Passive income is the holy grail of entrepreneurship, right up there with scalability. This is not a coincidence: when it comes to successful startups, scalability and passive income often go hand in hand.

But what exactly is passive income and more importantly, how do you generate it?

Passive income is pretty much exactly what you think it is: making money without doing much to earn it. Sounds pretty sweet, right? But let’s back up a minute, because this description is actually the result of setting up a passive income revenue stream. You still have to put in the work to develop it, which in some cases can be a lot, but at a certain point it continues to generate income while demanding very little of your time.

While there are a great number of different ideas for building passive income, they usually fall into one of four categories: Selling Products, Marketing Revenue, Investment and Added Value. Like most business ideas, time and money is usually involved, although how much of each is required varies widely by the type of passive income you choose to build.


Selling Products

Selling products online is one of the most common ways to build passive income, just like it is one of the most common types of entrepreneurial startups. What makes an online business that generates passive income different is that once you build out your product or service, it continues to sell without additional work – well without much more anyway. There will likely be site maintenance, accounting and marketing administration to attend to, but for the most part, you should be able to set and forget.

There are a number of products that can generate passive income: here are a few ideas to consider.

  • Write An E-Book: If you’re an expert on anything, you can write an e-book. From nutrition to online marketing to travel guides – and everything in between – the topics for e-books are limitless. And while you don’t have to limit yourself to non-fiction by any means, the e-books that often sell well are how-to books, especially if the author is already somewhat established as an authority on the subject matter. You can publish on your own website or third-party sites like Amazon Kindle Direct Publishing, and while you’re at it, why not release an audiobook version? You can also focus on shorter format e-publications like guides, which can cover everything from training manuals to life coaching to travel destinations.
  • Create An E-Course: Another way to leverage your expertise to make a passive income stream is developing an e-course or program. From learning specific skills such as digital photography or knitting to health and fitness programs, there’s a niche for learning pretty much anything. Again, having a proven track record or expertise in your subject matter is key, as is knowing how to create an online course, which you can start learning about from Hugh Culver here.
  • Develop Software: Creating a popular software program or app is one of the most lucrative opportunities for making passive income. Apps can be particularly powerful given that most people today are doing so much more with their smartphones. From scheduling software to photo layouts to tracking your calories, there are endless opportunities for developing software that sells – even things that might on first glance seem ridiculous. Take for example WeCroak, an app that reminds subscribers randomly five times a day that they are going to die, presumably in effort to shift their daily thought patterns and encourage mindfulness. Thanks to our dependence on smartphones, seemingly absurd concepts are being developed – and purchased – every day. If you can dream it, you can probably build an app for it.
  • E-Commerce: Setting up an online store can be labor intensive, but it doesn’t have to be. From selling stock photography or designs as downloadable files to drop shipping store fronts and print on demand style shops, there are a lot of options for e-commerce without the elbow grease. There are lots of options for easily selling your wares from Shopify, Cafepress and to Istock and more – just be sure to do your research and find the right place for your store.


Marketing Revenue

Another way to generate passive income is by monetizing your web presence through advertising and promotion. There are advertising platforms like Google AdSense that are commonly used by websites around the globe, but there are also other things you can focus on to attract advertisers. In general, however, the two main ways to generate revenue with online marketing are affiliate marketing and advertising.

  • Affiliate Marketing: These are commission-based programs that pay you for promoting products or services. You promote the product or service on your website, social media channel, E-Newsletter – wherever you are delivering content – and for every sale generated from your outlets you receive a commission. Learn all about affiliate marketing from online marketing guru (and successful entrepreneur and New York Times bestselling author) Neil Patel.
  • Advertising: As no doubt you are aware, advertisers will pay to place ads on your website, blog and YouTube videos. How much you can make will depend on your target audience, the traffic you generate and of course, the quality of your content. This article, although a little old, provides a good overview of how to generate ad revenue from a website. To learn how to monetize your YouTube channel check out this video and for more on how advertising on your website works, read this article.



If you have capital to invest – and especially if you have a lot of it – you can easily generate enough passive income to live on and never have to work another day in your life. But most entrepreneurs just starting out don’t typically have huge wads of cash just laying around. If they did, they’d be investing it and already making money rather than spending their time figuring out how to generate other types of passive income.

Regardless of your bank balance, investing isn’t something to be ignored because it’s worthwhile even if you only have small amounts to invest. And hopefully you will have more substantial sums to invest in the future, so it’s never too early to learn all about investing strategies. There are a lot of investment options available from simple high interest savings accounts and term deposits to stocks, dividends, cryptocurrencies, real estate and more.

This article looks at opportunities for those with just $1,000 to invest and for those looking at the real estate market, there are more ways to make money in real estate than simply buying and selling. And for a complete beginners guide to investing check out this article by The Balance.


Added Value

It’s also possible to make money on the things you’re already doing like browsing the web, online shopping and using your credit card. Although the additional cash you make on these minor transactions is not going to make you a millionaire, these small incremental increases are all adding to your total net worth. From playing games to online shopping and cash back on your credit card purchases, there are many ways to make money on the things you’re already doing or buying. Just be sure to shop around for the best rewards and always read the fine print.