Smart Active Income – With Maren Kate
This is a Guest Post by Maren Kate from Escapingthe9to5.com, a friend of mine from the Internet Business Mastery Academy. Maren Kate was recently featured in a success story interview on the Internet Business Mastery Podcast.
Passive income is my goal.
Right now I work entirely too much, though still less than if I had a “real” job, but when I dream, it’s of sugar plum fairies and passive income streams.
When I first escaped the 9 to 5 I did so by starting a social media marketing firm to help brick and mortar businesses get launched into the online realm. I’m glad I did it, but it’s not exactly passive. I have two employees who work for me full time (VAs really) and with that comes writing schedules, checking up, wooing clients…the list goes on. The point is, passive income is the goal, but I’m implementing smart active income to get there… The awesome thing is you can do the exact same thing by following some simple steps to getting smart about your passive and active income goals!
What is Smart Active Income?
Active income can come from a variety of sources, anything from flipping burgers to being the CFO of a major corporation, but I believe truly smart active income consists of not trading hours for dollars. You can escape this vicious cycle by creating systems and organizational charts that allow you to work X hours for anything between 10-200 units of product, then if your business grows beyond that you can hire someone to replace you completely and the systems you’ve set up will scale to put out more and more product with the aid of more workers.
Where does this leave you?
Possibly not sipping margaritas in Cabo, but at least you aren’t working from 6 am to 6 pm doing everything yourself. Instead you’ve learned to delegate, which is something they never teach you in business school and possibly the most important part of entrepreneurship ever.
How Can I Create Smart Active Income?
Just like with passive income, it’s best to create a business model that is centric with your passions and skills.
Are you a writer? Create a copywriting service online where at first you write everything but as the business grows you hire other writers at X and charge the client XX, making a profit without much additional work. Do you love to bake? Create a specialty dessert business run completely online, you’ll bake the goodies in your home and then ship them out upon each order placed.
As you grow you’ll document everything, planning as if you’ll franchise the deal down the road. Then if you must move to a physical location because of expanding sales you can hire on a few people, have them read your detailed systems and begin duplicating your processes as you ease yourself out of the mix (baker humor!).
Also if you’ve been planning as if you would franchise your business someday what holds you from just doing it? If it works you can become the next Nothing Bundt Cake and with every new franchise license sold you create a real stream of passive income that can grow exponentially. So assess your skills, measure what drives you the most, and then look at the active income opportunities that exist around you. You can always find ways to turn active income into passive income and often the more active path produces results faster as you focus on escaping the rat race to build up your passive income streams the smart way.
How To Turn Active Income Into Passive Profits
At the beginning I worked like a dog (or maybe a mule?) to get my active business off the ground, then slowly but surely I created systems and brought on other people. Once it was actually profitable I started to look for little ways to tweak the business model so I was actively involved less, thus the business was still being ‘active’ but the income appeared more passive to me.
Additionally, I began to create mini-products within my site that were completely automated, whether I sold 1 or 100 it still took the same effort – that is pressing a few buttons every morning to run a program. This is my example of turning an active income stream into a more passive one and a thousand more examples exist.
Worst case scenario you can use smart active income to allow you to escape your current job (where you most definitely work hours for dollars) and with your spare time develop and test additional passive income streams. I have begun to do this on my blog as well as testing out the idea of mini sites and affiliate income.
There are tons of ways to make an income on and offline, the best thing is to do your research and then jump in head on. If the business model is too active for you, tweak it as you go so it becomes a source of more passive income… if you find you love the active lifestyle, keep it up, just be sure to delegate all the things you don’t cherish to others.
Regardless of which path you chose be sure to keep an open mind on your entrepreneurial journey, never allow someone else to pick your path for you and focus above all on loving what you do by trading passion for profit.
For more from Maren Kate, you can visit her superstar business blog at Escapingthe9to5.com.
Posted on : April 9th, 2010
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- The Best of the Smart Passive Income Blog
- The Smart Passive Income Brand and Plans for the Future
- The Smart Passive Income Blog Makeover and eBook!
- Smart Passive Income Podcast Survey Results and Some Quick Analysis
- The Latest Going-Ons and What’s Ahead for The Smart Passive Income Blog
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32 Comments (Click Here to Leave a Comment Below)
Great post Maren Kate. Very true what you said, just follow your passion. Half the time it doesn’t feel like work when you are loving what you do. The biggest key is to just do it and get moving with massive action.
Well written.
All the best.
I agree Marty
Everyday when I go to “work” in my home office or at a coffee shop I am actually excited about the day – I never had that in College, or in any of the inane jobs I tried throughout school…
Thanks Maren, I love to hear success stories and I think that yours is one of the many models people pursue to get at passive income. I see way too many business owners that don’t get past the first stage of working like a mule to get the endeavor off the ground because they don’t take the steps to make it truly passive.
It’s true, you don’t want to get stuck in your business – instead you want to build a structure, set the wheels in motion and with every passing year make it more and more passive.
Awesome Maren! I think another huge benefit or working for yourself with active income is the ease of diversifying your income. You have the ability to branch out into new sources of income and devote time to various pursuits without sacrificing the quality at your “9-5 job”.
It is a faster road, if not a bit more choppy – but if you go from active income to passive income you can enjoy the best of both worlds
which is always nice.
Yeah I definitely wish they had Delegation 101 at OU… it would probably make me more accepting of the idea.
Marn Kate,
Alot of people forget what it takes to get to the Passive Stage. For example, most are familiar with the 4 Hour Work Week. 4 hours sounds enticing, although, it’s very unrealistic to think one could build any business starting out with only 4 hours.
