All about passive and diversified income for freelancers

People say that one of the joys of being a freelancer is the freedom. That you don’t have to work for ‘the man’.

That’s true in some senses, but in reality, it’s the same stuff with a different man. Especially as you work for bigger clients and make more money. There are still deadlines and still difficult people to deal with.

Our clients are our bosses.

That’s why I like building up multiple sources of income. It diversifies risk, keeps life interesting, and sometimes removes the need for me to be actively working to produce income.

Here are some ideas for creating alternative income streams.

Create a product and sell it. I often looked at sites for sale on Flippa and on the old Sitepoint marketplace. I saw an iphone unlocking site sell for 1.5 million. I have seen a simple forum population script making over $70k per year.

I see those things and realise I can do the same thing. As a result, selling software is an area I am moving into increasingly.

You already know about Freelance Total, but you may not know I also have two other software products, with two more products planned for this year.

Doing these projects not only creates a bit of money on the side, it also makes me a better freelancer. My marketing skills have increased dramatically. I have experience making sites and products for myself, and especially when I’m talking to potential clients that are a start-up, that experience counts for a lot.

Offer webhosting. It takes some knowledge to offer web hosting, but I believe it’s well worth it. I offer hosting packages to my clients and my clients only. Probably about 60-75% of clients host with me. I’ve been doing it for three years now, and the income just keeps building.

The downside is increased responsibility, but well worth it if you ask me.

Other income producing websites. Maybe you’ve got an idea for a website that can make some money. Whether it be publishing, blogging, affiliate marketing or whatever.

For me, I am a partner in a couple of e-commerce stores. The agreement is that I manage the websites, and my partner handles the operations side of the business. This allows me to work on it when I have the time. It allows my partner to have access to sweet websites without having to lay down large sums of cash up front.

Like creating a product, having experience in ecommerce is great when talking to potential ecommerce clients. My money is where my mouth is.

Other examples that I’ve seen other web designers do is niche informational sites, adsense sites, etc.

Designing themes. This is a great one for designers. I’ve never personally created a theme to sell, but it’s an endeavour that’s well worth it for designers. Especially if it helps to build a portfolio.

Stock photography. Again, this is something I don’t have personal experience with. But if you have the skills, it’s a great thing to do.

Be smart about it

I’m a strong believer in constantly building alternative and passive income streams. But there are pitfalls to avoid. It’s easy to spend more time on things than they’re worth, especially if you’re like me and really hate working for any sort of ‘man’. Building passive income streams takes a large investment of time up front, and it’s important that the time you put in is likely to see returns. There’s no point putting 200 hours of effort in a project, if over 5 years it will pay $2000.

There’s an element of risk in going after passive income. Do your research and make sure the reward is there.

Don’t spread yourself too thin

There’s nothing worse than over-committing and under delivering/being late. And I have to admit I have done it on some occasions. If clients are making the majority of your income, clients come first. After all, they’re the ones paying the bills. (for now =))

Leverage your resources

Leverage the resources you have and the situations you’re in. One of my products, I made after one of my clients wanted a solution, and the current market offerings were lacking. Because it looked like I had to do it anyway, it made sense to capitalize on it and sell it.

Partnerships and other people are resources. There’s no way I have time to process orders in an e-commerce store. There’s no way I can code as much as I would like.

Partner with people where they get the most out of your skills, you don’t spread yourself too thin, and you get the most out of their skills.

Do you diversify your income streams?

I’d be really interested to hear some of the other ways people are diversifying their income. If you have something to share, please do!

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