The Value Component

You are NOT done reading this post until you’ve set your
passive income goal and have written it down. If you haven’t
done this yet, do it right now.

Prepare to succeed. Expect to succeed. Know that once you’ve
set this goal, you’re going to achieve it.

And if you’re going to achieve it, then you need to start shedding from your life
whatever would otherwise get in the way of your goal. Whoever can’t handle it,
drop them.

This will create space to invite much better relationships with people who
will support you on this path. The dead weight must be shed, so that positive support
can come through.

OK, on with the show.

Now that we’ve covered setting your passive income goal and
a bit about the mindset of passive income, let’s explore the
details of how to actually create passive income streams. We’ll
start out fairly high-level here and then drill down into the
specifics in future posts.

Here are the 3 basic parts of an income generating method:

  1. Value creation
  2. Value delivery
  3. Payment

Notice that these same 3 aspects can be applied to any basic
income generation method. When you work at a regular job,
for instance, you’re probably going to create and deliver
something of value to your employer, and then you receive
payment for it.

So what’s different about passive income? The difference
stems mainly from the second aspect: how value is delivered.

When you generate active income such as with a regular job,
your value delivery is usually done just once. Whatever work
output you’ve created gets handed over to your employer.

The same goes for contract work. You do some work for a
client (value creation), hand over that work (value delivery),
and get paid.

With a passive income strategy, however, the idea is to deliver
this value multiple times. Then you get paid multiple times,
once for each delivery.

So the heart of a passive income strategy is found mainly in
the approach to delivering value.

The words “passive income” suggest that it’s the third aspect
(payment) that defines the difference between passive and
active income, but the main differences are usually found in
the value delivery methods.

With an active income method, you hand over your work
product once and get paid for it once. With a passive income
method, your work product is delivered multiple times, and
you get paid multiple times.

The passive element means that this value is being delivered
without your direct personal effort. So you’re using a method
to get your work output into the hands of multiple customers,
but you don’t have to be the one personally delivering it. For
example, when I publish a new article to my blog, it gets
delivered to people all over the world automatically, but I
don’t have to personally send it to everyone. The value delivery
is automated.

Now here’s a good question to ask yourself: Why do you only
have one customer?

A person with a job is just a business owner who sells to
only one customer. If you take a passive income strategy
and apply it to just one customer at a time, you have an active
income strategy. One boss. One employer. One client at a time.

A person who generates passive income usually prefers to
deliver value to multiple customers simultaneously. Another
option is to repeatedly deliver value to the same customers
over and over, but without having to create that value anew
each time. A good example of this would be renting out property
that you own. You can generate passive income this way even with a
single customer since that customer can keep paying you rent
every month.

When people shift from an active income to a passive income
mindset, they usually start thinking about how to deliver value
to more people. Instead of having just one customer for your
work output, why not have 10 customers… or 100… or 1000?
Why not have 1,000,000 customers?

How many people are you capable of helping?

While you ponder that, be sure to check this out.