For most online businesses (blogs or affiliates) it can take a couple years to see passive income kick in. A lot of this has to do with an individuals learning curve. So, I really liked the part of beginning with a “Smart Active Income.” This can be the missing link for many. Good Post.
Mike
I have written posts on that before Mike, like how Tim Ferriss (as gifted as he is) worked probably 80 hours for a few years to get his biz off the ground, then to promote his book and make himself the huge personal brand he is now.
Its not like you can wake up and only work 4 hours with no “Starter strain” and make millions – heck if you can tell me how!
I listened to the IBM Podcast the other day and you had some great information in there! I learned a lot from Sterling, Jay, Pat, and now you. Your story was very interesting and motivational. Systems are definitely needed to create passive income and the E-Myth really helped my to develop mine.
gosh the E-Myth literally rocked my world – glad it did yours too
thanks!
It’s all about building a business around your passion! Great post.
I think the only way to create long lasting passive income is to build your business around your passion, every other thing outside this tends to be a “mirage”.
Thanks for the great post.
Thanks
like the mirage analogy, very true!
Great post.
Essentially these are the principles in the book E-Myth. If anyone hasn’t read that book, they should!
I really like the active income analogy here. I can’t say that I have seen it and recognized it before, or given it much thought, but as I strive for a residual passive income myself, I find that it is more like active income and finding ways to make it more passive while remaining profitable is a great reminder to have. Thanks for the post Maren Kate.
Exactly Brandon, you must diversify, some people hit it out of the ball park their first time to bat… but most, like me, have to try various ideas, over and over before something hits gold. This is a fine plan as long as you realize it and plan for both passive and active income models
Hey Pat and Maren Kate,
You know the point I really like about this is taking advantage of the income streams we can actively create and then turning them into systems that create money on autopilot – essentially the same outcome for passive income. I like that concept because it forces bloggers and others online out of the mindset that “Well, all I can do is sell products.” I think infoproducts can be (and clearly, have been) a very successful way to make money, but you’re right: a copywriter could write a book on copywriting, or if they are successful at getting hired for that as a service, they can instead build that into a passive business
The one caveat I think is that info products do tend to work better if the person themselves is sought after. For example, Tony Robbins has build a huge company and does have other people handling a lot of different things – but (as far as I know) the biggest draw is not necessarily his methods or techniques, its Tony Robbins himself.
You are right on Sid, building a personal brand today is just as important as building your business – because you can move from business to business in life, but you’ll always keep your personal brand. If you invest in it early on it’ll be the biggest asset in your life later
Hi Guys, Great Information in that Article and well written too, well done.
Passive Income I believe is now the wave of the Future, people will be saying “What E Commerce business do you have?’ it will be a topic at BBQ’s and get togethers all over the World. How can anyone who has been exposed to Passive Income not Seriously have a go at creating it. There is so many Excellent Sources now available to everyone with no Geographical Boundaries.I am in Australia which in the past was like a world away, not now with Internet opportunities its an even playing field, how cool is that ? I have discovered a few tips on how to avoid scams on my website but I believe the Majority of people do want to help others succeed also. Do all your research then give it your all and the World is your Oyster also.
Remember Active Income (People who know HOW working for people who know WHY) will not set you Free but Passive Income CAN ! All the very best to you all.
Steve
Thanks Steve
you are right – active income is only the means to the end in my mind – complete freedom does require quite passive income. Cheers!
[...] quote above is from a post on Pat Flynn’s Smart Passive Income Blog, which was a guest post by Maren Kate, another internet entrepreneur I discovered today. Pat has [...]
Hey Maren,
I’ve been playing the affiliate game for a while and it’s starting to not be fun anymore. Now that I’m about to graduate, I’m looking forward to getting out and trying some new business ideas.
Thanks for these tips on active income plans. I hope to implement them in the coming months.
I also think it’s very important to decide which of your tasks can be done by other people. You can’t give a specific task which requires the skills you particularly have to someone who can’t do it properly.
[...] Smart Active Income – With Maren Kate [...]
Hello Maren, it helps to read motivational posts now and again… Keep the fires burning, that was well written thank you, Sean.
Maren Kate,
I like the term “active income” it is so much more empowering than “trading hours for dollars” with a definite different shade in meaning too.
Of course I like “passive income” even better … lol… Maren Kate you have hit the nail on the head with the emphasis on systems. Without systems and some active attention, a passive income can over time, dwindle away.
Thank you for the great post. Wishing you continued success.
Maren Kate,
Thanks for the excellent advice! What if your passion is something that is hard to be translated online? For example what if you love cars?
Perhaps I am not opening my mind, but would appreciate your thoughts!
Thanks
Great interview. It made me think about my business and how I can scale it. It’s time to re-examine my goals.
I have one client that calls me very day and if I don’t answer he calls every hour.
I guess it’s the 80-20 rule. 20% of your clients take up 80% of your time,
[...] Smart Passive Income. She is a guest blogger there and her article is about how to turn an active income into a passive income , I’m not going to go into the details here as you can just hop on over there and read the whole [...]
Trading dollars for money is definitely undesirable. I did this for years. The projects, deadlines, and clients eventually wore me down. As a freelance writer, the words I type are my bread and butter and I was sick of looking at them! I changed my business model to focus on my websites and it’s much better now.
I like how you turned Pat’s blog around and talked about Smart “Active” Income. Very refreshing.
“As you grow you’ll document everything, planning as if you’ll franchise the deal down the road.” This is something really important, but totally non-urgent type of thing. I’m guilty of not doing it myself (or rather stopped doing it after the initial documentation phase). Definitely want to keep that in mind!
Thanks Maren, been following your blog for a while, it’s great to see you growing!