Introduction to Passive Streams Of Income Ideas
There are many ways in which to create multiple streams of income from your businesses. The following are some passive streams of income ideas:
- Internet Business
- Traditional Business (Bricks and Mortar physical premises)
- Investment Business
Internet Businesses can do all their business online or they could be hybrids with traditional businesses. Many of the traditional retailers are offering more online services since the purchasing trend of consumers is more towards ordering online for home delivery.
The best example of the success of the pure online retailer (with no physical store) is, of course, Amazon, which is growing and plans to enter into market areas which are more associated with the High Street, such as property sales.
Companies such as John Lewis or any of the major retailers have to offer online as an option to their customers, as well as keeping their high street stores open (at great cost). BHS was a casualty of which there have been many on the High Street
Traditional Businesses can also be quite varied and many traditional businesses have online departments as well, so as to offer their customers choices about how and when they can purchase the products which they want. Examples would be Currys PC World, who have physical premises as well as good online ordering and delivery systems for the products which they sell. They also offer installation of some products as well, so are more like a supply and install contractor in some circumstances.
Traditional businesses which have not adapted to the new way of doing business online have suffered and in some cases gone out of business, for example, House of Fraser.
So in terms of passive income, the only role in which you could expect to receive a good return would be as an investor, but the risks for such traditional businesses are high with increased competition in the marketplace.
So how to reduce the risk?
Franchises are a business model with less risk than a completely new startup because the model has already been created and proven to be successful. A drawback is that to purchase the proven model and reduce your risk will cost you money paid to the franchisee. MacDonald’s franchises are expensive and you will not see a return on your investment for several years, depending on the location of the business and the level of trading. Some franchises can be run from home and do not necessarily need premises, but you need to carefully check out what you are actually buying with the franchise system which you have chosen.
Remember that for any business to work, you need customers, so no matter how much you spend on the franchise, how will you get sales? From where do you get customers? How to convert prospects into sales? How much effort will that take, ie how much of your time will you need to spend on this? Is this really passive income? Is it what I want to do?
Within the Investment Business category we would include:
- Stocks and Shares and Options Trading (including commodities)
- Cryptocurrency Trading
- Property Investment
Each one of the above categories needs a much more detailed explanation so as to see which one or more may suit your particular circumstances and financial capability.
Here are a few passive streams of income ideas which relate to Internet Business
Sale of Digital Products For Which You Own the Private Reselling Rights
Some of them relate to the selling of digital or educational products, either your own or selling e-products produced by others, under Private Reselling Rights.
An example of a system selling digital products is PRIMO3. If you want to see the OMS review of PRIMO3 then go here.
The main other ways of generating passive income online are listed below:
Affiliate Marketing can produce good passive income streams from different websites selling other people´s products or services. Affiliate marketers usually specialize in a particular niche or niches.
Goods can be sold on Amazon, Etsy, eBay, or Shopify, which are the most popular online stores.
Products can be sourced from such marketplaces as ClickBank, Commission Junction, JV Zoo.
Often Affiliate Marketers use their own website and blogs to write reviews of products with links to those products and similar ones, from which they can earn a commission on each sale.
OMS has done a review of several affiliate marketing systems including Wealthy Affiliate, which is one system which we highly recommend. However, WA is not a get rich quick system, and in order to arrive at a position where you will receive passive income from the websites which you develop, you will have to invest a large amount of time.
If you want to see our review of Wealthy Affiliate, go here.
Small value sales will give relatively small value commissions, but high ticket sales can also produce high-level commissions. Once buyers trust a seller then they can be offered Up-sells which generate higher returns and profitability. You need to decide on your marketing strategy of what products or services to sell, and how to market such products.
Sale of Own Products Online
Some retailers have their own range of products which they produce or source and then sell to customers online. Sometimes these are traditional retailers who also have high street stores, but also offer online shopping to remain competitive with full online retailers. Examples of online sellers with retail high street presence would be John Lewis, Next, Selfridges or Harrods.
Drop shipping is a supply chain management method in which the retailer does not keep goods in stock but instead transfers the customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer. As in retail business, the majority of retailers make their profit on the difference between the wholesale and retail price, but some retailers earn an agreed percentage of the sales in commission, paid by the wholesaler to the retailer.
The seller only orders the product once he has received payment from the customer. The seller places the order with the drop shipping fulfilment company at a lower price, in order to make his margin.
The seller has to keep no stock or inventory, nor premises, so there are big overhead savings over a traditional business.
