Okay, so back in August 2018 I posted my top 5 passive income ideas and presented it as a bit of a challenge, for both myself and my readers to follow.
My personal aim with this challenge was to make myself accountable for creating both brand new passive income streams from nothing, and also to transform my current business income streams into passive ones.
The latter is built upon years and years (the last 10, to be precise) of extremely hard work, with very little reward – it’s only through both personal development and the awareness of the importance of my time, and the hard work that preceded this transformation into an automated revenue source, that allowed me to make passive income here.
And, to be frank, who wants to learn about that? Do you want to sacrifice 10 years to be able to generate a modest passive income? Didn’t think so.
And to be honest, given the opportunity, I wouldn’t do it again either.
My mindset, over the past decade, has shifted severely.
From a workaholic entrepreneur, focused on building the biggest empire I could, reinvesting every penny in my business to allow it to grow.
Through to where I am today – understanding there is a huge difference between GBP and GB’Fuck You’P, and appreciating the importance and value of my own time.
There are far quicker and easier ways to generate a passive income online – and these are the ones I’m most interested in sharing with you here.
To summarise the 5 top passive income ideas from my challenge post (if you want to read more about each idea, click here), here they are:
- Create YouTube videos
- Become a Udemy instructor
- Become a lender on Funding Circle
- Trade cryptocurrencies
- Create a digital product
And which one has been the most successful for me?
Well, aside from the slow build-up of interest repayments from Funding Circle (which get instantly reinvested anyway, so that they can produce compound returns – I’m playing the long game with this approach), number 2 and number 5 have shown most success for me recently (although I didn’t stick strictly to a digital ‘product’ for number 5, more on this further down).
Here’s a summary of what I did for each of the passive income ideas under my challenge:
1.Create a Youtube Video
So, for this one I chose to do product reviews on some of the items we sell over at vitalifehealth.com.
I figured, if the video gets plenty of hits, it’ll be a double-sided benefit – we’ll achieve more awareness for the products we sell, make more sales, and be able to monetise the video with ads too.
It’s a win-win scenario . . . if you achieve the views.
Which they unfortunately, did not.
The most views one of the videos got was 250+, which is obviously nowhere near the minimum Youtube level to even turn-on monetisation, and even farther away from earning a meaningful income from Adsense revenue and product sales/referrals.
Undoubtedly there is a ton of money to be made on Youtube, but to get there you have to be one of the big players (the average earning potential is around £1,000 per 1,000,000 views – so we’re talking 10s or 100s of millions of views to make any meaningful level of income), and to be one of the big players you have to be churning out interesting, engaging content daily – which goes against the principles of a passive income.
Like I mentioned in my original passive income ideas challenge post, if I try a passive income idea, and it turns out you have to pile a ton of time and effort into the concept to not just get it off the ground, but to sustain that income once you’ve started to generate it (which, by standard business practice, is a given), it gets ditched.
My goal is to seek out the most effective passive income techniques, not to start other time-sapping, regular entrepreneurial ventures.
I’m effectively trying to find the holy grail – a business that doesn’t need constant time and attention to sustain beyond the setup process, doesn’t require the funding of a small Country to setup, and one that, forever thereafter, generates consistent income at a meaningful level.
The brief isn’t easy. So I expect, and have already experienced, a lot of dead-end experiences like the one I had with Youtube videos.
Onto the next idea . . .
Income generated: £0
2.Become a Udemy instructor
This one I had already got a head-start on when I created the original passive income ideas challenge post, since I already had a live, income-generating course over on Udemy.
So my challenge was to follow this up with a second Udemy course – and in late 2018 I did just this with my course ‘Boost Productivity: An Entrepreneur’s Guide’.
I always take the strategy with my courses to make them free during the first few months, so they can build up some reviews/feedback, then switch them to paid once they have some visible credibility in the marketplace.
Otherwise, I find, courses can sit there for months with no enrolments whatsoever – the Udemy marketplace is quite crowded, and noone wants to risk their money (even at the lowest price bracket of $19.99) on an untested, unreviewed course.
