Passive Income: The Sexiest Freelance Income

A little bit ago, I talked about the importance of diversifying your income. I can't stress the importance of this. As an independent worker, you should never feel forced to rely on a single stream of income. If you do, you may as well have remained chained to your old 9-5.

The beauty of working independently is that you can do all kinds of stuff. If you want to dabble in a variety of different projects, you can. Your clients typically cannot set any unfair non-compete clauses on you. If they do, I'd probably suggest that you run far away. Why? Because you are not their employee. Non-compete agreements seem too much like employment. Stay far, far away...

I digress, one cool way to diversify your income is to get into creating passive income. What is passive income, you say? It's income that you earn with little to no future effort. For example, if you create a training seminar and sell it online, you likely won't have to do much with it after the fact, but you will continue to earn money as it sells. That's like earning money while you sleep. That's sexy.

One of the goals I announced was to work on earning at least $500 per month in passive income each month by the start of October. How do I plan to do this? One way is through this blog, but I know that blogging for money is a long-term thing, so I can't wholly rely on that. I haven't quite had a chance to really think through what else I can do to earn passively, but I will keep you all updated here. I will likely look into creating some product specifically related to freelancing and start selling it. Again, I'm not sure.

I've been listening to a few podcasts and consistently reading Pat Flynn's blog (he talks about earning smart passive income). He is an advisor and mentor for many of us in the business blogging world - myself included. He is always very candid in everything that he posts - all the way down to him posting his monthly earnings.

I will no doubt be talking more about passive income, but I'd like to know, are you aiming to start earning (or increase) passive income this year? What are your goals? Let's keep each other on track...

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The Importance of Diversification

Diversification isn't just a term for investments. As a matter of fact, the term extends into all areas of life - including business. As a freelancer, you've no doubt heard someone tell you that you "shouldn't put all of your eggs in one basket". Even if you aren't a freelancer, you've probably heard that saying before. As you begin to grow your business, it's important to introduce a variety of streams of income. Being too reliant on any one stream can be detrimental to your financial health.

Say for instance you are working with a particular client and are earning enough to maintain a decent living. That's great! But, what happens when things start to go south for that client and they need to cut back on the services they have hired your for or worse yet - they FIRE you?

If you've been keeping all of your eggs in a single basket, you won't be prepared for such a change. Your world will be turned upside down and your financial status will plummet. Dramatic changes, such as this, can send you right back on the job hunt, and we already discussed that you don't want to quit freelancing and go back to slave labor, so that won't work - at least not in terms of your long-term goals. So, what's the solution?

Since you can't rewind time (wouldn't it be neat if you could?), you have to refocus on the future, which can me getting a "real" job for just a bit as you sort out your finances and gradually bridge the gap back into freelancing. If you have a nest egg/emergency fund saved and can stay afloat for a little bit, it would be best to continue on in your search for additional clients.

The emphasis here is on the "s" at the end of that word. You must not settle for only one client, but should focus on having multiple clients. That way, you can be sure that you aren't as affected in the future. Again, let's not put all of our eggs in one basket. Diversify - have several clients in differing industries. That way, there's less opportunity for your work to become mundane and your make sure that if one industry "folds", you still have other clients that are still staying "afloat".

Do you have a diverse book of business or are you putting all of your eggs in one basket?

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