During my initial research for the Knitting for a Living project I conducted a survey asking my readers a few questions, one of them being the following one: “Do you know the term “passive income” and its meaning?
The answer was clear: only 20% knew its meaning, and more than 50% had never heard about this term before.
It might be caused by my audience – usually, knitters are not automatically into online marketing and publishing – so the result was no that surprising. Nevertheless this project educates you about how to make a living from knitting – or at least, how I’m doing it – and passive income is a big, big part of it.
So let me explain what passive income is all about.
What is Passive Income?
In my experience, what most of us entrepreneurs crave – and what I focus on here at Knitting For A Living – is the following:
Building online businesses that take advantage of systems of automation that allow transactions, cash flow, and growth to happen without requiring a real-time presence.
In other words, we don’t trade time for money.
Instead, we invest our time upfront creating valuable products and experiences. We work hard now to continually harvest the benefits later (this phrasing is not mine – it’s by Pat Flynn. Have a look.)
No More Trading Time for Money
Trading time for money means the only way of increasing your income is either to work more hours, or to charge more money per hour. Usually, as an employee, your possibilities of implementing those changes are limited.
By decoupling your working hours from your income you create a world in which you can work where, how much, what YOU want. Passive income does exactly that by decoupling the amount of work needed for creating a product from the number of products you are going to sell.
How is this possible?
This is made possible by creating digital products: you have to create the product only once. But the number of times you can sell identical copies of it are indefinite!
Let me explain this concept by an example.
Imagine your product is a table and you need ten hours to produce one single table. If you want to sell 20 tables you need 200 hours for producing them.
But now imagine your product is a digital item: an ebook (or even a real paperback book), or a song in mp3 format. How many books (songs, …) do you need to create to sell 20 copies of the same book or song?
One. Just one.
Possible Sources of Passive Income
Generating passive income is easy if you’re a millionaire already – just invest your money and wait until it pays off. If you’re not – as most people are, including me – things are a bit different.
If you want to dive deep into this subject I strongly recommend Pat Flynn’s articles and podcasts about passive income.
As mentioned above, the best way of creating passive income is selling digital products. In our case – being knitters, crocheters, crafters of any kind – our digital products are most likely patterns.
We can use patterns to sell single copies of them, create books, or teach online. These are our sources of passive income.
How to get started with generating passive income as a knitter will be covered in the next posts on this blog. I’m looking forward to publishing them, and I hope you enjoyed this article!
turn your hobby into income.
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