I think we’ve all waited long enough. Let’s begin the walkthrough of creating a new stream of passive income from start to finish.
If you haven’t already been following the passive income series that I started in April, I encourage you to begin with the first post and get caught up when you can.
The process of creating new income streams is different for everyone, so you won’t necessarily want to model my approach exactly because your knowledge, skills, and resources may not align with mine. Even so, I’m sure you’ll learn something from this walkthrough.
So let’s dive right in and get started.
Pick an Idea
Your first step is to pick an idea. Hopefully this is fairly obvious.
One of the simplest ways is to grab a pen and paper, and brainstorm a list of ideas. Keep writing down ideas until you run out of ideas. Then look over your list, and pick one that seems decent.
If you need help generating ideas, read Generating Ideas for some advice on how to do it.
Many people get caught up trying to pick an idea. If you get stuck here, you can’t progress. So whatever you do, don’t let yourself get stuck here. Make a decision no matter what.
One of my favorite ways to choose among different options is simply to ask, Which option is the most me? That usually narrows it down quite a bit.
Worst case if you can’t decide, flip a coin or roll a die and let chance decide. You’re better off getting into action quickly than suffering useless delay and self doubt. You’ll progress much faster by getting a few projects under your belt than you will be trying to dream up the perfect idea in advance. Some creative people will advise you to fail faster, which is good advice.
Notice that picking an idea is not the same thing as whining about why you can’t pick one.
It’s also not the same as saying you don’t have any good ideas.
And of course it’s not the same as saying “I don’t know how” when you think about your favorite idea.
The truth is that good income-generating ideas are a dime a dozen. Coming up with ideas is the easy part. If you’ve been stuck in the corporate world for too long, then perhaps your creative impulses have been squashed to make you a better slave, so if that’s the case, then go ask a nearby child what you can do to make the world better for people, and listen to what s/he has to say.
Now if you’re really and truly stuck and can’t come up with a decent idea, then I’d be delighted to pick one for you and assign it to you, but you may not like it unless you’re Canadian and very submissive.
My initial idea was to create some kind of digital product and sell it. That seems simple and straightforward, and it’s an approach other people can model if they so desire. I can sell something through my own website, and other people can sell digital products through Amazon, iTunes, and other online stores, depending on the format.
Refine the Idea
Depending on the nature of your idea, you may have some details to decide next.
For my product idea, I need to determine a topic and a format.
Once again, you can brainstorm possibilities. Then pick something, and keep moving forward.
Don’t get caught up in vacillating. Just decide. Your decision won’t be perfect, and it doesn’t have to be. Just pick an idea that seems pretty good, and run with it. You’ll get better at picking ideas once you’ve completed a few projects and saw how they turned out.
For the format I decided to create an ebook and an audio program, so I’ll actually have two different products in different formats, but the underlying content will be the same. I might sell them separately or as a bundle or both, but I can decide that later.
For the topic I settled on Subjective Reality.
Why SR? For starters people have been clamoring for a more in-depth product on that for years. We had the Subjective Reality Workshop in 2011, but not everyone can make it to a 3-day workshop.
I also think this would be a fun and interesting product to create. Based on what I’ve seen, there isn’t a lot of quality material available on SR. Most of it is either very shallow or very woo woo, and it fails to explain why we seem to have the various limitations and constraints that we do.
I doubt that SR is the topic that would make me the most money. It’s a niche topic, and many people don’t care to learn about it. But for those who do care, they tend to care a lot. So this is the kind of product that should have strong appeal to a certain core audience, and beyond that most people will just think it’s weird. For whatever reason, this sort of product really appeals to me. I’d rather make some people really happy than lots of people only moderately happy.
So I’m choosing this topic because I think I’d enjoy it, I think enough people would appreciate it, and it’s an area where I feel I can contribute something unique and worthwhile.
SR is also a timeless topic, so this product could easily sell for many years to come.
Fall in Love With Your Idea
The next step is to fall in love with your idea.
