AskPat 502 Episode Transcript
Pat Flynn: What's up everybody? Pat Flynn here. Welcome to Episode 502 of AskPat. Thank you so much for joining me today. As always, I'm here to help you by answering your online business questions five days a week. We have a great question today from Stacey. Before we get to that, I do want to thank today's sponsor which is FreshBooks.com.
An amazing company serving over three million other small businesses with managing their business finances, from their income to their expenses. Even invoicing too. Actually, they have an amazing invoicing platform. If you have a number of students or businesses that you consult with and you just need to bill people for all the work that you do, I would definitely check out FreshBooks because they make it incredibly easy, very professional looking. You get paid sooner. I would highly recommend it for everything related to finances for your business. Go ahead and check that out. Go to GetFreshBooks.com and enter “AskPat” in the “How did you hear about us?” section. That will get you 30 days for free. Try it out and see if you like it. Go ahead and check it out GetFreshBooks.com, enter “AskPat.”
Here's today's question from Stacey.
Stacey: Hey Pat. My name's Stacey. Thank you so much for what you offer to the online community. I appreciate all the wisdom and resources that you have offered us as we've started a business in the last year. It really has been a source of growth and development for us. Thank you. My question today is: we have spent the last year really focusing on our physical products business and growing that online. That is finally established and moving on it's own. Now, if you had 72 hours uninterrupted to start working on or start initiating another stream of passive income, where would you focus your attention? That's my question.
Thanks so much, Pat. We look forward to hearing your answer.
Pat Flynn: Hey, Stacey. Thank you so much for the question. First of all, congrats on what you've done so far with your business. I think it's really smart that you focused on one area and you've gotten that down. Now you're moving on and focusing on to another one. Not necessarily moving on, forgetting about it, of course, but try to see what you can do today first to find thinking of ways you can make your income a little bit more passive is always good.
I will say that if I had 72 hours to start a new passive income stream, that in general, is very difficult to happen because passive income takes a lot of hard work in the beginning so that you can earn that passive income later on. 72 hours to start a new stream of passive income makes sense because there's things you can do during that 72 hours to get to that point where you're off in the right direction. However, to set up a completely passive income stream within 72 hours that you'll start to see income coming in without doing any work is pretty much impossible.
There's a lot of work that happens up front. That's what I would do. I would actually put in a ton of work to validate a particular product idea that would then become something passive later on. Now you might have done that already and actually that's where I would start. I would look at the things that are working for you now. Where's income coming in? Is there any way in that process from customer to purchase to anything even after that. Is there anything that you can automate within that process?
By thinking of it that way. By thinking of things that are already working and how you can take human out of that. Whether that's you and taking yourself out of that. Having somebody else, some other human take care of those things for you or having some sort of software or some system of automation to make those things happen much quicker and faster. That is going to help you create these passive income streams based off of and starting with the things you've already done. Think of it that way.
I would actually chart out. Okay, here are the different ways I can generate an income currently in my business. You said you have physical products. There might be some other ways. How can I automate this process as much as possible? That's going to help you create these passive income streams, again, based off of stuff you have started.
Now, if you want to start something new, if you're adding, for example, a different segment or leg to your brand where you want this to be passive at some point and have that focus moving forward. I would start with validating an idea. Starting with the problems of your audience and the pains. Starting with there to see if there's anything that you can do to create a kind of software, information, some sort of product or even a service that is able to duplicate itself in some way, shape or form. This can become a form of passive income.
In terms of product, how do you passive income a product? There's a great episode out there with Brian Casel of the Smart Passive Income Podcast, Episode 158. In that episode was how to productize your service based business. If you have a service, you can make it more automated. You can make it passive. That's SmartPassiveIncome.com/session158 to check that out.
Now, of course, information—something that can be replicated which is where the whole passive income thing comes from because you could potentially sell that without actually having to deliver it. It's automated in terms of the deliverable. Same thing goes with books. Same thing goes with software. That's something that when you create something that people want, people just download it through their shopping cart and it gets automatically delivered to them. That was the whole idea and why Smart Passive Income exists because I discovered this in 2008 when I built an ebook to help serve the audience that was looking to take this exam called the Lead Exam. That's where all this came from and why the passive part is important.
