I’ve been writing a newsletter about online business since 2007. During those years, many times I’ve been sent emails from my subscribers with some version of this question –
Is there a low cost business idea that you can guarantee will bring me $5,000 to $10,000 a month in passive income within six months?
There are variations to this question. Some people are willing to work for a year to get a result, while the impatient people want money back in three months or less (!).
Sometimes I’m asked to teach this miracle business idea directly and they promise to pay me back with the profits they earn. Others ask for a course or program they can buy from me for under $100 that is guaranteed to work for them.
I understand the motivation behind these kinds of questions. I remember what is was like to feel desperately in need of income and believing that there must be some kind of business idea that I just haven’t discovered yet that will finally work for me to deliver those passive income dreams.
It doesn’t help that there are countless ads and channels on YouTube, blog articles and banner ads, all circulating some version of a story about a normal person starting a business and now earning thousands of dollars a month, a week, or even a day — and it took them just a few months to get going!
Sadly these people are often going after the desperate and naive, knowing that if they dangle monetary results in front of them, show lots of testimonials and pictures of Paypal payments or bank deposits, this will get their juices flowing with the belief that this might finally be the miracle they have been looking for.
They then proceed to buy access to some kind of program or course, spending what little savings they have only to barely even study what they paid for, feeling bad again that they wasted money and are not one step closer to having a successful business.
As a person who sells business training, I understand this market oh too well. It’s full of broke people who want short term solutions to their immediate money problems.
You Should Get A Job
This might sound like crazy advice from a life-long entrepreneur, but it’s the reply I’ve sent back to pretty much every person who sends me an email asking for the quickest, most reliable, low-cost way to earn income online.
I proceed to tell them that starting a business by definition is not a quick means to make money. There is no business that will work 100% of the time for every person, even if they do everything right.
The concept of ‘Passive Income’ is basically a myth, especially for people starting with nothing. It’s easier for the already rich to earn passive income because they can tap into assets they already have, a benefit the money-desperate do not have.
I suggest you consider getting a job first, at least a part time one, to cover your immediate financial needs and get to a place of surviving, so if you do decide to start a business, you can do so in a careful, patient, non-desperate mindset.
That’s what I did. I spent seven years trying to turn side hustles into full-time incomes, all while I worked two-to-three casual or part time jobs in university and after graduation.
I never needed a business to cover my rent and food, and I didn’t quit my jobs until I could see that my online income was more than my job income and had been consistent for at least a year (I explain this here: When Should You Quit Your Job To Focus Full Time On Your Online Business?).
Why The Miracle Business Idea Doesn’t Exist
I would not have been able to answer these questions about online business until I had succeeded with at least two of my own.
I say this because your first business success may be more about luck.
Actually, luck is always involved in business success, but there is being in the right place at the right time because you stumbled into it, and then there is luck because you planned and set up the conditions to get lucky. One is strategic, the other is just being in the water when the wave happens to be rising.
In my own entrepreneur history I stumbled into a rising trend — blogging. I had to put in the effort to capitalize on what was a new opportunity, but I just happened to be in the right place at the right time with the right motivation to do so.
More recently I built a business deliberately choosing to solve a specific pain point with a solution I already understood and had the resources to deliver. There was far less being in the right place at the right time in this situation. I was tackling a very old problem in terms of the internet — too many emails — so certainly not riding a recent trend!
But back to the important question…
Why is there no such thing as a business you can start and earn passive income in a few months following some guaranteed formula?
The first issue is you’re asking the wrong question.
Everything about this framework for an idea ignores the fact that a business is not some kind of magical entity that produces money just because you want money.
It’s like saying — “it’s raining, I wonder if there is some kind of dance I could do to avoid the rain, if only someone would give me the exact steps.”
Instead you need to see a problem — rain is falling from the sky — and then address it with a solution you charge money for. For example – “let’s place some kind of barrier between you and the sky and sell this barrier to other people who need to avoid getting wet when it rains.”
What you should be thinking about are the motivations behind spending money and to some degree, why people pay attention to something.
Why do people spend money? To solve a problem or meet some kind of need, be it for entertainment, status, or connection.
Attention is also a source of income online, so understanding how to attract it and direct it is a critical skill.
Even When You Understand You’re Still Far Away From Passive Income
When you change your focus towards solving problems and understanding why people spend money (rather than your own quest for some kind of quick passive income stream), you still have to face another sobering fact.
Building anything of value takes time.
A business requires you have something of value to sell, a means to deliver that value and a way to reach the right people who actually spend money in return for the value you offer.
…and even when you have all these things, to make it passive and not reliant on you, there has to be some kind of system run by people and technology, which create and deliver the value for you, and attract customers without you.