Due to the first 2 reviews on my second course only coming in at 3 and 3.5 out of 5 stars, I have had to keep this unpaid for a little while longer than I had hoped.
I’ve noticed on Udemy that they only really rank courses that have a rating of 4.5 or more stars, so switching it to paid with a rating substantially lower than this just wouldn’t produce results.
I briefly questioned the value that the course was delivering following the two less-than-perfect reviews, re-watched the whole course again, and felt confident that it delivered on what it promised, so persevered.
More recently I had a couple of 5 star reviews land for the course, which has bumped the rating up (beyond the category average) and just today I switched the course to paid at tier 7 ($49.99).
One thing to bear in-mind if you are going to create your own Udemy course is that in over 3,000 student enrolments for my first course, not 1 student paid the ‘RRP’ – not a single one! – I’ve only ever made sales during Udemy promotions and, to a more limited extent, via my own coupon issuing and promotion.
This was even true when I priced my course at the lowest bracket of $19.99, people were only paying $10 for the course on promotion. In fact, I had more sales when I boosted the price to $99.99, because the promotions were still offering it at $10 – making it look like a much better discount than when it was priced at just $19.99 RRP.
Be aware of this when pricing your course – even if you price at the very top tier ($199.99), most sales will probably come through at around the $10 mark. So to make a meaningful passive income here, the key is volume of sales – so either choose a popular category that doesn’t have a great deal of competition already (hard to find, by the way!) or be prepared to launch a number of courses, and not just rely on one.
Meanwhile, my first course has been consistently delivering around $150 per month in passive income, following this same launch strategy that I employed for my Productivity course – so fingers crossed, I can bump this passive income channel up to $300pm once the second course gathers the same pace.
I’ll then look to build on this some more with further courses in the future.
Income generated: $150pm
3. Become a Lender on Funding Circle
Again, this is one I had a bit of a head-start in prior to launching my passive income ideas challenge in August 2018 – I’ve been consistently lending and feeding any spare savings into Funding Circle since around September 2017.
One thing I’ve learnt about Funding Circle investing following my first full year at it, is that, the first year is normally the best in terms of annual return (I averaged 7.9%pa after fees and bad debts).
You have to remember that you are lending your money to mostly small, entrepreneurial businesses – they are taking risks with these funds, and sometimes those risks don’t quite work out – leaving debts unpaid (bad debts).
Typically, you’ll not see any defaults (bad debts) from borrowers within the first 6 months, but thereafter, you’ll experience a ‘correction’ period as some of the borrowers start to run out of capital and fail.
This is where your projected annual return will also start to ‘correct’ and typically fall (Funding Circle are quite open and honest about this phenomena – and show that returns can dip throughout years 2 and 3 due to this, but then rise back steadily thereafter as some bad debts are recovered).
After almost 18 months of lending, my annual return has fallen from 7.9% to 5% after fees and bad debts, and now currently sits at 5.2% after a slight recovery.
Funding Circle should always be viewed as a long-term strategy, and one that you consistently top-up with additional savings. The more you put in, the more you get out, and when you also feed what you get out straight back in (via their fully-automated bidding tool), your returns start to compound, and over time, that’s when figures can really start to become interesting and a modest 5-8% annual return, on an initially modest amount of money, starts to look anything but modest.
Surprise yourself, and use the The Calculator Site’s compound calculator to project your own returns.
Income generated: 5.2% pa on capital invested
4. Trade Cryptocurrencies
I still think cryptocurrency has huge potential, as does blockchain (we’re already seeing big companies like Amazon launch their own technologies built on or around blockchain), just perhaps not so much so in the area of speculating on their value – the days of huge rises (and falls) I think are mostly over, as the concept of cryptocurrency matures and they find their useful place within the economy.
More interesting investment opportunities in the way of FOREX trading are situations such as that in South Africa where they seem to be replicating the fate of Zimbabwe in forcibly stealing land back from white farmers (who have actually financed their land and farming operations with loans from the South African banks), and when removed from their land, will default on these loans – leaving the banks, and therefore the Government, with a big black hole in their finances.
