It’s been said that trading time for money is the bane of the working man’s (or woman’s) existence. When have a job and are working for someone else, you’re essentially trading your time for their money… no matter how lucrative the arrangement may be.
Eventually, many people decide that they want to set their own schedules and have more freedom with their careers. So they leave the safety of their jobs behind, and become self-employed consultants. They’re taking on more risk but making more money, with more freedom to set their own schedules. Life is good… until they realize that they’re still trading time for money, only now it’s their client’s money instead of their employer’s paycheck.
There’s nothing necessarily wrong with trading time for money, but as so many solo consultants and freelancers have found, it’s not ideal. When you’re trading time for money as a consultant, your income is limited by the number of hours in your day. When you want to take a vacation or take a day off, you hit the “pause” button on your revenue… that’s a day you won’t be getting paid. You launched out on your own, but you still feel stuck. What can you do?
Escaping the Time for Money Rat Race
The first thing most consultants and freelancers realize when they’re in this situation is that they can make more money by changing how they bill clients.
Most consultants start by billing hourly. Then, they move to project-based fees, charging more for the entire project than they would if they were charging by the hour. Finally, they arrive at value-based fees, an idea popularized by consulting guru Alan Weiss. The idea here is that as a consultant you are charging a portion of the value you are creating for the client.
This movement away from hourly rates to value-based fees is a good one for the average consultant, and many consultants and freelancers can double or triple their income simply by making these changes. But despite these changes, when you’re charging project fees or value-based fees, you’re still trading time for money.
Passive Income vs. Trading Time for Money
No matter how you’re charging your clients (hourly, project-based, or value-based) you’re still trading time for money. You’re still only getting paid when you work – and you only get paid once for each hour that you put in.
That’s why I recommend that every consultant and freelancer start to build passive income in their businesses. Passive income is income that allows you to do the work once and get paid over and over again. When you write a book, create an online class, or record a webinar, you can then sell that product over and over again. People will buy it for months or years… including while you’re asleep, taking the day off, or on vacation in the Caribbean.
Simply put, the best way to stop trading time for money is by building passive income products in your business. Best of all, you can create passive income while still working with clients. You can sell your e-books, webinars, and courses on your website, making passive income alongside the “active income” that comes from your clients.
5 Steps for Building Passive Income in Your Business
So how do you start creating passive income in your business? Here are 5 steps you can take right away:
#1: Figure Out Your Passive Income Niche
The first step is to figure out what you want to teach people – what your passive income niche will be. Chances are that as a consultant, you know lots about your industry. In order to be successful, you’ll need to “niche-down” when creating passive income streams. To learn how to select the right niche, read How to Figure Out Your Passive Income Niche.
#2: Figure Out Your Passive Income Stream
The second step is to figure out which type of passive income to create. Eventually, you’ll want to have several passive income streams built but for now focus on just one. The most popular are writing e-books, recording webinars, and creating online classes. For more ideas, read 7 Passive Income Streams You Can Add to Your Business this Year.
#3: Test Your Product Before You Build It
Once you have selected your niche and your stream, it’s time to test your product… before you build it. Since your current business is based on trading time for money, you don’t want to waste time by creating a product no one will buy. My suggestion is that you either survey your audience (your clients, your e-mail list, etc.) or actually pre-sell your product to make sure people are interested in it… before you create it!
#4: Create Your Passive Income Product
The next step is to actually create your passive income product. This can seem like a daunting task, but it’s crucial if you want to successfully move beyond trading time for money in your business. For simple, step-by-step directions on how to create great info products, read How to Write a Bestselling E-Book and How to Create a Bestselling Online Course.
#5: Market Your Product
The final (and always ongoing) step is to market your info product. I’ve seen many great passive income products fail because of a lack of marketing… and many mediocre products succeed because of great salesmanship. The best way to market your product is to build an e-mail list and market directly to that list (over and over again). To learn how to do that, read How to Sell More Online Classes and Webinars.
You CAN Stop Trading Time for Money this Year!
Building passive income products in my consulting companies is the single best business decision I have ever made. The ability to earn income day in and day out, regardless of my client workload, has enabled me a freedom that most can only dream of. If you want to stop trading time for money (or just build an extra revenue stream for your business), use the 5 steps above to start building passive income products this year!