- There are several different ways to generate passive income
and make money online. And in this video I'm going to share three completely different
legitimate strategies that you could choose from to build a passive income business of your own. Since 2008, I've built
several different businesses that have utilized one or
more of these business models. I've been featured in magazines and articles across the globe. And since I've started my journey, I've generated over five
million dollars in earnings. In fact, all of my income and
expenses since October of 2008 have been tracked and can
be seen online publicly on SmartPassiveIncome.com. Now, instead of reading all
of those income reports, make sure you stick around because I'm gonna distill
the decade of learning into three completely
different business models that you can choose from. So you can decide which path you want to go down from this day forward. Those three models are the F.P. Model, the A.A. Model, and the E.P. Model. What are those? - [Man] (screaming) What are those? - Well, I'll tell you in this video. But the real trick is finding out which one actually best suits you. And to help you, I'm gonna give you a real life example of each of
these and how to get started. Hi, my name is Pat Flynn,
founder of SmartPassiveIncome.com and I'm here to help you make
more money, save more time, and help more people too. Now let's talk passive income. What is passive income? Well, there are many
different definitions of it. But my definition and the
way I like to teach it is it's building online
businesses that can work for you. That allow you to generate
income and grow and scale without a real-time presence. In other words, we don't
trade our time for money. You build something up
front that can continue to work for you over time. - Pat, is this even possible? - Yes! It's definitely possible. - Is this something you can do without investing a boatload of money? - Yes! Unlike real estate or
investing in the stock market, you can build something with
relatively little to no money that can continue to pay
you over and over again. - And finally, is this
something that's easy to do? - No, definitely not. Passive income is not easy. Some people are gonna tell you otherwise. They're gonna tell you about
a magic button or formula or a blueprint where you can
get rich all by doing nothing. And don't even get me
started on the people who say that this stuff can happen overnight. It doesn't! And if that's what you're
looking for, well, I'm sorry. You're in the wrong
place because guess what? It does not happen overnight. It takes a lot of hard work. You gotta put in the hours,
you gotta work hard now so you can build these assets that can continue to work for you later. Because once you start to build
that passive income stream, you start to have a little bit
of flexibility and freedom. You can have more time to do
more things or do less things. Or build even more
passive incomes streams. So please, as I introduce these three business models to you, do realize that they yes, take time, but also, it's very much worth it. Cool? Cool. Alright let's get started. The F.P. Model stands for the
Freelance to Product Model. Starting with freelancing
and then finding a problem that can be solved with a product. Freelancing is working
for different companies and getting paid for certain skills that you have that they need. Now you might be thinking,
Pat, what the heck? You said this was about passive income, well, freelancing is active income. You are trading your time for money. What's the deal? Well the deal is, we're
just getting started. So, hear me out. First of all, freelancing,
I feel is the number one way to get started in building
a business of your own. You're gonna learn a lot of skills running your own business as a freelancer. And not only that, you're
gonna get paid much quicker too than if you just started with trying to make passive income first because that's a great way to fail. You need to start with
the active income first before you can convert that
into the passive income later. But beyond that, my
absolute favorite reason why I recommend freelancing
to start is this. You'll get to know the industry
that you're in quite well. Perhaps so well that
you can find the holes, meaning the opportunities,
for you to create a product-based passive income business. In other words, by
freelancing in a space you have interest in, you not
only have the opportunity to make money now from your skill sets, but you also have the
opportunity to find opportunities to build products that can continue to help you earn money over time. Let me tell you about
my friend, Brian Casel. He too was once a freelancer, who was only making money by
billing client after client. - [Brian] I actually
used to bill per project. I come from a background
as a freelance web designer and I used to kinda build per project and occasionally by the hour, but either way it was still
very much tied to my time. I could only fit in a
certain number of projects and I was basically living like project to project throughout the year. - After doing web designer for years, he eventually found a huge
need for website and design in the restaurant and food truck space. Then after getting tired of working with client after client,
he decided to turn his service base business
into a productized business. - [Brian] I kind of wanted
to move away from that and get into a more standardized,