The dropshipping fulfilment company sends the product to the customer by airmail for quick delivery, or train or sea shipment. Sometimes these dropshipping fulfilment companies are based in China, but they could equally be based in any country including the USA. Examples of Chinese drop shipping companies are Alibaba or AliExpress.
OMS has reviewed a couple of drop shipping companies which are based on the Shopify platform.
If you want to look at the OMS review of ZeroUP, go here.
An example of a USA based drop shipping company would be TREX or Slingly, although there are many other systems out there.
If you want to look at the OMS review of TREX, go here.
If you want to look at the OMS review of Slingly, go here.
MLM involves selling of products at different levels within a system or programme. An example of such a system would be The 4%, which OMS, has not yet reviewed.
In most circumstances, OMS would NOT recommend that you invest in an MLM business.
However, there are a few exceptions which we will advise on shortly once we have fully explored and tested them.
Share And OptionTrading
Additionally, there are other forms of business which rely on trading, such as the buying and selling of shares and options.
These systems can be used so as to generate relatively good levels of passive income. It is claimed to be able to start with relatively low levels of capital, although we have yet to fully try this out.
An example of a Share Trading System is Share And Options Trading Education from Sean Allison. For the OMS review of How To Open Your Trading account With Professional Options Trading Education Program using Sean Allison´s training system click here.
For the OMS review of The Wealth Trading Company, from Darren Winters click here.
Another means of achieving passive income is from trading in Cryptocurrency. There are a number of groups specializing in the buying and selling of cryptocurrency, such as Keys To Freedom.
We will shortly be publishing our OMS review of Keys To Freedom.
Property Investment And Development
Property is a massive subject for consideration in relation to Passive Streams Of Income ideas but does usually demand that you have at least a proportion of the capital available to invest in the development which you are interested in. The Rule Of Thumb is that you need approximately 20% of the development cost, whether you are managing a large development or investing in property on a small scale.
We are aware that some people claim it is possible to use entirely other people´s money, but we are quite sceptical about the effectiveness and risks of such a strategy.
Your role in the Development process could be as:
Owner (of the site and the eventual development), which could be Freehold or leasehold for a fixed term of years.
Investor (in all or part of the development).
Some investors purchase only Freeholds of properties and do not
There are numerous franchises available in the property market, one of which is Platinum Property Partnership. Their financial model is based upon Houses of Multiple Occupation (HMO), and involve identifying properties in certain key locations, which have parking available and also which are near public transport. These properties may also be near such places of intense employment such as factories of large office complexes, Universities, Hospitals etc.
The identified house is purchased at a certain price level, which is factored depending on the anticipated rental income from each individual room available for rental.
The house is then refurbished and extended and upgraded to conform with the required Building Control and Fire Regulations.
Once the refurbishment is complete, the individual rooms are furnished to a suitable high standard and offered to young professionals to whom this standard of accommodation is targeted.
Rental agreements are prepared and signed by the landlord (you) and the tenant, on whom you will have taken up references before agreeing to rent them the room.
Another example of a successful property investor is Kevin Green.
Kevin Green´s success model is based on buying ¨Distressed Sales¨, ie those where the vendor is under some pressure. For example, there may be a charge on the property and the owner may be behind with payments, so is being pressurized by the bank to make all payments, or if the owner is unable to do so promptly the bank may threaten repossession.
Kevin Green specializes in doing deals under such circumstances, then refurbishing or improving the properties and selling them on at a profit.
Property is such a large subject area, we will publish separate reviews about these opportunities in due course.
Conclusion And Recommendation
From all of the passive streams of income ideas which are listed above, it is clear that depending on how closely you wish to be involved in each of the businesses, and in what role, there is potentially a lot of work involved in many of them. They can hardly be described as Passive Income.
So you need to choose carefully the business which suits you best, taking account of the amount of capital which you have available to invest, and also the amount of time which you are personally able to invest.
You need to be aware of how much money and time it will take to develop your business. You need to assess at what stage you will be able to make passive income from the business, and exactly what commitment will be required once that stage of development has been reached.
You also need to look at what options there are in the particular business model which you have chosen for an Exit Strategy. What will you do? Hold the business in perpetuity, and pass it to your heirs, as your legacy? Alternatively, do you plan to build the business up to a certain stage of success, and then sell the business as a going concern, so you bank the proceeds of the sale as your return on the investment which you have made to start and build up the business.