A mistake people often make is that they look to their ideas to give them confidence, as if an idea itself can provide that. In reality almost all ideas are going to feel fuzzy and uncertain at first. It’s your job to inject them with confidence.
Your relationship to your idea will largely determine how far you get with it, and this relationship is under your control to a great extent.
Where does your relationship with another person exist? In your mind. Where does your relationship with an idea exist? In your mind.
If you start thinking ill about your relationship partner and succumb to doubt about your future together, what does that do to your relationship? It kills it. On the contrary, if you hold lovey dovey thoughts towards your relationship partner, does that not improve the relationship? Of course.
With an idea it’s even easier. Treat your idea as if it’s the most amazing thing ever. Respect it. Honor it. Fall head over heels in love with it.
Don’t look to your idea to provide you with inspiration and motivation. Don’t try to suck your idea dry like you’re sucking an orange. You must let the inspiration flow the other way. You must feed and water and nurture your idea, helping to give it form and substance. You’re the creative conduit here, not the idea.
If you don’t fall in love with it, why would you expect anyone else to? An unloved idea will lead to a crappy result that no one will want.
Have fun with this. Be playful about it.
By way of example, I’m making myself fall in love with my subjective reality product. It’s going to be the coolest, deepest, and most mind-blowing product on the topic that anyone has ever seen.
Who cares if that’s actually true? It’s fun and motivating to inject your idea with positive expectations. Self-doubt is only going to slow things down, so don’t even go there.
Once you’ve selected your idea, the evaluation period is over. Like a newborn child, you’ve named it and claimed it and taken it home with you. It’s too late to decide whether or not it’s a good idea. It’s yours now, and you’d better learn to love it.
Devise an Income Stream for Your Idea
Some ideas are easy to adapt to income streams. Others require a bit more finesse.
In the case of an ebook and audio program, my intention is to package these as digitally downloadable products and sell them directly via my website.
Later I may sell them through other sites like Amazon, but for the purposes of this demonstration, I want to keep it simple.
What if you don’t have a high-traffic website like I do? Then you’re not likely to generate many sales if all you do is post it on your website.
When I released computer games before I had much web traffic, I spent a lot of time marketing them. Basically this involved uploading the free demos to hundreds of download sites, buying some online ads, sending out press releases, and more. For one game I spent about 6 months marketing it after it was released. This made a big difference, increasing the sales by 10 times.
If you’ve fallen in love with your idea, you’ll have a lot of motivation to do this part. But if you don’t love it, I’d bet money that you’ll drop the ball here.
I see a lot of would-be online entrepreneurs create and release products they clearly don’t love. They’ll usually spread the word for a few weeks, and then they give up and let the income stream die. People can tell it’s a me-too product, so they don’t buy. With an unloved product, this is enough discouragement to call it quits. With a product you really love, however, you’ll be able to push through and keep putting the word out.
It’s not enough to just create a cool product and hope people will buy it. You have to let people know about it. Once you build enough momentum, your sales may become self-sustaining, but don’t assume this will happen automatically just because you created something and put it on the Internet.
In my case I own some marketing vehicles that I can use, like my website and newsletter. I can also use my Twitter and Google+ accounts to get the word out. Blogging about the development of this product along the way can also be seen as a way of marketing it. Many people who are following the passive income series won’t care about an SR product, but some will. So there will probably be some decent interest in the product when it launches.
I can share more ideas about marketing later in the series. For now, let me just say that you can expect to spend at least as much time marketing your new product or service as you do creating it. If you don’t love your creation, that’s a headache. If you love it, then getting the word out won’t be so bad.
The good news is that you don’t need to design your own income-generating process from scratch. I’m certainly not doing that here. You can borrow someone else’s fully developed system, such as the ones I shared in Passive Income Systems.
Outline the Idea
Your next step is to outline the idea. What do you think you’ll include?
For my SR product, I came up with a rough chapter outline:
Part I – Understanding Subjective Reality
- What Is SR?
