When you own a business, it can seem like if you aren't working, you're losing money. But what if you could earn money 24/7, without spending any (or at least much) of your precious personal time? It's possible — through the power of passive income.
This is money you earn with little to no investment of time or resources. You may have to put in some work upfront to get a project going, but it should start earning autonomously before long. Here are a few of the simplest, most effective ways to earn passive income for your small business.
1. Referral Programs
Referrals are a great way to earn business. In fact, they're so valuable that other businesses are willing to pay for them. You could contact local businesses in your area (not your competitors, obviously) and see if they offer any sort of payment for referrals. For example, if you successfully refer a client, a company might offer you 10 percent of that client's first sale. You referred the client, but you're basically earning money while the other business does all the work.
2. Cash Back Credit Cards
If your business isn't using reward credit cards, you're missing out on free money. These cards can offer cash back, free flights or hotel stays, gift cards and other generous rewards (or points toward earning them) whenever you make a purchase. All you have to do is use your card to pay for your regular business expenses. Pro tip: Consider making certain employees authorized users on the company card, too, so that their business spending counts.
3. Publish Videos Online
What does your business do that could interest or be of value to people? If your company has a special area of expertise, you could consider creating some short training videos. For example, a plumber could create a series showing how to fix basic problems around the house and put them up on YouTube, with support from a Google AdSense account. As you get views, you'll collect a small share of the advertising revenue.
If you don't want to give this advice away for free, and your website has good traffic, you could try selling your videos on your site.
4. Rent Out Spare Office Space
If you aren't using all the space in your office, you could rent it out. You're already paying for it, so why not use it? You could store goods for another company, or if you have enough space, rent out a spare room for another business to operate in.
5. Invest Your Profits
Depending on your financial situation, you could consider putting your profits to work in investments, rather than keeping them in a low-interest bank account. Here are a few investment options to consider:
- Money market funds and bank CDs don't offer big returns, but they're very safe, and you can invest a small amount (even just a few hundred dollars). These can be good options if you think you may need to use the money in a short time frame, such as later in the year.
- Bonds are medium risk, medium return. You can invest a small amount, and they may be a good option if you won't need to use the money for three to five years.
- Stocks and mutual funds carry a higher risk for a higher return. You can still start with a small amount, but generally these are best for big, long-term investments.
- Real estate rentals require a decent sum upfront for the down payment (thousands of dollars). They can take a lot more work than the other options, but they can yield very high returns. This is another option better suited to long-term savings.
Determining the best investment options for your business — or, indeed, whether it makes sense to invest at all — depends on your profits, financial situation and your personal and professional goals. If you're unsure what the best strategy is for your business and specific circumstances, be sure to consult with an experienced financial advisor before making an investment.
By building passive income, you can help boost your bottom line. With this extra cash flow, you could pay for a new social media marketing campaign, provide more employee perks like free lunches or give yourself a larger year-end bonus. That's certainly worth the effort, so get started today.
This article provides general information, and should not be construed as specific legal, HR, financial, insurance, tax or accounting advice. As with all matters of a legal or human resources nature, you should consult with your own legal counsel and human resources professionals. ADP shall not be liable for any direct, indirect, special, consequential, incidental, punitive or exemplary damages in connection with the use by you or anyone of the information provided herein.