You’re a consultant. You’ve got a consulting business plan in place. It focuses on finding more clients, serving their needs, building repeat business, and getting referrals to new clients. That’s a great start… but chances are your consulting business plan is missing one key element: passive income.
As a consultant, clients are the backbone of your business. But without adding passive income to your revenue portfolio, you’re missing the opportunity to make significantly more money in your business.
Here’s why you need to include passive income in your consulting business plan:
#1: Diversify Your Revenue Streams
Strong businesses have diverse revenue streams. If your business – or any business – relies on just one type of revenue (say… consulting revenue) then you’re at risk if that stream slows down. That’s why your consulting business plan needs to have multiple revenue streams. If your consulting works slows down, or you get sick, or you need to take time off to care for a loved one, your other revenue streams can kick in.
In my experience, the best way to diversify your revenue streams is to add passive income to your consulting business plan. When you turn what you know into e-books, webinars, and online courses, the revenue you generate will build your current income while at the same time providing a safety net for those times when your consulting revenue drops.
#2: Build Once, Profit Forever
This is probably my favorite reason for including passive income streams in your consulting business plan. When you create passive income products, you can build them once yet profit from them forever (or at least for a very long time).
With consulting, you’re trading time for money or for a specified amount of output. You work an hour, and you get paid for an hour. Or you work on a project, and you get paid for that project. With passive income products, you spend a couple of hours or a couple of days creating them, and you can sell them over and over for many years to come.
#3: Establish Yourself as an Expert
You may be wondering what impact passive income products will have on the consulting side of your business. If you add passive income to your consulting business plan, will your consulting revenue go down because you are now teaching what you know to others at a fraction of the cost?
In my experience (and in the experience of thousands of other consultants) the answer is no. In fact, just the opposite. Creating information products like e-books and online classes will position you as an expert in your field and will actually help you increase your consulting rates. It’s a win-win for your business.
#4: Make Your Business More Acquirable
This is a bonus reason for adding passive income streams to your consulting business plan: doing so will make your business much more acquirable if you ever choose to sell it.
In fact, if you grow the passive income side of your business, you’ll actually have two options when it comes to selling your business: you will likely be able to sell just the information product side (and keep the consulting side) if you set it up correctly. Or you’ll be able to sell the entire business, which will be much more valuable and transferable because you added passive income to your consulting business plan.
In my career, I’ve sold just the passive income side of my consulting businesses twice, and I’ve sold an entire business (including passive income and consulting sides) once. Adding information products to your consulting business plan is a huge boon for your business if you ever want to sell it.
The Most Important Thing for Your Consulting Business Plan
I want to leave you with one final thought on your consulting business plan. Many people will show you examples of business plans that are 40 or 50 pages long. That’s fine, if you’re building a complex business with dozens of employees and lots of moving parts. But if you’re a solo consultant or you only have one or two employees in addition to yourself, you don’t need a plan like that.
The most important thing for your consulting business plan is that you get it done and you start implementing it. If you’re trying to write a 50 page plan, chances are it will take you forever to get started and forever to get it done… and then you’ll find it very difficult to execute on. Keep it simple, and start making more money today!