Entrepreneur Sejati

When I learned about the concept of passive income, I immediately became excited about it. I read every book I could get my hands on about wealth, personal finance, real estate, and entrepreneurship. Most of these books were heavy on concepts, but light on specifics. With this in mind, I went to seminars and started mingling with people who were already doing it to find out how they started. Here are five suggestions from what I’ve learned.

1) Buy an investment property with no money down.
Pros: inexpensive, huge asset for nothing but a signature
Cons: need good credit, must choose wisely, must find tenant quickly,

I was a first time homebuyer when I bought my first investment property. Banks love first-timers. They have a myriad of different programs to get buyers into their first house. Most banks will bend over backwards for them. With meager credit, I qualified for a brand new house with no money down, super-low interest rate, and $5,000 in equity, just for signing on the line. That was the fastest $5,000 I have ever made.

The catch is that first timers must buy the house as an owner-occupant, meaning the owner must intend to live in the house. This requirement, however, can be a blessing. Finding a good tenant can take some time, but if you are living in the house you won’t incur any additional expense. I lived in the house long enough to qualify myself as an owner-occupant and find a tenant to take my place. When I found a tenant, I moved into a rental apartment 1/4 the size of my house and 1/2 the monthly payment.

If you are not a first time homebuyer, there are other ways to get a property for nothing down. A creative mortgage broker can show you loans that cover the price of a home plus improvements. These brokers use creative financing to arrange a payment plan with no money down. Another method is to take over payments for an owner to get them out of a sticky situation.

It is very important to choose your property wisely. This is especially true if you have a very small margin for error in your finances. Find a good realtor who deals with a lot of investors. They will be able to help you find a property that will cash-flow immediately, meaning that the rent you receive will be enough to cover the mortgage, insurance, taxes, maintenance, vacancy fee, and all other expenses related to the property.

Don’t get sucked into the idea that you are going to make up for negative cashflow with capital gains. This is a recipe for disaster. If it doesn’t cashflow, it isn’t passive income. In fact, it’s a passive expense. There are plenty of properties out there that will cashflow, so take the time to find one.

2) Start a bulk-candy vending business
Pros: extremely low maintenance, excellent return on investment (ROI)
Cons: difficult to secure locations, requires small initial investment

Everyone has seen a gumball or candy machine in the lobby of a restaurant. Have you ever wondered who owns those machines? Most bulk candy businesses are owned by small, independent operators who have negotiated their way into another’s place of business. The vending operator either gives the owner a percentage of the revenue or promises to give a percentage to charity.

A quarter vending machine that offers three different types of candy can be bought for about $200 and the candy to fill it costs around $50. In a good location the machine can easily bring in around $25 per month. That means that you can pay off the entire asset in about six months or roll your profit into a second machine. After another six months, you can buy two more machines.

This may not seem like big money, but it is planting the seed for big money in the future. If you don’t have the money or credit for real estate, this is one way to turn a couple hundred dollars into a couple thousand.

The hard part is finding locations. You will have to learn some sales skills and utilize the power of persistence as you knock on doors. You might approach 20 different businesses before you get your first location. However, once you get a few locations, finding more will get easier.

Click here for a more detailed article on bulk candy vending.

3) Network Marketing
Pros: low initial investment, huge potential
Cons: must overcome negative stigmas, many scams out there

Network marketing is an industry that allows individual entrepreneurs to team up with a company to market their products or services. The idea behind network marketing is for the company to eliminate the costs of marketing, advertising, sales, and distribution, allowing the consumer to take on these responsibilities if they choose.

Many highly respected companies such as AT&T, Direct TV, Gap, Amazon.com, Google, Apple Computer, Macy’s, Nordstrom, Travelocity, and tons more have started to borrow from the concepts of network marketing. These companies have realized that the impact of their multi-million dollar advertising budget pales in comparison to the power of word-of-mouth advertising. When I noticed this trend towards the network marketing method, I dropped my “no way” attitude and decided to investigate the traditional network marketing model.

Most people have very negative feelings about network marketing because there have been a lot of bad apples in the industry, especially early on. What these people don’t realize is how far the industry has evolved. A few of these companies have learned from past mistakes and rid themselves of many of the negative aspects of old-paradigm network marketing. If you can find the right network marketing company today, it is possible to build passive income without a lot of money and still keep your friends.

Have you ever recommended a great restaurant or movie to someone? Have you ever told someone where you found a really great buy? Did the restaurant, theatre, or store ever pay you for your referral? That is precisely what the new generation of network marketing companies is doing.

The good apples offer a wide variety of great products or services at a great price, meaning that you don’t have to refer people to make it worthwhile. Selling something that is expensive and unnecessary is hard, but recommending a product or service that is better and less expensive is easy.

The way to minimize your costs with network marketing is to find a company that has products that are already on your shopping list. Then, replace the products you are already buying and you have just started a business for nothing. You might even find a way to save money.

