How to Make Passive Income (Passive Income 101 Part 1)

Pssst. This post was originally published on my old blog, back when I was designing resumes on the side. Since I’ve quit my corporate job and am now designing and selling digital downloads full time here at Pipkin Paper Company, I thought this post was a better fit here.

This little paper business all started with a question:

How can I make money when I don’t have a job or any money to invest upfront?

When I first quit my job, I thought I was just going to be taking a couple months off from the corporate world to figure out my next move before finding a new desk job. After spending 7 years in D.C., waking up at 4 am, commuting an hour each way (on a good day), and barely having enough time to eat dinner before it was bedtime all over again, I was ready for a more flexible line of work. One that preferably came with less time at a desk, more telework opportunities, amazing pay, and lots of artsy fartsy projects to dive into.

Aka the white elephant of jobs.

Although I have always wanted to start my own business, I figured that the internet had become such a saturated market that the last place I could earn a real income would be on a site like Etsy. But with a near fanatical need to carry my own weight, I set up shop nonetheless to make a little extra money while I was looking for a new gig.

And to be perfectly honest, I haven’t really looked back since.

I’ve found that it’s not only possible to make money on Etsy, it’s possible to make money passively. And that frees up your time so you can work on other things, or better yet, not have to work at all.

Here’s I’ve learned over the years about how to make passive income.

How to Make Passive Income

What is passive income?

Most small businesses, especially small Etsy businesses, earn non-passive income. These shops sell physical goods or services that require someone’s time (typically the owner’s) in order to make a sale and sustain the business. If the owner isn’t making products, they aren’t making money.

Passive income, on the other hand, is earned whether or not the owner is actively managing the shop or not. This type of business can be set up, fully stocked, and then left alone to earn income while the owner goes off and does other things. While it does take a large amount of time and effort to get the shop up and running, it takes very little, if any, time to maintain it.

I call this the set-it-and-forget-it model and it’s the easiest way to make money on the web.

How can I start earning passive income quickly + easily?

Three words: Etsy digital downloads.

A couple years ago, Etsy introduced digital downloads to its online marketplace. Once created, these e-products can be sold for as long as the shop remains open without any additional effort on the part of the seller.

I sell digital downloads on Etsy because it’s the easiest way to get up and running if you don’t currently have a website, a storefront or an audience. But you can sell them on your own website or another online marketplace. Where you sell them doesn’t really matter.

You just need to get started.

Here’s how:

1 | Choose a digital product to sell

Anything you can make once and deliver digitally is fair game. But here are some passive income ideas to get your inspiration flowing:

• Patterns
• Invitations
• Personalized stationery
• Resumes, cover letters, and business cards
• Calendars
• Ebooks
• Party decorations
• Iron-on tee shirt designs
• Adobe Photoshop actions
• Vector design elements for Adobe Illustrator
• Fonts
• Stock photography
  –

What you sell just depends on your medium of choice.

If you’re a photographer who loves Photoshop, you can create light action sets to sell to other photographers. Or if you love to knit, turn your simple infinity scarf design into a pattern so others can make it too.  If you like to draw, why not create some art prints your customers can print and frame themselves.

Use your hobby as a jumping off point for creating digital products that help other creatives do what you do.

2 | Create your product

You don’t have to be a designer to create digital products that sell. I’ve seen Etsy shops make a killing by selling e-books, meal plans and tutorials.

It’s the content that matters, not how flashy the product looks.

If you’re not a designer or photographer and you can’t afford to buy the Adobe suite (that’s what I use to make my products) there are a couple things you can do to get started anyway.

1. If cost is the issue, look into getting Adobe Creative Suite online. Adobe realized that most of us can’t afford to buy their software, so now they’ve made it available on a subscription basis. For $21 a month you can get Adobe Creative Cloud which comes with all the same functionality as their standard software but without the expensive price tag.
2. Use an online graphic design site like Canva. While I use Adobe for my design work, I recently started using Canva for making branded graphics and shop photos. And I love it. It doesn’t have all the bells and whistles of Photoshop or Illustrator, but it’s good enough for most things, especially if you’re just getting started. It uses a drag-and-drop interface, which makes it easy for non-designers to create pretty, professional looking documents that others would gladly pay for.
3. Create templates using Microsoft Word. This is how I started making my templates and it worked pretty well for a newbie. Not only is Word pretty inexpensive to buy if you don’t already have it (and to make it even cheaper, check eBay for used older versions that still include the authentication key), but it’s the software that most people use to edit their documents – thus making your templates easy to use and available to a wider audience.
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3 | Setup your shop – but don’t overthink it

Do you know what kills an Etsy shop faster than anything else?

Not having enough products.

I know listing your items takes a lot of time. Between creating dozens of images, writing unique listing descriptions, and finding keywords, you’re bound to feel overwhelmed.

But in the long run, none of those things matter as much filling your shop.

You should be spending 90% of your time designing new products and 10% of your time listing them.

Don’t worry about:

• Taking perfect pictures
• Having more than 3-4 images for each item
• Writing different listing descriptions
• Perfecting your product
  –

Do worry about:

• Creating as many different products as you can (aim for 40 to start, but 100 is better)
• Listing new products every week
• Using keywords that will bring you the most traffic (use a tool like Marmalead to find out what those are)
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4 | Tell people about it

You can wait for Etsy to start dropping customers in your lap (spoiler alert: you’ll be waiting a while) or you can just go out and get them.

Pinterest is my go-to marketing platform and it’s brought me thousands of sales over the years. But use whatever platform you like. (In fact, use a few different ones and see which one works the best.)

Only when you start getting your products in front of people will you start making sales.

How much money can I make selling digital products?

Therein lies the beauty of passive income products. You can make as much money as you want. The only limit to your earnings is the number of shops you can open and the number of digital products you’re able to create.

Obviously, the more items you have in front of potential customers, the more sales you’ll make. Etsy recommends starting with at least 40 listings, but more is always better.

And as soon as you get one shop fully stocked and are seeing consistent sales, open a new shop and expand your reach.

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So there you have it – the easy way to make money selling digital downloads. If you’re still a little confused about how to make passive income, don’t worry. We’ll be covering product development in future posts.

And if you would like to check out my own shop, here’s the link.

Next up in our Passive Income 101 series: How to Make a Template in Word.

The information contained on this Website and the resources available for download through this website are for educational and informational purposes only. I am only sharing what worked for me, and as such, I cannot guarantee that any products or processes will give you the same results.