How to Create Passive Income Streams From Your Service-Based Business
July 18, 2021

In today’s video, I’m going to talk about leveraging your service-based business to create passive revenue streams. Let’s dive in.

A service-based business is an enterprise composed of professionals and a team of experts where you deliver or aid in completing a task for the benefit of your customers.

So think of it as you providing a service to someone, you being compensated, and then you providing that service to another business, or an individual. B2B would be “business-to-business,” B2C would be “business-to-consumer.”

This consumes about 34% of the total workforce, and there are about 30.7 million service-based businesses in the US.

Popular Types

Now the popular types, I’ve broken into 4 buttons:

  1. Personal: Can be a Fitness trainer, Nutritionist, or Personal chef. Anything in that bucket.
  2. Academic: Can be a Teacher, GED test prep, a Resume writer, any one of those would suffice.
  3. Home: A Handyman, Locksmith, or Appliance repair.
  4. Business: Virtual assistant, Headhunter, Bookkeeper, Web designer, Business coach, Live chat support, SEO/SEM. All of those would fall into that.

Developing Your Core Offer

Now, when you think about developing your core offer, you really wanna focus on your unique selling proposition (USP). This is what you do that differentiates you from other businesses like your own.

So let me go ahead and break down what that formula looks like. One, you have your main service-based business—in my case, web design services. Now if you add that to a specific niche—which is startup—that’s who you’re really focused on helping, we have a sweet spot.

So let me break this down: we provide web design upgrading services, but we mostly deal with startups. And by doing that, what we’re doing is we’re positioning ourselves as a thought leader in that space.

So we can charge a premium because we’re only focusing on one type of client, and you can develop systems that pertain just to that client. So you’re creating an IP within your business—IP being Intellectual Property.

I’ll get more into that as we go into the presentation. But just to give your kind of a general idea, you wanna have your main service-based business, and you want to choose a niche, and then you want to have a sweet spot within that niche that you created.

Pentagram

So one example of a service-based business is Pentagram. If you’ve seen huge logos like Chase, and larger businesses that are huge, you’ve probably seen Pentagram’s work. And they focused primarily on a few things: they focused on brand identity, which can be a logo, design systems, color palette, and they do logo design.

That’s it. That’s pretty much their niche and that’s where they stick, and they charge $1,000,000+ per logo buildout.

Raw Studio

Then we have another company like Raw Studio. Now what they do is they focus on UX, or User Experience. They work with startups—so that’s their specific niche—and they’re focused on branding and UX.

That’s all they do. They’re not doing Facebook Ads, they’re not doing Ad Management, they’re focused on their bucket, and their niche, which is startups.

Ranked AI

Then you have a third example, which is Ranked AI, and what they do is Search Engine Optimization (SEO).

They do it on a simple basis, very affordable, they’re focused on Content, Optimization, and Backlinks. That’s pretty much all they do. Anything outside of that, they’re not really focused on.

Doing the Work

So when it comes to a service-based business, you’re always in a position to perform the work, right? As a service-based business, you have a service that you provide, which means that you’re exchanging your time for money. Your success is directly tied to performing these actions, getting a result, and being compensated accordingly.

So to break that down, let’s say you work 10 working hours, you get a payment of $1000, and you have 1 project completed. And that is essentially the cycle: you work, you get paid, you complete your project. And it’s that cycle—it’s cyclical.

The thing about service-based businesses is that you’re trading your time for money, right? So it can be difficult to scale your efforts.

The Kicker

So how can you turn your services into passive income? Let me break down 3 ways that I’ve done this myself, and what you can do to get it off the ground.

1. Develop Proprietary Systems for Your Services

This is crucial. The first thing you need to do is develop your business systems. This includes:

  • Standard Operating Procedures
  • Step-by-Step Systems and Breakdown of Your IP (Intellectual Property)

This is the system that you use that is proprietary to what you do. So let me show y’all an example.

So here, we have all of the operational procedures within our business. All of this is proprietary to our agency, right? So we’re able to develop these to create a system that I can then delegate to other team members.

Google Docs

So in one example, if I look into the Web Design Agency Process—I click here—I’ll go into my docs, and I’ll show you an example of what I mean.

So we’ve broken down our agency process from A to Z. So when we onboard a client, what the process is, what form it takes, what type of automation email, client agreement—all of that is included in our process here, broken down step-by-step.

Now what this does is it systematizes our business, so that way, you can create and delegate, but then I can also use this for other things—and I’m gonna get into that in a couple of minutes.

So to create your systems, you can use a tool like Google Docs—if you’re keeping it simple like we are.

Trainual

You can use a platform like Trainual—and I’ll show you an example of that—where you can develop a knowledge base for your business. They also have operating procedure examples, and tons of templates that you can use for diversity inclusions, performance reviews, and a bunch of other tools. And it’s really affordable, actually, for the cost.

So if you’re looking for something like this, you can create a knowledge base for your entire team. And it’s important to do so, and I’m gonna tell you why in a few minutes.

Notion

Another option, as well, is Notion. So with Notion, you can create a knowledge base for your business. So for example, here is ours at 5four Digital: we have Mission, Vision, and Values, Employee Directory, Request Time Off—all of that is included in Notion doc.

So you could use that and leverage that for keeping your systems intact.