The new generation of companies handles all the inventory, paperwork, and sales for you; all you have to do is refer people and the company does the rest. It is truly amazing how simple the process really is. What’s that you say? You don’t want to bug all of your friends and family? Not a problem, smart networkers use the internet, or other forms of creative advertising to bring prospects to them.

The big money in network marketing is made when a referral decides to make a business out of it. Most companies pay referral fees not only on your referrals, but on secondary referrals and beyond. Your efforts will be multiplied by the efforts of those you refer. Your business will soon be leveraged into a money making machine when some of their referrals decide to do it as a business, and so on.

Click here for a more detailed article on network marketing.

4) Create Interesting Internet Content
Pros: extremely low cost, extremely low maintenance.
Cons: some computer skills required, must have interesting content

The internet is entering an exciting new phase where otherwise average people are being rewarded for creating and sharing interesting content. There have been a group of internet pioneers such as Google, Revver.com, istockphoto.com, Amazon.com, and others, who have decided to share their revenue with content creators. This means that if you can come up with an interesting blog, movie clip, photo collection, flash design, podcast, or other form of easily distributable electronic content, you might be able to make passive income from it.

5) Set up an Automated eBay Business
Pros: relatively easy, system already in place
Cons: time spent acquiring & shipping, must find unique product sourcing

eBay is to product markets what the Nasdaq is to the stock market! If you can find a reliable, wholesale source for a product, there are over 50 million people on eBay waiting to buy it from you at retail.

It is easy to fall into the trap of turning an eBay business into a full time job, so to keep it as passive as possible you need to automate. Find a product that you can get over and over from a reliable source at wholesale. Then automate your eBay auctions with one of the hundreds of auction software programs available to you on the internet.

The software will start new auctions when the old ones end and basically do everything for you except ship the products. Eventually, one could even hire out the shipping to his kids for allowance money.

The key to a profitable eBay business is a good product source. Even though eBay is known for rock-bottom prices, it still works on market principles. For example, you could shop eBay’s “Wholesale Lots” section to find products in bulk at a discount. Then, you would turn around and sell them one by one for a profit.

I have used all five of these techniques to produce passive income. In doing so, I have been able to quit my job and work from home. You can read my income reports for a complete breakdown. I hope that my experience has provided you with some insight on how to do the same.

Creating a successful and profitable business is no easy task. It’s reliant on many outside factors, including competition, timing and demand, which you have very little to no control over at the beginning. Assuming all of these outside factors are in your favor, having a sound business plan can lead to having a successful business. Here are five steps to consider when you’re building your business from the ground up:

1. Determine your business. What are you selling?

This question isn’t as easy to answer as you may think. For example, Nike is in the sportswear business, but the truth is that when you buy a pair of Nike shoes and a t-shirt at the mall you’re buying a lot more than sportswear — you’re buying an image, a feeling. You're buying the Nike brand. Richard Thalheimer, the former CEO of The Sharper Image and the founder of RichardSolo.com, has worked in specialty retail for more than 30 years. When asked what business he’s in, he’ll tell you “convenience” or "innovation" before he specifies any particular industry, and he's built one of the most powerful brands in America. Keep in mind, there’s more to a product than, well, the product. Your brand is what sets your product apart from your competitor’s.

2. Select your market. Who are you selling to?

This step is a bit less interpretive as the first, though equally important. Who are you selling to? or more importantly, what do you know about this person? Understanding your consumer is a key to success. What do they do? Where do they hang out? What do they watch on television? These are just a few of the questions that you should be able to answer about your consumer. Knowing the answers to these questions can answer a lot of questions of your own when it comes to a devising a marketing strategy. Richard Thalheimer understood his market for The Sharper Image, probably as well as they understood themselves. From an article in the LA Times, Tracy Wan, who was president and chief operating officer under Thalheimer says "Richard has the amazing ability to figure out the things that people want to have." This ability to perceive your consumer's desire can only be a result of knowing them like your neighbor.

3. Create a marketing strategy. How do you speak to these people?

This is a culmination of understanding your brand and your consumer. As mentioned in number two, understanding your consumer can answer a lot of questions concerning your marketing strategy: Where should you advertise? What's the voice of your brand? What kind of prices are reasonable for this demographic? In order to engage your consumer, a.k.a. sell your product to them, you must know where your advertisements will be noticed, how to speak to them, and how much they will be able to spend, among many of things. Really, this step should have been combined with the last because who your market is dictates your marketing strategy entirely.

4. Learn by example. Seek advice from those who have done it.

There are many books written by professionals who have already started their own business and have been successful in doing so. One that comes to mind immediately, as we've already mentioned him a couple of times, is Richard Thalheimer. "Creating Your Own Sharper Image" shares the story of how he grew his tiny office supply company, The Sharper Image, into the thriving enterprise that it has become today.

Remember, building a successful business in not all about the dollars and cents. Equally as valuable is you brand equity and your ability to engage your consumer, which is only attainable by understanding them. Assuming there is a demand for your product, and you can compete with the other brands, following these four steps shall guide you in the right direction.