This will pretty much leave them with one option – print more money. Which will cause inflation. Which will negatively impact the value of their currency (ZAR).
The only difficulty I’ve had in exploring ways to exploit this is that all retail trading platforms don’t seem to offer an easy/simple way to ‘short’ on a currency.
If anyone knows how this can be achieved at a retail trading level, please leave comments below. I’d love to hear how it can be done.
Income generated: In the last 4 months – £0.
5. Create a Digital Product
This is the one where things got interesting – I had a lot of fun on this one.
Okay, so the first thing to explain is my approach here.
In the end, I didn’t go with a digital product – I didn’t like the upfront investment of both time and money that it required, and the fact that I’d have to offer some form of aftersales support thereafter.
So, how do you avoid these burdens?
Become an affiliate instead.
At first, I was thinking along the lines of becoming an affiliate for an existing digital product. Then, my mind switched to Amazon’s affiliate program.
Why?
Because Amazon sell everything under the sun, and no matter what the customer buys, provided they go through your affiliate link and order within 24hrs of clicking your link (used to be a 30-day cookie, but hey ho), then you get paid for it (somewhere in the region of around 5%).
I know this because one of my old niche sites teareviewblog.com used to display Amazon affiliate links to teas (naturally) but I remember seeing payments on our statement once for a dildo (who switches from artisan teas to dildo-shopping?? Teas must really put that person in the mood) and vegan shoes (yes, they exist).
So with this in-mind, you can see how the Amazon affiliate program opens up your revenue potential far beyond that of the products you’re actually directly promoting.
So, my original plan was to setup an Amazon affiliate ecommerce site and promote it via CPC advertising, organic search, and a little social activity.
In order to make the financials work, I had to choose a product category that included some high ticket items – since I’ll be spending a fixed amount per click to bring the traffic to the site, and I’ll be getting paid a %age (around 5%) of sales that get completed.
Starting a 99p store on this model just isn’t going to stack-up.
So after a little research, I landed on the product category of tools and DIY. It has a good number of high-ticket items (power tools, mowers, and so on) with a good selection of lower-ticket lines to cross-sell as complimentary items (saw blades, hardware, building materials and so on).
I also did a little research on price competition in this area, and Amazon were really keen on pricing in most of these subcategories – putting us at a distinct advantage over other online DIY retailers, since our range and prices would be Amazon’s.
To highlight this pricing advantage, I chose the domain bandwho.com. Rhymes with the name of the huge DIY retailer B&Q, and is like ‘B & Who?’ – as in, who are they? Our prices will have you forget about them.
I chose this for PR, mostly. If we can get under B&Q’s skin with this approach, and the similarity of our logo (below), then we may be able to drum-up some media interest in the conflict it creates – and media interest can equal high quality backlinks from credible online sources, just what you need to rank higher in the organic results.
But I didn’t want to rely solely on this potential media interest to make this project a success, so I also bought the domain cheapdrills.co.uk (after a little research on Google’s Keyword research tool to show me some good high volume, low competition terms in the industry).
From experience with niche sites, I know the keywords in your URL can have a huge impact on your rankings – I also chose the .co.uk suffix for this project, since we’ll be targeting just the UK audience, and it may help with rankings in this locale, more so than a .com suffix.
To double-down on the media approach, I also figured we could annoy the heck out of Sean Paul – of all people – by posting some funny memes across social media about his love of cheap drills.
This isn’t a random attack on Sean Paul – I figured his similar namesake song ‘Cheap Thrills’ with Sia, made it a perfect punchline (for those with an exceptionally childish sense of humour).
As for the actual site infrastructure, I built it using WordPress (my Udemy Course Fast Track Entrepreneur: Start an Online Business in 4 Weeks covers step-by-step how to setup and install WordPress on a domain, if you don’t know how to do this bit).
I then installed the ‘Kingdom’ theme and the ‘Woozone’ plugin – which allows you to directly import products from Amazon into your site, and runs on Woocommerce. I bought the theme and the plugin as a bundle for $70 from Code Canyon here.
