Create passive income business to support dream lifestyle

To achieve my dream lifestyle to travel around the world, passive income is the only way to make it happen. In the past few years, I have tried many things and now identify the direction. I am learning it the hard way. I should know better few years ago.

Regardless which method you choose, there are bottom line requirements to make this true passive income business.

1. Automation – The only way to make passive income is NOT to work on it. Or simply spent few hours a week to do minor tasks.
2. Outsource – Let other people do the work for you
3. Scalable & Profitable – The only way ensure your business model can last a long time, the business must be scalable and profitable.

Basically, it follows The 4-Hour Workweek principle.

Here are the methods I am working on.

1. Advertisement

Running a popular niche website and generate advertising revenue is probably the easiest way to generate passive income. Using Google AdSense, and many other advertising medias or affiliate programs,  a website can generate pretty good income. The challenge is to make the website popular and convert.

2. Subscription based Membership website

Create a niche community for people who have common interest to exchange information or added value will bring in good passive revenue as well. It doesn’t matter if the community is B2B, B2C or C2C, the idea is to have user generated content to drive the revenue.

3. Licensing & Franchising

In my opinion, this is the most difficult method to generate passive income, but it will generate most revenue. For example, if you created a software or script that can be licensed to other people for a recurring fee, you can generate great revenue on this.

What about e-commerce?

To be honest, I haven’t really found the unique niche to make e-commerce a passive income business. There are few main reasons that a small e-commerce will never generate good passive income.

1. Inventory – Handling inventory is very expensive. It not just cost money to manage the stock, it also cost money to keep unsold items.
2. Customer Service – You should never outsource your customer service to third party. Handling shipping, return and complaint cost most of the the money in this type of business.
3. Not scalable – If your niche is not very much scalable, you won’t be able to make huge profit, even your items have higher profit margin.

My take on creating a passive income business is now solely based on the following guideline.

1. User generate content
2. No inventory
3. No shipping and return
4. Less customer services
5. Information only

Don’t get me wrong. I am not saying they are the only few passaging income business model. I do believe they will work the best for what I know and what I do.

What is your passive income business?