I didn’t have a business plan when I left corporate America and launched my career as a software development consultant and trainer. Once my company became established, though, I did think carefully about how I wanted my consulting career to evolve. Eventually I came up with a rudimentary business objective: earn a nice living while I’m asleep. That lofty objective then forced the question, “How are you going to do that?”
As an independent consultant with no employees, every penny of revenue came through my own efforts. The trick was to figure out how to generate as much income as possible with as little effort as possible. I came up with several ways to generate ongoing passive income streams after some initial investment of effort.
Income While You Sleep #1: Book Royalties
Book royalties are a gift that can keep on giving, with some caveats. First, you need to write the book. After authoring eleven of them, I can tell you this is not trivial. Second, it has to be a good book. Ideally, it will accrue many positive reviews, and readers will recognize the contribution it makes to the practitioners in your field.
Third, the book should fill an important niche in the literature of your domain. I typically identified gaps in the software literature and attempted to plug them, with generally good success. It’s best if your topic doesn’t face a lot of competition or if you have something innovative and unique to say.
Fourth, people need to know the book even exists, which generally means going with an established, traditional publisher rather than self-publishing. You won’t get as much money per copy that way, but you certainly will sell more copies. And fifth, try to write a book that has a long shelf life, not one that deals with the latest fad in your field or with a technology that will be obsolete in a year.
Not many technical and professional books sell zillions of copies, so don’t expect to live on your royalties. I do know a very few people who make more — sometimes a lot more — than $100,000 a year from software book royalties. I’ve never approached that lofty pinnacle myself. Nonetheless, the royalties do add up.
Once the book is conceived, planned, outlined, proposed to a publisher, contracted, written, reviewed, revised, edited, proofread, published, and promoted, all you have to do is cash the royalty checks. What could be easier?
Income While You Sleep #2: Licensing
Most of my work through my company, Process Impact, has involved training. The income from delivering training by yourself is linear: if you teach two classes, you make twice as much money as if you teach one class. To increase the income-to-effort ratio you must disrupt this linear relationship.
One option is to hire other people to teach classes for you and split the revenue. This lets you stay home while someone else wrestles with airplanes, hotels, rental cars, weather, and students. However, having employees or subcontractors complicates your accounting and taxes, at the very least. Think carefully about whether you want the onus of being responsible for someone else’s livelihood, negotiating salary, providing insurance and other benefits, and all the rest. I did not.
I tried a different approach. For many years I’ve licensed my courseware to other companies. Some of my licensees teach the courses internally to their own staff. Others deliver classes to their own clients or through public seminars. Licensing has worked out well for me.
Obviously, first you must have content available that others find valuable. The content must be structured and packaged such that other people can easily learn to present it. Whenever I developed a new course I created detailed instructor notes and supporting information as I went along, with the intent of licensing it eventually.
After we execute the licensing agreement, I’m not involved with how a licensee uses the courseware. I don’t know how much my licensees charge and I don’t care. I often point prospective training clients to two or three licensees so they can consider alternatives to having me teach the class personally. At the end of every calendar quarter, I ask each licensee if they delivered any courses. If so, I send the licensee an invoice for the appropriate royalty amount.
You can publish articles in different forums as well, provided you’re careful to grant each of them nonexclusive publishing rights. I’ve licensed dozens of articles (both new and adapted from my books) to multiple websites, collecting a modest fee each time. These license fees have significantly augmented the royalties from the source books.
I’ve also licensed various other bits of intellectual property to people who wished to incorporate them into their own products, courseware, and publications. These materials include white papers, articles, project document templates, figures or tables from books, and slides to accompany one of my books when it’s used as a university textbook. Just this week, I made $100 by licensing three pages of content to a training company. My total effort consisted of a couple of brief emails. Okay, I wasn’t asleep when we worked that out, but the effort was minimal.
Income While You Sleep #3: E-Learning Courseware
After the attacks of 9/11, I realized people might be hesitant to travel for training. Therefore, I began exploring ways to package my courses in a CD- or web-based format so people could take my classes from the convenience of their own chairs. I settled on an e-learning format that closely mimics my well-received live presentations. I also created on-demand webinar versions of several short presentations in this same e-learning format.
Over the years, I’ve sold hundreds of both single-user and site licenses of my e-learning courses. Creating the courses is a lot of work. Preparing slides, writing scripts, recording and cleaning up the audio tracks, synchronizing slide animations with the audio, publishing the whole as a deliverable course, and testing it takes considerable time. But after making that initial investment, the unit delivery cost and effort is minimal, and the profit margin is high.
Similarly, I have presented numerous webinars through a company that makes recordings of its webinars available to its members on demand. The company shares the revenue from these viewings with the speakers. It has never amounted to a lot of money, but they mail me a check every year.
Income While You Sleep #4: E-Books
Some years ago, I wrote several e-books of approximately seventy pages in length on various topics. I sell them as PDF downloads through my company’s website, both as single-user copies and as site licenses so a company can distribute them throughout their organization. These e-books are inexpensive, but they collectively constitute another small revenue stream that requires negligible effort on my part following the initial investment.
It is now quite easy to publish e-books through online resources like Kindle Direct Publishing, Smashwords, IngramSpark, and many others. You can create versions for use with various e-book readers. Chapter 34 of my book Successful Business Analysis Consulting describes some of my experiences with self-publishing.
Income While You Sleep #5: Other Products
I’ve developed and sold a variety of other products over the years through my website. None generated massive revenue, but it didn’t take a great deal of work to create them, and the dollars continue to come in.
The most popular product by far has been the Process Impact Goodies Collection. This is a set of more than 60 document templates, spreadsheet tools, sample project deliverables, checklists, e-books, webinars, and other useful items for software projects. Customers can buy small groups of these items in individual sets for a few dollars, or they can purchase the entire collection in a single big zip file for more dollars. A customer once suggested I package my individual downloads into a convenient collection like this. That suggestion has yielded nearly $40,000 so far. Best of all, the profits go to a fellow consultant who has been disabled for 20 years with a traumatic brain injury.
Income While You Sleep #6: Affiliate Programs
Affiliate programs constitute another source of free money. When visitors to your website click through certain links to a vendor’s site and buy products there, you get some percentage as a commission. The Amazon Associates program is perhaps the best known of these. To see how it works, follow this link, https://amzn.to/2flYVAZ, to the Amazon.com page for my forensic mystery novel, The Reconstruction.
Even if you don’t buy the book (what?!), once you’ve clicked in through a link like that, you may then browse around Amazon to your heart’s content and buy lots of other stuff. I’ll receive a small percentage of whatever you spend, and it costs you nothing.
Affiliate programs can work the other way, also. I enlisted several companies to resell my e-learning courses; when one of their customers buys a course, we split the revenue. Their marketing reach extends to customers who might never find me on their own. Everybody wins. Not all affiliate programs yield actual profits, but once set up, they provide one more way to make money while you sleep.
Is this a great business plan, or what?
This article is adapted from Successful Business Analysis Consulting by Karl Wiegers. If you’re interested in software requirements, business analysis, project management, software quality, or consulting, Process Impact provides numerous useful publications, downloads, and other resources.