- Lucid Dreaming
- SR. vs. OR / Equivalency Principle
- Understanding Beliefs / Observing or Causing Reality
- Changing Beliefs
- Living Subjectively
Part II – Applying Subjective Reality
- The Law of Attraction
- Creating Your Reality
- Subjective Reality and Money
- Subjective Relationships
Part III – Integrating Subjective Reality
- Merging Subjectivity and Objectivity
- Reality as Story
- Final Wisdom / Closing
Now this is only a rough draft, not necessarily the final outline of the completed product, but it gets me started and helps me see what I want to include. For example, I know I’m going to cover the Law of Attraction in this product.
The idea is to create something to help guide you in your development process, but don’t let this part bog you down. If you’re spending more than an hour on it, I think that’s too long. Just aim for something that looks halfway decent. If you can’t manage halfway decent, then settle for indecent. You can always change it later.
It’s pretty easy to get stuck in this stage, so that’s why I like to move through it quickly. If you’re building a space rocket or a hospital, then it makes sense to invest in careful planning. But for a flexible digital product, overplanning tends to be a much greater risk. We just need a general idea of the main sections, so we can start filling in the content.
Create a Simple Completion Plan
Now that we have an idea and a rough outline, how are we going to get this done?
The previous steps in this article are pretty straightforward. You can do them in less than an hour. If it takes longer than that, you’re probably getting stuck in vacillating. Just make a decision at each step and move on.
Lots of interesting ideas die somewhere between here and full completion. So let’s pay some attention to how you’re going to complete this and get it done.
For one-person projects like this, it doesn’t make sense to get bogged down in overplanning. Some people spend more time planning a project and getting ready to begin, when it would have taken less time to just dive in and do it.
I favor the dive in and do it approach, which has worked beautifully for blogging, but since this is a larger work, I want to make sure I have a process that I trust will converge on a completed product.
Here’s my basic action plan to move this project forward to completion:
- Each day until the ebook is complete, I’ll create a minimum of 5000 words of fresh content, and this will be edited content of publishable quality. This includes weekends.
- I’ll keep adding 5000 or more words of content to the product until I’m satisfied that the content is complete.
- For each section I’ll jot down some quick notes for the key points, stories, and examples I intend to include. Then I’ll use the built-in dictation on my MacBook Pro (dictation is part of OS X Mountain Lion) to speak the content aloud into a Pages document. If I don’t like this process or if the dictation quality isn’t good enough, then I’ll fall back on just typing the content like I do with blog articles.
- After I dictate a section of content, I’ll do an editing pass to correct errors, add subsection headers, and improve coherence and flow.
- At the end of each day, I’ll bring all of the existing content to a publishable level of quality, meaning that it would meet my standards for something I could publish to my blog. This is an important lesson I learned from writing software — always bring the code to a publishable level of quality at the end of each day. Fix mistakes and low quality work as soon as possible since it takes much longer to fix them later.
- Once I have the first draft done, I’ll give it another editing pass and have a few others check it for typos and mistakes. I may keep doing rounds of this till I’m satisfied we’ve got the final content good to go.
- Once the ebook content is done, I’ll have someone who’s more aesthetically minded format it to look nice, including creating a cover page.
- After the ebook is complete, I’ll use it as the script to record the audio program. Since the initial content will have been spoken for dictation, it should make for a natural sounding script for the audio. I may not record it word for word exactly, but the core content will be the same. I think this will yield a more polished audio program than if I try to use the initial, unedited dictation sessions. I’ll probably use the same recording equipment I used for podcasting.
- I’ll have someone help me edit the audio files, add intro music, turn them into MP3s, and help package the results into a completed audio program.
- Once these products are complete, I’ll create a sales page for them, add them to the online shopping cart, add links through my website, and announce them on my blog, newsletter, and Twitter and Google+ pages.
So that’s the basic plan.
Now all sorts of things could go wrong with this plan. Maybe maintaining 5K words per day will be too much. Maybe I’ll need to take weekends off to regain my sanity. Maybe the Mac dictation won’t be good enough, and I’ll have to fall back on typing all the content. That’s okay. The plan can always be adapted as needed. The point of planning is to envision a path to completion. What I have above looks good enough to me.
