Passive income is the ultimate income stream. Here's (exactly) how to generate passive income.

Your business model matters
This next sentence will sound impossible but I'm going to show you how it's not: Before anything else, make sure that your your product can be sold, shipped, and supported without you. Sounds hard doesn't it? It's actually not, once you rely on a simple business model and free tools.


The Business Model
There are many business models that can help you generate passive income. Here's a few that you could use:

• membership sites
• e-books
• software
• Drop-shipped inventory via an e-commerce website

Can your business's offerings fit into any of the above categories? If you have a blog, could you create any special membership content that you could charge $20/month for? If you are technically capable, could you create a website that solves a business problem for users that you could charge a recurring monthly amount for? Membership sites and software are the easiest types of passive income models for most people.

If you are not as technically savvy, E-books or drop-shipped inventory are also options. E-books are only a viable business if you are a certified expert in the field (you will need to prove this to your users by possessing academic degrees, professional designations, etc, or they won't buy from you). Drop-shipped inventory can be sold through an e-commerce website with virtually no interaction from you. The challenge here is getting a website built, finding a product people will buy, and setting up the automatic shipping and distribution through your website (this is not as hard as it sounds; many established drop-shippers will provide an easy integration to their service).

Once you've found a way to adapt your product into one of the 4 automated business models above, you're ready for the next step:


Removing yourself from the sales equation
This is the easiest part. Your website needs to provide a compelling sales message, because we don't want you speaking with clients over the phone. Everything they need should be transparent, and located on your website. Your goal is to maximize email, and minimize phone conversations. Utilize split testing (learn it here) to optimize your sales page for conversions. Having your sales page churn out conversions is half the battle; you still need to process them somehow. Of course we don't want you processing anything personally. So...


Removing yourself from the payment processing equation
Processing payments is a huge problem for many small companies, because it can become expensive very quickly. Setup fees and commissions on each sale can chew away virtually all of your profits. So if you're on a budget, try E-Junkie. Setting up an account is simple, and it's ridiculously cheap (up to 10 product for a flat total of $5 a month, with no commissions). Each payment is securely processed over an SSL connection, and the money from each sale goes directly into your bank account. It works fantastically, and it takes you out of the equation. E-junkie can handle recurring memberships, as well as product delivery (if it's an e-book or software, it will send them a secure link to the product that can't be shared). If you are selling through drop-shipping, you will need to invest in a payment processor however; sometimes this can be coordinated through your drop-shipper (which also allows for smoother integration). Please note I don't work for E-Junkie, I've just used them before and liked them. They are a terrific asset when setting up an automated business


Enlisting free salespeople to sell your product... While you stay out of the equation
Almost anything product be configured to allow for affiliates to sell your product. Affiliates will advertise and sell your product at a small commission (that you can set beforehand). Let them work hard for you while you do something else with your time. You can find many directories of affiliates; try not to spend any money joining a directory though. Just optimize your pages to make it as easy as possible for affiliates to join you (there is a plethora of information on the web that will show you how to do this).

Believe it or not, that's all you need. A business model that is flexible enough to let you remove yourself, a highly optimized sales page for your product, an automated payment/shipping setup, and an army of affiliates marketing your product. Put this business model to use, and fire up a passive income stream.

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