2. Leverage Your Systems Into Courses

Now all of that leads into an important part of this process: you can leverage your systems into courses. So now that you have proprietary systems to perform tasks in your business, you can package up your systems and sell them to other service-based businesses in your space. I’m telling y’all, this is the major key.

This is why you need to build systems in your business, because you can take that, package it up, and sell it to other people in your space.

Now you might be thinking, “Oh, I’m giving away my stuff, I’m giving away all my info,” you are, right? You’re giving people the systems they need to leverage and use. But you’re being compensated for it on a passive basis.

Podia

So one example you can use to do that is Podia. That’s a platform I use for all my courses. Kind of funny, I’m on the homepage, they featured me there for being one of the top sellers on their platform—which is pretty awesome.

But our entire course is housed there, and we’re able to make courses and sell PDFs, you can sell webinars, you can sell digital downloads, and memberships. All that’s included in Podia’s framework. And you can easily set that up by taking the systems that you built in Notion or Google Drive and converting those to a course, which you can then sell.

That’s why you need to start all of this with building your systems in your business. And if you wanna learn how to do that, you can. There’s down on the post right here, you can check out how to create standard operating procedures in your business.

Teach:able

Next up is Teach:able. Teach:able is just another platform that you can use to develop your courses. They have a ton of resources and tools as well.

Kajabi

And then of course, we have Kajabi, which is basically like a one-in-all business. You can literally run your whole course business on this platform—which is pretty phenomenal.

But my favorite has to be Podia. Their customer service, their systems, everything is really easy and simple to use. I love it.

Then, an example is my website. So on my personal website—this is outside the agency—this is where I have my courses and curriculum housed. So you can learn a little bit about me, but then you can also check out my courses here that have details and specifics on how I run my business, and the systems that I use to build and scale our efforts.

So it’s an amazing tool that you can be able to leverage your skills, your service-based business—the thing that you’ve been working on for years—turning that into something like this as a course that you can sell on autopilot.

And that makes it really easy for users to find out all about you and be able to convert from, “Hey, this is a prospect,” to a sale. Because I’ll be honest—a hundred percent: the client that we work with might not necessarily want to hire an agency that’s gonna cost 10, 15, 20K.

What they might wanna do is maybe learn our process and be able to make that applicable to what they’re doing. Or you might have freelancers that are looking to level up and really systematize their business. Why go through that 5 years on a new show when they can purchase a course, learn quickly, efficiently, and grow their business.

3. Develop “Quick Bite” Products

The third and final piece that you need is to develop “quick bite” products. So quick bite products are smaller, less expensive products you can develop using short webinars that you turn into courses, ebooks or physical books (Amazon KDP)—I’ll get into that a little bit in a second, templates and design resources, and guides.

These are all things that you probably already have in your arsenal that you can make actionable products that people will wanna buy between like the $10 and $99 rates.

Amazon KDP

So one example is the book that I wrote a couple of years ago, called “A Step-By-Step Guide to Building Wealth from $1: The Black Wealth Masterclass. Now, I made this as a part of another of my companies, called UrbanWallet, and with Amazon KDP—which is Kindle Direct Publishing—you can actually self-publish ebooks and paperbacks for free. It’s wild, y’all.

So you can write your book, create your cover, you upload it to Amazon’s platform, they’ll create an Amazon landing page for you—like this one—and you can go and sell your book. And what’ll happen is anytime someone goes and buys that book, Amazon will print that book, bind it, send it over to them.

Let’s say the book is $15. Amazon will take about 6 or 7 of those dollars, and then they’ll print it for you and ship it to the customer on your behalf for free.

Then you can have a Kindle version of your ebook as well, audiobook—I mean, the platform is amazing. We sold about 6,000 copies, it became a bestseller on Amazon in the financial space, and it was just a really great resource.

And again, you might not get rich on ebooks or self-published books, but it is a great entry point to your brand, it’s a great way to make some passive income and it’s just an awesome opportunity to get yourself out there and create brand advocacy.

Webinars

So another thing is, this is a guy I follow on IG, his name is Mahdi Woodard. He’s a really great guy, he’s funny, as well as very articulate and super duper smart when it comes to marketing and conversions on Instagram.

So he creates webinars where he has a one-time webinar you pay for. And then he takes that webinar, bundles it into a product and sells that through his content that he creates on Instagram.

So this is another great opportunity because you create that content once and you can sell it on a cyclical basis. It’s just a really great opportunity.

Check him out on IG, by the way. He drops some really great content as well.

PDFs

The last thing is the tool. And I’ll show you an example from Gal Shir. He’s a designer—his website’s great—he has all these different products on his website where it teaches you how to do illustrations.

So it teaches you high quality textures, patterns, line brushes, color palettes. He’s got PDFs, programs, tool kits. So you visit his site and you can buy any one of these products pretty efficiently, and I know it comes straight to your inbox, where you’re able to download them and use them for whatever you like.

Conclusion

So I wanna reiterate the three items as well, just so you have it, for you to be able to know what to do to move forward. So:

  1. Start to really systematize your businesses. That’s crucial. Once you start doing that…
  2. Then take those systems and turn them into an online course, or an online offer. Then what you can also do is highlight your highlight-able offer, which mine is about $500-1000.
  3. Then you have a quick bite product, which is $10-50, or even up to $99. Create those quick bite products so you can get people through the door. You can always retarget them and do more.

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