predictable service, and essentially a productized service that just does one thing extremely well, solves one problem exceptionally well, and then it's really designed
for one particular client. And that just removes that
whole discovery negotiation from the table so that I can just focus on providing a great service
and kind of leave it at that. - So what he did was remove
all that individual client work and then create actual
templates and products that would serve that market. They would pick the product,
he would serve it to them. Either by just choosing it and
having it already available or having his team, other human beings, actually create those
things for those clients. You can catch more of Brian in
his interview on Session 158 of the Smart Passive Income podcast which I will link to you
in the description below. All active businesses can be shifted and turned into a more passive business by either having products
that are already made, by having software do a
lot of legwork for you, or even other human
beings do that work too. Now let me tell you about how I made my first passive income
online back in 2008 with business model number two. The A.A. Model stands
for Alcoholics Anonymous, Anti Aircraft, Alumni
Association, Acronym Abuse. Just kidding. Sorry, I get a little
carried away sometimes. It actually stands for
Audience and Advertising Model. It's one of the most used forms of building passive income online, however, it does come with
a fair amount of warnings which I will share with
you in just a minute. If you're a YouTuber making
money through AdSense, then you are following the A.A. Model because you're building an audience and then generating an income
through your viewership. If you're a blogger and you're
getting a lot of traffic to your website and you are making money through advertising and or sponsorships, well then you're also
following the A.A. Model. A podcast, with sponsorships, A.A. Model. You get the idea, right? You have this audience,
you have these advertisers who want to get in front of that audience and you marry the two
and you get paid for it. When I started building my
architectural related business back in 2008 online, my first dollar was actually made through advertising. I'd spent months building
credibility in this space and actually getting traffic to my website and then I through an ad on my website one day and I made $1.18. I mean sure, I can sure that
underneath my couch cushion, but that wasn't the point. The point was the fact
that I actually was able to build something online, put an ad, and actually make money without
me having to do anything. Although of course, it took
several months to create that, but point being, it was possible. It motivated me to move forward. And eventually, I put
more ads on the site. My traffic started to grow
and then I was earning anywhere between $30 and $50 a day just through advertising alone. Now here's the funny thing. I built a completely brand new website, I got even more traffic to
that one than my previous one. I put ads on it and I didn't
even make more than $50 after six months of advertising. And that's one of the
downsides of the A.A. Model. Ads are not super predictable, especially auto-generated ones like ones who Google AdSense and such. Secondly, although I've done advertising and sponsorships in the past and have made hundreds and
thousands of dollars doing so, the truth is, that it takes a lot of time for this business model to actually start to generate an income for you because you need to
build that audience first and it takes time to build an audience. And more than that, what
happens when you build this audience that are
following on a platform that ends up changing their algorithm or how often you actually get seen in front of this audience
that you've built. Super stressful for a lot of people which is why I always recommend
building an email list. In order to build an
audience, you need a platform, you need to have
something worth following. Something worth sharing
and valuable to others and that of course, takes time. Now that's not to say that you
can't build a huge audience in a very short period of time. A lot of people have become quite famous in a short time period. (laughing) As often as we hear about those stories, we also don't hear about the stories, the millions of people who are
struggling every single day just to get a few more fans and followers. But the cool thing is, you
don't need a huge audience in order to generate passive
income and make money online. That's why if I had the choice, I'd actually go with the E.P. Model. The E.P. Model stands for
the Expert to Product Model. Now don't let the term
expert scare you away because it's probably not what you think. Most people think an expert is somebody who is a master at something. Somebody with a special
degree or special training. Somebody who has put in those 10,000 hours who is just great. That's not the kind of
expert I'm talking about. I'm talking about the fact
that you can be an expert in the eyes of somebody else just by knowing a little
bit more than they do. And guess what, you have
experiences, you have ideas, you have opinions that
are all unique to you. Your goal is to become just
expert enough to earn the trust from others so that can want
to learn even more from you. So quick story, remember that $1.18 I found in the couch among other things? Well, even when that