Now, I will say that there's nothing that is 100% passive. Nothing. There's always work that needs to be done to at least keep things up to date. Upkeep that which you create that isn't passive because even when you think about the stock market or your accounts in real estate, for example. Things that are traditionally considered more passive than other forms of income. You still have to upkeep those things. You still need to upgrade your portfolios. You still need somebody to manage the tenants that you have. The houses that you own and all those sorts of things. Nothing is 100% passive, but you can get to a point where you are not trading your time one for one for money. That's the whole idea here. That's why information is a great thing to do. If there is some information that your audience needs, that's a fantastic way to do it. In terms of building something that can be replicated, shared, sold and generate a passive income for you.
Software is another good one. That's where a lot of people are going these days. You can check out the episode I've done with Dane Maxwell which is 46 of the Smart Passive Income podcast. That's SmartPassiveIncome.com/session46. That's if you want to get information on how to reach out to businesses and extract ideas from conversations that you have with them. To then be able to create a software to help them do something that, for example, that they hate to do in their business or that they have to do over and over again that you can create something that can do much better and easier and quicker and more convenient for them.
I mean, really, a business is simply a potential solution to somebody's pain and problems. That's really where it really starts. It starts with discovering what those pains and problems are and creating something out of that. The thing is approaching something in terms of, how do I make—how do I create something for my audience that's going to be passive. I don't think that's the right approach because yes, you want to look down the road and see, well, how can you automate this process? I believe that's smart, obviously. If you primarily want to create something that isn't going to take a lot of work, for example, that's what I'm worried about. It's not going to work out. You need to put a lot of work up front. You need to figure out what those pains and problems are and create that solution. But when you create that solution, then you can decide, okay, how can I make this or is this something that would fit in my passive income portfolio. If not is there a way to take myself out of this or add another human being to help instead of myself. Or have a piece of software or something to automate that process.
Again, there's a lot that goes with this, Stacey. My recommendation would be to just continue to discover more about your target audience. To see if there's anything that you can do to help them and see if there's anything related to that that can help you in terms of building and adding to your passive income portfolio. I would also recommend checking out my upcoming book Will It Fly?. You can check it out at WillItFlyBook.com. That's a book all about how to validate your next business idea to see if it's actually going to work out for you or not.
The cool thing—just to go back to the 72 hours thing—I mean the first day, I would spend idea extracting. Trying to figure out what that next business idea is based off of those pains that my audience has. The next day would be to actually build a prototype or a mock up of that. Whether that's software, for example. Drawings. If it's some type of information product. It's an outline with modules and lessons. That sort of thing. I would actually go in the third day and talk to those people. Validate that product and see if it's actually a solution that makes sense for them. Actually try to get paid for it. In that way, you could get paid for your idea up front before you build it. That's how I would use my 72 hours.
Again, the first day, is idea extraction. Really discovering the pains and problems and making a list of those. Picking and choosing one that I feel I can best represent in a product that could be potentially passive down the road. Number two, the second day, the second 24 hours, I would spend actually creating that mock up. Defining and refining what that idea is. The third day, presenting it out there. Sharing it and trying to get it validated through. Not just people saying they want it because people say they want things all the time, but then when it's time to actually pay, they don't. You want to get certain amount of people to pay for that idea up front. Of course, they'll get early bird pricing and they'll get to work with you through that product which is the benefit of them coming on early. Also, they'll be able to help shape what that product actually is and what it becomes. That helps you, helps them, everybody's a winner. There's your first 72 hours.
Hopefully that answers your question, Stacey. We're going to send you an AskPat t-shirt for having your question featured here in the show. Thank you again so much. To everybody else out there whose asking questions. If you have a question that you would like potentially featured here on the show, just head on over to AskPat.com. You can ask right there on that page. I also want to think FreshBooks.com for sponsoring this episode. Serving over three million small business owners including myself with helping manage our business finances, especially come tax season, it's going to be very useful for you. If you would like to check out FreshBooks for free for 30 days, go ahead and go to GetFreshBooks.com and enter “AskPat” into the “How did you here about us?” section. Again, that's GetFreshBooks.com, enter “AskPat.”
Thank you, again, so much for listening in. To finish off the day, here's a quote by Dr. Seuss. He said, “You have brains in your head. You have feet in your shoes. You can steer yourself in any direction you choose.”
Take care, guys. I'll see you in the next episode of AskPat. Bye.
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