Passive Income: the holy grail of side hustles?
Passive income is money that is earned without the need for a traditional job or trade. In its purest form, once a passive income stream is set up it continues to provide income without the need for additional work.
This could be in the form of setting up a long-term pension plan or instructing a broker to invest in the stock market. However, most so-called passive income side hustles are not really passive. They all involve regular maintenance to nurture and grow that income.
The opportunity to earn an extra source of income which needs little or no effort from yourself may appear very attractive. In reality, most passive income streams require an ongoing commitment to maintain and increase that income stream.
What are the most common “passive” side hustles?
- Print on Demand Platforms (POD)
- Websites/Blogging
- YouTube
- Low content book publishing
- eBay and e-commerce sites.
What all of these opportunities have in common, is that to be successful you need to commit a certain amount of time every week. The “passive” element is more about the way sales are made rather than how much time is needed.
For many of these methods there is little or no interaction with customers. You can make sales or affiliate income while you are at your regular job, on holiday or even fast asleep in bed. These sales are truly passive.
Sites like eBay and Etsy do have a more complex interaction with customers and suppliers. However, there are plenty of platforms that only require you to upload digital designs and to collect royalties when you make a sale.
How to choose a passive income stream?
In order to decide which option is best for you we need to break down how each type differs from the alternatives. We will not be discussing the investment or pension options here. Those require specialist advice from an independent financial advisor or qualified accountant.
1. What Are Print on Demand Platforms?
POD platforms are websites that encourage their customers to become designers and sellers of printable merchandise. This could be clothes such as t-shirts or phone cases and home ware. The three best known platforms are Amazon Merch on Demand, Redbubble and Etsy.
Are all POD platforms the same?
Although these companies offer similar services, each of their business models is subtly different. Etsy is the least passive. You need to arrange, supply of the merchandise, upload the designs and provide customer service. With Redbubble and Amazon Merch, the POD company handles everything for you. You upload your design and listing, and the company pays you a royalty payment for every sale.
Redbubble is a great place to start as anyone can apply for an account and you can be up and running in a few hours.
Best for traffic: Amazon Merch
Amazon Merch on Demand requires you to fill in an application form to request an account. Accounts are limited in number so there is no guarantee of acceptance. For those who get accepted, Amazon Merch is a fantastic opportunity to build passive income. In the long term that could add up to thousands of dollars per month.
Amazon Merch uses the same marketplace that we all know , so the potential traffic is massive!
2. Creating Websites/Blogging
Creating a niche website can be a great source of passive income. By providing articles and blogs on popular subjects, the author can drive traffic to their site. This traffic can then be monetized by using affiliate links, hosting adverts and offering digital info products.
Choosing the right niche (subject) and offering high quality articles is the key. Sites take time to reach their potential, so patience is needed.
3. YouTube Channels
Like websites, the key to YouTube is choosing the correct niche to base videos on. You then grow the channel by posting content that your potential viewers want to watch. To qualify for the YouTube partner program you need 1000 subscribers and 4000 hours of watch time.
You can also offer relevant affiliate links to products and use a service like Patreon to sell memberships.
By combining a good website with a compatible thriving YouTube channel, you can drive traffic in both directions.
4. Low Content Book Publishing
The main platform for this is Amazon’s Kindle Direct Publishing (KDP) platform which works in a similar way to Amazon Merch on Demand. You design the book cover and interior and Amazon does the rest. You can write traditional books or go for the lower content options such as colouring books, planners and journals.
As with Amazon Merch there is no customer service and you receive your royalty payments monthly. Given time, making several hundred pounds a month is possible with many people making $10000 per year.
5. eBay and Local Marketplace Sites
Although these are the least passive of all the options, it is still possible to make a decent profit with minimal effort. Selling unwanted personal items and flipping items found in retail and charity shops, the canny seller can build a profitable business.
Local online marketplaces can be more profitable due to the avoidance of postal costs, although the sheer scale of eBay provides a massive customer base to sell to.
Our Verdict
The term passive income is misleading as every job or side hustle needs work to set it up and maintain it. However, some so called passive income streams can become more passive over time. This allows you to combine multiple streams of income without committing more time to the project.
Having multiple streams of income developed over several years, will give you the best chance of making good monthly income with the potential to out-earn your regular job.
The sooner you start, the sooner you will get there, so start your own passive income journey today.