In my life teaching business and meeting entrepreneurs, even when I meet super financially successful people, more often than not they still personally play a big part in the success of their company.
Now this could be by choice, because they enjoy it and would rather work and be creative than just do nothing living off the profits from their entirely passive business, but in more cases than not, they are still required to make the business work, it will fail without them.
This could be because they are the personal brand that powers the attention (marketing) that brings in customers, or they create value through their knowledge, content or status, or they simply haven’t been able to build a team around them and set up systems so they can step away from the company.
They may be earning good money, but without them, things fall apart.
So, What’s The Best Business Idea?
I’ve been deliberately blunt in this article.
I need to be, because the people I am going to send this article to are feeling desperate about money, and that causes you to think only about making money.
Making money is not a goal. It’s a byproduct of the execution of an idea for a machine you can build that will deliver value. That value is something you can charge money for, hence you make money as a result. Or, in the short term, money comes from jobs you work for other people, earning money in return for labour.
Your focus should be to build the machine and to fully understand the problem-solution that machine is built to address. If you want to, you can then switch that machine on to autopilot mode by using some of that money to pay people to run the machine for you.
Ahh, but this doesn’t answer the question of what is the best business idea?
Unfortunately, there is no clear answer to this question because there are too many variables involved, including the biggest one — you!
However, I can certainly give you directions to explore.
But let me be clear about this, you are the energy force that makes something happen.
Study your personal motivations first, what are you willing to do, to learn, to commit to experimenting with in the real world to get a result, that is your first guiding principle.
3 Business Models That Are Proven To Work
I’ll end this article with three business models that are all proven to work for thousands, if not millions of people online. Some of these are easier and quicker to get started with, but they all take time to turn into a real, stable, consistent business.
1. Sell Services
I’ll start with what I consider the easiest to get started with.
Sell in-demand services that you either deliver yourself, or build a team to deliver for you. You start as a solo-freelancer or if you’d prefer to manage people, hire contractors while you focus on marketing and sales.
This is probably the hardest model of the three I’m going to cover to turn into a passive income stream, but it’s the quickest to start earning money. You could have your first customer tomorrow if you find a person who needs something you can provide.
You can follow my guide here to get started: 7 Steps To Launch A Home-Based Business Selling Services Online
2. Sell Education
Education in the form of courses, membership sites, live teaching or coaching, or selling books (audio and written) takes a little longer to get up and running with, but once created can be sold over and over again.
This business model can be turned into a near-passive or completely passive income with a few key people and technology platforms helping you.
However, education is harder to sell than services. People would rather pay for someone else to do it for them (a service), than learn how to do something themselves.
That being said, once you have established trust and credibility, and become a source of quality content on a topic, and captured an audience (ideally an email newsletter with thousands of subscribers), it becomes a lot easier to sell your digital products.
If this business model appeals to you, then my now world famous guide — The Blog Profits Blueprint — is a must download (it’s free).
3. Sell SAAS (Software As A Service)
Software is definitely the hardest to create, unless of course your talent is coding. If you’re a software engineer, or want to become one, then the SAAS model is fantastic.
You can build a utility or tool, something simple that solves a problem, which can generate a recurring income for you.
You of course still need to solve the marketing/sales issue, which unfortunately is where software engineers tend to struggle.
Once you have customers, the SAAS model is much easier to turn passive with a few key team members running things for you (customer support, engineer for bug fixing and adding new features, marketing person to bring in new customers, etc).
If you’re not a software engineer, you’re going to need one — and unless they become your co-founder, they won’t be cheap. This is why it’s often hard to start a software company without at least some kind of seed money or the ability to code yourself.
The other common business model I haven’t mentioned here is to sell physical products — e-commerce.
It’s not that I don’t think e-commerce is a viable business model, it definitely is and can become passive if you have a good team running your business.
However, I haven’t personally done much in e-commerce, primarily because I dislike the small profit margins common with physical products and the often race-to-the bottom on pricing due to so much competition.
Perhaps the main reason I haven’t dived into e-commerce is I’ve never been passionate enough about a specific product category to go after it. If you have a product you love, believe in, or have created yourself, that can be a great source of motivation to make e-commerce the right business model for you.
No matter what business model you choose, you have to have clarity and realistic expectations about what you are about to build. If all you feel is desperation about money, get a job, seriously, it’s the smart choice to move you away from desperation.
Stay positive, stay focused, and build something that solves problems.
P.S. I didn’t mention one other option because it requires upfront money to get started — you could acquire a business.
Buying an already functioning online business in any of the models I mentioned above – services agency, content/education business, SAAS or e-commerce – is very possible.
You can start by searching sites like Flippa.com and Microacquire.com to see what is for sale.