Sources of Passive Income for Business Owners

Owning a business provides many opportunities to create sources of passive income that interconnect and enhance your business. Passive Income is income generated from sources that require some upfront work and provide a steady stream of income without additional work.

Purchase Rental Property

I know that I hate writing my monthly rental check because the money that is virtually thrown away. I feel that business owners should consider owning their business’s property.

Owning your property is like paying yourself. To maximize the benefits of commercial property ownership, you should setup a separate entity (corporation, LLC) for the management of the property. Your current business should still pay rent every month to this separate entity. There are too many reasons for setup a separate business for the commercial real estate to explain here. Speak to your accountant about your best options and the benefits.

If you have multiple individual units to rent, then you are creating a great passive income stream. To reduce the amount of your time invested in managing the property, you can hire a property management company to manage the details.

Vending Machines

Placing vending machines at your business is a great form of passive income. Since I own a Martial Arts School, we offer water and energy drinks. Coca Cola provides and services the machine FREE as long as you purchase the drinks from them. The cost per case is cheaper than you can get in a store.

Our vending machines earn about $60 per month. We need to fill the vending machine only once every month although we could easily let it sit for two months without any problems.

Don’t limit the vending machine idea to drinks. It could be a snack machine, gumballs, or “a grab a stuffed animal with a claw” game. Take a step back, look at your business, and find the machine that fits.

Fund an IRA

This is a no-brainer. Investing money in mutual funds, stocks, and bonds generates a passive income over the long run. This means investing for the long haul – no day trading.

I recently read many blog posts about investing and market timing. I believe market timing is difficult because we do not have a crystal ball to read the future.

But…

Here’s a method that I use to discipline myself to buy low and sell high. First, pick mutual funds you wish to purchase, preferably in different asset classes. Then, decide the percentage of your total you wish to invest. Finally, at the same time every year rebalance your portfolio to the chosen percentages.

For example, if you invest 25% of your money in 4 mutual funds, after a year check the totals and sell stocks with more than 25% and buy the mutual funds with less than 25%. This method forces you to buy low and sell high once a year.

Writing Articles

E-zines are popping up everywhere on the internet. Writing articles assist you in promoting your business and provides valuable back links to your websites to increase traffic. At the same time, some of them pay you for the submission or share advertising dollars. This is a win-win.

For more information, read my article Making Money on Your Articles. Currently, Helium is producing the most passive income for me.

Write a Book or E-book

Writing a book is easier than ever with the advent of self publishing. Writing an e-book will not only generate additional revenues but will also propel you and your business to the status of the Obvious Expert.

Blog or Website Income

Providing great web content will generate traffic to your website or blog. Earning additional passive income is as easy as adding Adsense ads to your site or getting involve in affiliate marketing.

Do you have any other ideas for generating passive income? Leave a comment and share with other readers.