly traded billion dollar company for a very special and interesting initiative. In addition, although very selective and for a very high price tag, I also freelance every now and then.
Now that I have proven that I didn’t mean any disrespect, I certainly prefer working on building passive income streams. And because I absolutely love the idea of freelancing as well, I have dedicated this post to demonstrating a few ways freelancers can establish passive income streams rather than solely relying on trading their time for money, or hours for dollars as I like to call it.
I love the freedom, flexibility and financial rewards that freelancing can bring with it. I have written extensively on how freelancing increases your effective wage rate and gets you more time off from work annually at the same time.
That said, acquiring clients is an ongoing initiative. In addition, income stops flowing in when you stop working. Predictability is hard to come by, and without a steady schedule or work flow, it can be difficult to anticipate peaks and valleys in your work load.
Whether freelancers charge hourly or by project, payment depends on completion of either. There are some ways however through which freelancers can get away from the direct correlation of hours to dollars and supplement their cash flow with passive income streams from activities related to their disciplines.
Sure, establishing passive income streams involve unpaid time and effort upfront, but long term rewards certainly help increase the ratio of overall income output to time input.
Sell Residual Services on the Side
In the retail industry, the best customer is always the existing customer who has already bought from the business. In freelancing, when you are working for a client, you already have your foot in the door per-se.
Identify opportunities to cross sell products and services that are relevant to your discipline and your client’s needs. Products and services can either be sold for a one-time income or ongoing residual income depending on what you sell.
For example, if you are a CPA working as a freelance tax preparer, offer your clients a subscription to your newsletter or membership site where you publish valuable information on tax planning. This is a good opportunity to supplement your one time income from preparing tax returns to establishing a residual stream of income from subscriptions.
Although not completely passive, your income from subscription will increase the more clients sign up for your services. It is a scaleable income model, and one that has no limit on potential earnings. The result is an increase in your effective hourly wage rate.
You will also build an income producing asset in the process, which is your email list of targeted and interested clientele. Of course you need to make sure you are delivering value. But if this is your profession anyway, there should be no problem doing that.
Another example is selling or reselling domain, hosting, newsletter and similar services to a client. As a web designer or developer, you can sell the infrastructure your clients need to host, maintain and run their websites. Vendors like GoDaddy allow you to do just that. Both domain and host reselling pay residual commissions.
If you determine that your client can benefit from implementing a newsletter marketing initiative, you may recommend services such as Aweber which pay residual commissions to their affiliates. Similarly, many such vendors exist who’s products and services you can cross sell to your client.
The bottom line is, identify what your client needs, what can make their life easier, and then find a way you can offer these services and benefit from it. Because you are the subject matter expert, chances are that you are more aware of relevant solutions than your client is.
Sell Your Work
No matter what discipline you practice in, there is a market for pretty much anything out there. If you are a programmer, you can sell incomplete or unused files you have developed online. If you’re a photographer, you can sell your images to stock photography websites.
Selling creations of your work is a great way to supplement your income from freelancing. With a planned approach, you can even establish a passive income stream by selling your work on a non-exclusive basis.
The theme of this blog Thesis is a great example of this. The developers of this theme sell it on a non exclusive basis (available to everyone) on their DIYThemes website. Thousands of copies have been sold to date.
I recently blogged about selling your work and earning passive income in my post titled Creating Passive Income on the Side.
Sell Your Expertise
Through your course in freelancing, if you happen to stumble upon a niche or areas in which you have worked extensively, you can sell your knowledge and expertise to other clients in the same field. Because you have seen many clients try different things within the same niche, you can offer your diversified value in form of resources you create for that specific niche.
For example, if you are a web designer and have developed several websites for real estate agents, you may develop standard templates specific to the real estate industry and sell it along with consulting services geared toward helping agents leverage the internet to sell real estate.
Even if you can’t sell your consulting services, at least you can provide a website template customized for their industry. You can then supplement the template with a guide or ebook on how to edit and write content to market the website for a small fee.
I hope this post has given you some thought starters on filling your down time as a freelancer. Congratulations to you if you don’t have down time. You may still want to think about some of these ideas. Maybe you need to take some time out to implement one of these?
Time is scarce and we all have the same amount of it. It is how we use that time which differentiates output of one from another. If you are going to pursue avenues to establish passive income streams, I recommend focusing on one project at a time. It is easy to get distracted with several ideas and get none accomplished in the process.
What you ideally want is a pet project to work on in down times that can evolve into a supplemental stream of side income to your freelance business.