Much of the development time was spent on the ‘insane import’ module of Woozone, drawing in over 5,000 related products and organising the menus to show meaningful categorisation of this vast catalogue.
Then it was a case of forging ahead with the promotion of the site to bring in the traffic.
I setup an Instagram account and immediately incorporated this on my ‘Followliker’ Instagram edition software – which auto-follows related accounts, auto-likes related images and so on, to gradually increase your following and awareness on Instagram without you having to spend every waking moment on it.
Next step was to setup some form of CPC advertising. I started with Adwords – and those with more affiliate marketing experience than me will immediately know right now, that was a mistake.
Google are super, super strict when it comes to affiliate sites.
I knew this when I signed-up, and I read through a version of their ‘bridge page’ policy which advised that you need to own the full checkout process, with the only exception being where visitors are channelled away to, say, PayPal, or any other payment processor, to complete their purchase with you.
Now, Woozone works in a way that you have a cart on your website, so customers can read about items, add them to their cart, and continue shopping – it’s not just a case of channeling traffic straight through to Amazon following a click on a product.
In this sense, I kind of felt there was an argument that Amazon are effectively like our payment processors, and only the very final stage of checking out is completed with them – just like it is with, say, PayPal checkout.
Google thought not.
They suspended my account, and the only other workaround I can fathom is to turn on Woozone’s dropshipping tool – where checkout is owned fully by you, and you take payment from the customer, but then you have to manually place the order on Amazon, on behalf of your customer – you effectively just apply a ‘tax’ ie your markup, to all Amazon items, and that’s how you make money with this approach.
Aside from my questioning of whether this would sit comfortably within Amazon’s own purchase terms, I just didn’t like the idea of having to bump-up the price to the customer in order to make money on the sale – it renders your platform non-competitive, you always lose on price competition to Amazon, and also the non-passive process of manually processing orders for customers – I then thought about having a module custom-built that would place these orders with Amazon in an automated fashion, but the pricing issue still wouldn’t be overcome.
So I have to stick with the affiliate model, and not transfer over to the dropship model.
Next idea: Bing ads
Bing are far less stringent in their approval process for Shopping ads – and I got approved here just today! So it’s too soon to report on any metrics or the performance of the ads – but I’m super-pleased I still have this avenue open to create traffic for my affiliate site.
NOTE: One important point I did notice with Bing, and this probably explains their leniency regarding affiliate/bridge sites, is that they themselves are affiliates of Amazon – so they’ve gone ahead and signed-up for an affiliate account, created a shopping feed to display on their own search engine platform (which, I’m guessing, will cover the entire Amazon catalogue of goods), and earn commissions from referrals.
I can imagine it’s a big money-spinner for them – but what it does mean for us smaller players is that you’ll always be competing with direct links from Amazon, and Amazon aren’t the guys with the ad spend budget – it’s Bing themselves. So don’t even think of trying to outrank the Amazon shopping listings you see on Bing.com – just accept that you’ll always be at least 2nd, 3rd, or 4th in the shopping result rankings, and appreciate the fact that you’re still allowed to market your affiliate site this way.
You’ll still win traffic – since your price will be just as sharp as the direct Amazon links – you’ll just have to accept that Bing will be taking the lion’s share of traffic for your items.
Now it’s simply a case of watching the metrics on the Bing campaign and our Amazon affiliate account, making sure these stack-up financially, and continuing to try to piss-off the biggest player in the industry and an International superstar.
With the Instagram marketing alone, I have seen around £12 of commissions already be earned – which is far from noteworthy, but proves that the revenue model works in principle – now we just need to crack the traffic challenge, and we should see that commission figure grow accordingly.
I’ll provide updates on this project as time goes by. Stay tuned!
Income generated: £12 (very early days – this was just in the first week of launch with no CPC advertising running)
So there you have it – my full passive income ideas challenge update.
I’ll be updating my blog over time to show any further progress I make with these revenue streams.
I’d love to hear about your own passive income projects – please share them below in the comments.