Editor’s Note: Here at Dispatches, we are always looking for ways to help our readers do things. For some of our readers, that means helping navigate the working world, for others, it means assisting in the ever challenging question, “what’s for dinner?” For still others, it means figuring out how to balance family life with everything else. In an effort to aid in all of these endeavors, we have collaborated on this article written specifically for our readers.
Generating a healthy stream of passive income from your business is the holy grail of most startups. They want nothing more than to set the wheels of business in motion and then just cream income off the top after having spent all that time trying to make the enterprise a success. It’s the ultimate way to build wealth and exactly what the most successful entrepreneurs in the world do. Millionaires and billionaires create their wealthy by relying on the passive income streams.
Thus, for entrepreneurs, getting a business to the point where it is generating a passive income is one of their primary goals. Once a company is smart a business residual, the entrepreneur can then focus on a new project, while using the money from the old project to fund the venture. Perhaps the best example of this is the one provided by Elon Musk. Musk, co-founded Paypal, built it into a multi-million dollar company, and then sold it for a $100 million once it was clear that the firm would be able to run itself. He then plowed that money back into the two ventures he’s known for today, Tesla Motors and SpaceX.
Generating a 100 percent passive income is perhaps a myth, unless you sell a company and reinvest the money elsewhere. Most entrepreneurs have to stay on top of existing business enterprises, stepping in to make big decisions or reinvigorate the direction of a company. But the key here is to automate as many processes as possible so that the human labor element is reduced as low as it can go.
For entrepreneurs, just starting out, the idea of turning a business into a passive income generating machine seems a long shot. But there are things you can do now that will help set you up for passive income in the future.
Streamline Your Systems
Entrepreneurs at startups soon discover that it’s not the advertising or the marketing that’s the big problem they face, it’s a lack of organization and inability to get a grip on processes. Businesses constantly have to wrestle with technical issues and manage headaches that can sap owners and managers of time and energy. The problem with all of these hiccups is that they can slow a business down and prevent entrepreneurs from ever transitioning over from active manager to passive beneficiary.
Entrepreneurs who rely on residual income models use multiple strategies to help minimize the time that they are in the office. One of the ways that they do this is to streamline their collaborative systems by using modern apps and software. Take Slack, an app that allows businesses to keep conversations open and searchable all from one digital location. You can also consider Trello, a tool that allows members of your team to communicate with each other about the stage that they have reached in a given project, making communication more transparent and timely.
Constantly looking for ways to fine-tune your processes means that you don’t have to resolve issues on the ground. You can, rather, leave the rest of your business humming along happily as you look for opportunities to expand or start a new venture. If you’re looking to build wealth, your core goal as an entrepreneur should be to create systems that allow you to go from an active to a passive recipient of income.
Grab Plenty Of Virtual Assistants
Virtual assistants are a new and clever business model, all made possible by modern communications, that allow entrepreneurs to save on both time and cost. Essentially, a virtual assistant is a person located outside of your business who you can get to do some of the tasks that would otherwise end up taking up your precious time. Virtual assistants aren’t just the preserve of the busy executives of big corporate firms. They’re also helpful for the average business owner who doesn’t want to get snowed under by piles of paperwork and having to spend hours organizing their schedule every day.
The scope of services that virtual assistants can offer is surprising. They are able to provide practically any service, so long as it doesn’t require them to be physically present at your business. This could include things like making calls to clients, sending emails to customers, managing payments and invoices, and doing some of the routine administration. Virtual assistants are a great way to avoid paying for a new full-time staff and free up time for you to focus on other tasks.
Outsourcing, therefore, helps to reduce the complexity of your business and save a lot of time in the long run. It’s yet another way to generate a passive income from a business and transition away from a more active role.
Rent Out Your Stuff
It’s worth remembering that you don’t always have to grow a business to generate a passive income. You can also use your business’s assets to create a passive income stream all by themselves. For instance, if your business has conference facilities that aren’t used on certain weekdays or at the weekend, rent them out to other organizations. Or if your company maintains a workshop, hire this out to locals startups when you’re not using it so that they can develop their products.
Renting out stuff is now more convenient than ever for businesses, thanks to a host of online “sharing economy” platforms. These platforms allow companies to advertise and rent out pretty much anything they like and make a steady income on the side.
The opportunities to make a passive income through businesses are often just waiting to be exploited. There are many routes to generating a passive income, from business royalties, to providing credit to customers. These methods are ultimately how the wealthiest people in the world got to where they are today. So why not emulate them?