increased to $30 to $50 a day, it still wasn't enough to live off of. So I looked for other options. In August of 2008 after a few
people starting to know I was and how I was helping them
pass this exam on my blog, I wrote an e-book that I sold for $19.95. It included all the
information I knew about how to pass this exam and I just
sold it simply from my blog. On October 2nd, 2008 when I
finally put that book online, I sold my first copy which
was an amazing feeling. And then fast forward through
all of October of 2008, I ended up making $7,126.91
just from e-book sales alone. The craziest part about all
this is that I would wake up in the morning and there
would be more money in my bank account because
people bought my book overnight. When you think about it an
online store that sales something that's digital is something
that is open 24 hours a day, seven days a week, 365 days a year. In using tools and software
and systems, you can automate the delivery process so that
you literally don't have to do anything to serve that audience. Now in the description below, I'll put some of the
tools that I was using and also some more
articles about that story about how all that happened. But let's continue, what's
important to realize here though is that with this exam that
I was teaching people about, I didn't get a perfect score. In fact, I didn't even get
close to a perfect score. I passed, yes, but I also
knew a lot about this exam. Way more than somebody who was just diving into the studying of this. And it was because that, because I was just a
few steps ahead of them, they trusted me to help
them with that information. I provided a lot of great, free value to help them along the way. I engaged in conversations
in the comments section and on forums to get known. Most of all, I just really
cared about those people because I struggled
big time with that exam and I was helping people not do the same. Here's the truth, guys. A successful business is something that successfully solves a problem. You make more money by two ways. One, solving more people's problems. Or number two, solving bigger problems. Now let's take this one step further. The cool thing about this E.P. Model, the Expert to Product Model, is that sometimes these
products don't have to be yours. You can actually generate income
through the recommendation of other people or other
companies products. This is something called
Affiliate Marketing. It's how I've made
actually most of my money since starting in 2008. First time I did this was way
back with the same website, the architecture exam website. I connected with a company
that also sold practice exams and I got paid $22 for every person who I sold one of those things. And over the course of
the years since then, I've generated over $250,000 simply by recommending that product alone. Again, a product that was not mine, but it was still helpful to my audience. This was all done with just
thousands of visitors a month, not millions or hundreds of
thousands, just a few thousand. So, how do you get started
with the E.P. Model? Well first, you have to
be an expert in the eyes of those who you are looking to serve. And remember, you do not need all those qualifications and credibility. Actually, some people gain
expertise and credibility through just sharing their experience learning something too. Which is what I've done
on SmartPassiveIncome.com and many other people in
the personal finance base or in fitness. You think about it, they're
talking about their journey. They are building trust and authority through sharing their experiences and you can do the same thing too. Another great way to get
started is to actually in an area of interest that you have, go out and start talking to people. And asking them questions like, what are struggling with right now? What are your biggest pains? What's something that you
wish existed, that did not? And that'll give you some
ideas about where to start and what positions you
might be able to take. Remember, a successful business
solves people's problems. And at first, you're
gonna have to do the work. You're gonna have to do the legwork, put in the time, put in the hours. But of course, it's about
building something now so you can reap the benefits later. Because using software, using
tools, using automation, using other people that you hire, you can actually turn this business that helps solve people's
problems to something that can be automated for you. So you can generate passive income too. For more info about passive income, make sure you visit SmartPassiveIncome.com or subscribe to the Smart
Passive Income podcast which would be really cool. And if you like this video, make sure you subscribe right now and click on that notification bell so that you get notice when
new videos go live to you. Now quick question for you to answer below in the comments section before
you leave and that is this. Which of those business models
makes the most sense for you? And if you implement that business model and earn an addition, let's
just say, $500 a month. What could an extra $500 a month, generated passively, do for you? Remember, it doesn't happen
overnight, it takes work. Hopefully this'll give
you a great head start. Make sure to check out
SmartPassiveIncome.com for even more info about how to do it all. So, thanks again, appreciate you and look forward to serving
you in the next video.
