What was originally intended to be a single blog post, has evolved into a four part series that we’re excited to share with you called ‘Passive Income For Creatives’. In this series we deep dive into our favourite topic: passive income and how to turn your existing knowledge and skills into marketable products that provide limitless earning potential. We’re kick-starting this series with a look at what exactly is passive income, its benefits and why it’s such an empowering revenue source for service based business owners.
As creatives, we find ourselves in this new, somewhat unknown and rapidly changing landscape of business. In light of recent events, which could initially cast shadows of uncertainty for many of us, it’s brought to light the importance of income diversification as a financial safety net. Passive income is increasingly becoming a hot topic amongst creative business owners, and its value and merits have never been more relevant than today. Whether you’ve suddenly been forced to pivot your services or if you’ve been meaning to diversify revenue sources for some time, introducing passive income streams into your business has never been more timely.
Why we love passive income
At Moyo, we are incredibly passionate about passive income and its power to offer financial freedom whilst importantly serving others in the process. In fact, it’s one of my favourite subjects as it was a key focus of the model for our own business. Primarily, this is because we love to travel and our dream was to have a creatively fulfilling business that could support the lifestyle that we wanted to lead. For us, that meant being able to work and travel at the same time, but for you it could also mean more time to spend with your family, pursuing other passions or doing more of whatever lights you up most.
Not only does it have the potential to be a sustainable source of additional revenue, but it can be scalable too. (More on that later.) In the past, we’d been at the mercy of business burnout, we were on our knees and reached a ceiling with our work output. We couldn’t physically work any more hours, our business consumed all of our time to the point that it completely dictated our lives. We knew that for this to change, to flip the balance, we’d have to find ways of leveraging passive income in our business.
What is passive income?
Before we get into the ‘how’, firstly we’d like to get clear on what exactly passive income is. In case you weren’t familiar with this phrase, the term ‘passive income’ refers to regular income that requires minimal effort to maintain. Traditionally this used to come from asset ownership such as houses, stocks and shares, where those assets earn yield rental income, dividends etc. However, we now live in a remarkable time where we can create our own assets in the form of digital products.
Traditionally income or salaries are compensation for the hours you work, based on the simple trade of your time in exchange for money. As a creative service based provider, you may charge a fixed hourly rate or a set amount per project. To increase income, you can either take on more clients, raise your rates or do both. Depending on your plans to grow your business, when your income is derived purely from client work it can be difficult to scale without either risking burnout or investing in hiring or outsourcing.
As a creative business owner, you can generate passive income by turning your service and skills into a product. This can be in the form of various digital assets such as templates, e-books, blog posts and courses. By adding passive income as a revenue stream, you can leverage it to reach bigger income goals whilst also relieving some of the stresses that can sometimes come when you’re on the constant treadmill of client work.
Having a steady stream of passive income means that you can also be more selective with your client work. Rather than having to take on clients to your max capacity, you can choose to pick only the clients and projects that fulfil you and light you up.
The word ‘passive’ implies that very little has to be done, and so firstly we’d like to preface this by saying that creating passive income does require an initial investment of time and hard work. As with most things, you also get out what you put in. However, it’s important to remember that with digital assets you have the potential to earn revenue from your creation, long after the initial investment is made.
Unlike client work, where you’ll receive payments in various stages of a project, it may well be that you don’t see an immediate return for your hard work. However, thinking of things from a long-term perspective, once your asset is created it has the potential to sell time and time again. As long as your product maintains relevancy, it can continue to sell years later, offering a limitless potential to earn you revenue long after you originally created the asset.
One of the most liberating benefits of passive income is that you don’t have to be at a certain place at a certain time to earn. You can earn money alongside your regular client work, or even better when you’re on vacation at the beach, playing with your kids or (everyone’s favourite) when you’re asleep. Not only can passive income help to achieve financial freedom, but it can also offer a financial lifeline too. As creatives where we often rely on client work, there will be seasons where business is slow. Clients may unexpectedly pull out or there may be times when you’re not able to earn income at all as you’re on vacation or off sick and not able to work. In times like these, passive income is a buffer that can give you peace of mind and help to ease unforeseen financial pressures.
Unfortunately there is always the potential for reasons beyond our control that our seasons of business take a sudden turn. Whilst we cannot control world disasters or single handedly manipulate global marketplaces, what we can do however is implement systems and strategies in our business that can offer a safety buffer and help us to ride the storm. World pandemics aside, passive income frees you from the constraints of time and place. When leveraged effectively, it can truly help you to achieve financial freedom so that you can live your life on your own terms.
Despite current circumstances, we are living in an amazing time. For those of us with the privilege and good fortune to be able to tap in to these opportunities, we have the chance to earn money doing something that we love whilst making a positive impact at the same time.
Header image taken from The Madeline Collection