The classroom definition of passive income is regular income generated with little or no effort. Although this can be widely accepted, one cannot step aside from passive income generating sources and say ‘it will come anyway’ while you are day dreaming. The truth is in fact just the opposite. If one is idle about passive income generating sources, there is a possibility that it will dwindle someday into nothing. Therefore in order to ensure that passive income generating sources continue to give you inflow of money you need to follow the following basic rules.
- Identify the nature of the stream of income that comes from the passive income. This nature can be classified as ‘daily effort’, ‘monthly effort’ and ‘yearly effort’. An example for each of these is as follows.
- Daily Effort – Say you are a content writer, then you need to give in your write up every day or as agreed to ensure steady income from this source.
- Weekly Effort – If you’ve agreed to maintain someone’s garden for instance, then you need to visit and tend to the garden on a weekly or bi weekly basis.
- Yearly Effort – Rental income needs yearly maintenance to be done and this falls under yearly effort.
Hence passive income is not all that passive considering the literal sense. It needs your attention at various levels. In almost all cases it is not hard work that is required to ensure the continuity of the income, but having said that quality work is required.
- Know Your Competitors – Since this is an income that you receive with little effort, it is best to know your competitors because they may be putting in more effort than you and providing to more customers. Hence it is best to educate yourself on what is happening in your competitors world, how to overcome it and so on.
- Who Are Your Customers – Just because it is passive income one cannot sit back and relax and say, I have a customer and that will do. One needs to now the customer and understand his/her requirements. It is important to have a cordial relationship with your customers if not being the best of friends.
- Make Rules And Stick To Them – Since you are the boss of your business it is important not to stray around. Make your own rules and stick to them. Yes, they can be bent at times but you are the best judge about the level of flexibility. When people start understanding that you have great sincerity even about your small business, it appeals to them and it can take you to places.
- Create Value – This is the most important principle. Quality is the only way by which one can create value to what is being offered and this is the most important aspect to retain customers. Just throw shoddy out of your window and welcome completeness with open arms.
Knowing is something and putting it into action is another. Now that you know what to do and what not to do regarding your passive earnings, it is time to take corrective measures if you’ve been doing something differently or incorrectly.
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