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June 22, 2008

Generating Passive Income

I have been fortunate enough to publish three books in my chosen field of consulting. Great stuff, generates me a good solid passive income stream, and also does wonders for my credibility as an “expert” in my chosen field.

Taking advice from Alan Weiss, as I always have done, I am trying to expand what I am writing about. I’m trying to get away from writing more and more about less and less for a limited audience.

So my next two books will probably be on other areas that I have some expertise in, namely areas of consulting and areas related to job hunting.

While books are fantastic sources of passive revenue, there are other methods. These used to be a lot more limited than they are today; however, with a bit of imagination, some talent, and street smart marketing, they are all avenues you can exploit for profit and branding.

I have tried some of these, profitably, and I am exploring others, but all of them look like being worth checking.

Licensing IP

This is possibly the king of all passive income generators within the consulting game. Hard to do, requires a lot of attention to early detail, marketing and (of course) it has to have fee earning potential.

Writing Books

Remain a great earner for practicing consultants, not only for their potential to generate income, but only as a source for increasing the writers “expert” status.

Self Published Books and eBooks

A publishing sub-category is self published books and e-books. The latter is going through a phenomenal transformation as the Amazon Kindle gains ground, I am not really sure what this could mean for eBooks in the near future, but it could be a savior of the industry segment. Good one if you can master it.

Audio books on

I think this is a real showstopper. Audio books do not have to be in print already, and many of the people listening to them are in the business ranks. Right now I am listening my way through “Eat That Frog”, and I get at least one every week to listen to on my iPod while travelling.


These are in a similar vein to the above audible books; podcasts that people would pay money to subscribe to. There are only a few of these around, (and I don’t know of any from Consultants), but there are several who make money from paid advertisers!

Recurring Services Revenue

There are two of these that I am aware of, and both are variations of the same approach. This is a tricky one, and one I have only done once. It works something like this.

First get buy in to an idea, and then get a purchase order to conduct a review to work out (categorically) how much this is going to be worth to the client if they implement it.

Once that is known, and you have a high degree of confidence in it, then the deal starts. Take it to an insurer and get it underwritten. This will require a lot of facts, a lot of proving and a lot of good will besides.

The point is that you can then offer the client the implementation for free, and a guaranteed saving which is underwritten. So if they (for some reason) do not make it, the underwriter will cover it.

If they make anything over that, then it is payment for your company for a fixed period. In the contract I was involved with the passive income we generated was in the millions, for a period of three years.

The second recurring revenue approach is the popular risk/reward approach. In this type of deal the work is done on a reduced rate, and there is a firm agreement on the cut of any additional savings for a given period.

There are probably a lot more ways, if you are aware of any that I haven’t listed here, or any twists on what’s here, then please share them with us.

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