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What digital product should I make/sell to earn a passive income?

I have been learning more about finances and I am curious about passive income. My parents have multiple businesses where they sell digital products like domain names, etc from larger companies. I do not think I am particularly crafty or talented at anything in particular but I want to start a business and earn a passive income as well.

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Matthew L.’s Answer

Hi Julia.

Great question! Unfortunately, there really is no such thing as truly "passive" income. In every money making venture you have to either start with labor or capital to create low maintenance income. For example, if you write a book that you put up for sale on Amazon, you don't have to do too much after the book is written to keep selling copies, but you have to spend a lot of time (labor) up front to write the thing.

Similarly, if you have capital (money) available you can use that to invest in something that will earn you money without having to do too much work on an ongoing basis. For example, if you had $10,000 you could invest that in stocks that pay dividends to you (quarterly or annual payments from the company you invested your money in). Or you could invest in a local business (like a car wash). The owner will run the business and pay you interest for the use of your money capital. You don't have to do much once the money is invested, except make sure the business is well-run and growing.

That said, digital products are a great way to do some work up front (like creating a document or software program) and selling it on line. The thing to remember about ALL digital products (and actually all products of whatever kind they are) is that they solve a problem for someone that they are willing to pay money to solve. For example, a lot of people have made a ton of money online selling Excel Templates. If you are good at math and Excel, you can create spreadsheet that does something useful like tracking household expenses or keeping track of when homework assignments are due. That sort of thing. Then you can sell it to people who are too busy make their own spreadsheet or don't have the expertise.

There are thousands of people on the internet who create digital designs and sell them to other creative people who don't have the time or the knowhow to create the products on their own. If you look on Etsy, you will see lots of people selling photo backgrounds, stickers, wood working blueprints, and other stuff that they designed in a digital software program like Adobe Photoshop or Illustrator. They then sell those designs to people.

So what you can do is, first, figure out what you are good at and what you enjoy (frequently these are the same thing or closely related). You say you are not creative. But perhaps you're good at math or software. If so, you could create an Powerpoint template that people could use to create really organized presentations (many people have made a TON of money doing just this--I have purchased these templates myself). Or perhaps you good at explaining things. You could start a Youtube or Instagram channel (with your parent's permission, of course) that features videos with you explaining how to do a particular type of math problem or how to write a good essay. Youtube videos can generate almost passive income once you have enough videos and traffic to your channel. You can get ad revenue and even sell a digital product on your channel (like an ebook about how to start a Youtube channel and make passive income!). If you love to cook, do that.

As Doug said, it is best to find a niche that you like and that you really understand. Find out what people in that niche care about and what kinds of problems they have. Solve one of those problems and you could help out a lot of people and make some money in the process. People will pay for information that solves a problem they have.

And also, you should read everything you can about business, the internet, software and things like that. You don't have to reinvent the wheel here. See what other entrepreneurs have done successfully and copy their businesses (don't steal their actual products, but see how they did it and come up with your own idea and follow their process). Study great entrepreneurs like Bill Gates, Jeff Bezos, Mark Cuban, Martha Stewart, Simon Sinek, and Tim Ferriss (one of my favorites). Tim Ferriss is especially good at figuring out how to do things fast, cheap and with the minimum time investment. Genius, Learn from them and figure out how to do it yourself with your own twist.

If your idea is good and people like it, you can grow it and eventually sell it or hire people to run it for you. The great thing about being an entrepreneur and working for yourself is that you can never be fired.

Good luck!

Matthew L. recommends the following next steps:

1. Read everything you can about business, the internet, and books by great entrepreneurs.
2. Find a niche that has to do with something you love (like cooking or math). Then figure out what problem(s) people in that niche have and solve it for them.
3. Create a digital product (book, video, website, course, software) that solves that problem. Sell your solution for a price that people are willing to pay.
4. Keep learning and refining what you are doing until you get to the income level you want.
5. Set goals, create a written plan and revise it as you go and learn.
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Doug’s Answer

Explore websites, social media posts, and items in your bedroom until you discover a product you truly love. Next, think of ways to improve it—something both you and perhaps your friends would purchase. For a service, consider those that you genuinely enjoy and provide excellent value to you and others. Aim to pinpoint a niche that is either underrepresented or not well-addressed. Contemplate how to enhance that service by adding your unique touch.

To gauge the market, share your idea on social media platforms and inform people that it's available. If you require funds to launch your business and/or create some of your products, consider using Kickstarter or another crowdfunding platform.

Doug recommends the following next steps:

Take some time to determine the type of business you want to commit to and the prospective buyers you'd like to serve. You want to dive in with enthusiasm. But if things don't work out, just learn from your experience and try again.
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