I also have some travel coming up, so I’ll need to work around that. The first trip is less than 3 weeks away, and I’ll be gone for nearly 2 weeks. Then I’ll be back for a few days, and I have another short trip after that. It’s doubtful I’ll want to keep working on this while I’m on the road, so in that case I’ll probably put this work on pause and continue where I left off when I return. Travel is a big part of my lifestyle, so I’m fine having this project take a bit longer to work around these trips.
I know that if I hit a certain content quota each day, and if I bring the existing content to publishable quality at the end of each day, I’ll eventually have a completed ebook. And using that to record an audio version should be pretty straightforward. So even with some travel breaking things up, this will eventually converge as long as I stick with it.
How long will this product be? I don’t know… maybe 60-100K words (6-10 hours of audio), but it could be a lot more. I’ll create as much as it takes to do the topic justice and feel satisfied with the end result. The length doesn’t really matter since it’s going to be digital. I’m not planning to make print books or CDs since physical media is all but obsolete. If some people won’t buy it because it’s digital only, I’m perfectly okay with that. Most of my website visitors are under age 30, and past surveys showed that most of them prefer digital products anyway. Less than 2% said they wouldn’t buy something with no physical media, and dealing with physical media isn’t worth it to capture an extra 2%.
Price-wise I’m leaning towards $15 for the ebook, $15 for the audio, and $25 for both together. I think that’s very reasonable, especially for a niche product. I’m sure I could sell this for more, but I don’t want people who want it to feel that the price is a barrier for them.
My initial intention, which I shared earlier in this series, was to create a new income stream of $2K or more per month that lasts for 10 years minimum. If the average sale is $20, I’d have to sell 100 copies per month, which is just over 3 copies per day. For all the outlets I have available, I think that’s an achievable goal.
What Are Your Passive Income Priorities?
There are lots of ways to set up an income stream, so let me caution you to be careful what you optimize for.
Many people try to maximize income or profits, but this often involves sacrificing other things in exchange for more money, such as your ability to communicate as a real human being. For instance, you may need to be a lot pushier and more aggressive with your selling process if you want to squeeze more money out of people who are on the fence about buying. To me this is a big turnoff.
My motivation is to do something creative that I’ll enjoy, to contribute something of value to people’s lives, and to share it in such a way that some financial support flows back to me. For me a homerun is what I do on the creative side.
Another important factor for me is to avoid creating headaches for myself. I really don’t care about fighting piracy, so if people want to steal a copy without paying for it, that’s their choice. I don’t think $15 or $25 is too much to ask for a cool and interesting product like this.
As for whether or not to keep this product copyrighted or make it uncopyrighted, I decided to keep it copyrighted, at least initially. All my blog posts are uncopyrighted, but for a product such as this, I’d rather keep ownership of the copyright. This intuitively feels right to me. I can always uncopyright it later if I so choose, but once I do that, it’s irreversible. I’m still observing the ongoing ripples of uncopyrighting my articles, so I want more time to see how that turns out. It’s only been a couple of years so far.
During the past 8 years, I’ve given away a lot of content for free. The payment I ask in return is that I’m allowed to enjoy my life — to be happy and fulfilled in living how I wish to live. I like creating passive income streams because they make it easier to center my life around learning, exploring, connecting, and sharing.
Your priorities may be different than mine, so it makes sense to adapt your passive income stream to suit your own desires. Just don’t assume that maximizing income is necessarily the best approach for you. It’s not an approach I’d be happy with.
If you’re going to follow along with your own idea, then I encourage you to pick an idea, create a quick outline, and determine how you’re going to move it forward to completion. There’s no time like the present!
Please don’t feel pressured to follow me in real time with the creation of your own income stream. I obviously have some advantages and experience that many others don’t. This walkthrough will be available indefinitely, so feel free to go through it at whatever pacing works for you.
Incidentally, this summer was my 20-year anniversary of not having a job. That’s 20 continuous years of unemployment. Booyah!