5 ways to make money while you sleep

YouTube is awash with digital entrepreneurs proclaiming how they quit their day jobs and how you can too, if you follow their money-making tips. Passive income is, understandably, a popular topic. Making money while you sleep? Yes please! 

Imagine establishing a reassuring drip feed of extra earnings through work already completed (or investments) that don’t require additional input. Put the work in at the start, then enjoy the financial benefits as things tick along in the background. Wouldn’t it be amazing to wake up and find you’ve actually made money while in the land of nod? It’s like the entrepreneur’s version of going to sleep on Christmas Eve: What will the morning have in store?

It’s certainly true there are lots of ways you can generate passive income without subscribing to the 9-5. Flexible working is a legacy of the pandemic that many are hoping to retain as part of their career plan. After enjoying a greater work/life balance from remote working and less time commuting, many are reassessing new income channels that offer similar flexibility. 

Read on to discover some of the best and most common ways to generate passive income.

Manage an online retail shop but use a third party supplier to fulfil the order. You wouldn’t own stock or inventory, or even handle the product, but simply buy the products from a manufacturer or wholesaler to fulfill orders as they come in. This is a great business model for those dabbling in a potential passive income generator as you don’t need as much upfront capital to get going. There’s no need for you to purchase the product until you sell it, so you don’t have to commit to buying hefty amounts of stock. Simply send the order through when you sell an item. Minimal upfront costs will speed up the time it takes to make a profit.

We’ve written guidance on setting up an online shop, from how to integrate an ecommerce platform package into your own website such as Shopify and BigCommerce, to how to sell on existing ecommerce websites such as Amazon, eBay and Etsy.

Are you a talented creator, such as a musician, artist or writer? People are willing to pay to use creative work/assets. A great starting point is the world’s largest royalty marketplace, Royalty Exchange. You can also approach royalties from a stock content perspective. Upload your photos, videos, designs, music, etc, to online libraries such as Shutterstock and Getty images. Here, users will browse and buy your stock content. Royalties are quite low on these sites so it’s worth building up a bank and keeping an eye on trends, as well as identifying niche subjects that have low competition from other suppliers (big fish, small pond).

Whether you’re an expert in fitness, gardening, finance, technology, life coaching – anything! – chances are you could write a compelling eBook, guide or course, which people can pay to download. There are a number of publishing platforms available to boost your download’s visibility, such as Amazon Kindle Direct Publishing (KDP) and Apple iBooks Author for eBooks. Most of these publishing platforms are free to submit your content but will take a cut (usually around 20 to 30%).

Making money from digital downloads isn’t just for niche experts, but creatives, also. Digital downloads can include prints ready for framing, family planners, colouring book pages, wedding table numbers, themes and templates, etc. For creatives, Etsy is a quick and secure way to create an online shop to host your downloads, while taking advantage of its approximately 60.27 million buyers. Etsy buyers are often repeat customers and with 50% of them less likely to complete a purchase if shipping costs are too high, then a simple digital download is a fantastic solution. No delivery costs or risk of damage in the post. A win win.

Receive a share of business profits by investing in stocks and becoming a stakeholder. A popular passive income earner for many years, technology has made it even easier to research, invest in and track stocks. Popular investment platforms include:

• eTorro
• IG
• Hargreaves Landsdown
• Vanguard
• AJ Bell

Do be aware however that there is no such thing as a magical formula, or an “Easy Button” that can generate market-beating results. It doesn’t exist and never will. Make sure to consult a financial advisor before investing money.

If you’re looking to turn a side hustle into a startup, it’s worth considering a passive income generator that can grow based on the amount of time you put in. Some might simply be happy with a purely passive income generator to lighten the financial load alongside a full or part time job, or to capitalise on a hobby. While those looking to work more flexibly, might use their side business to test the water and see what the opportunity for growth is. While some of the above options such as dropshipping require minimal upfront costs, reinvesting a portion of your profit into key areas such as digital marketing and SEO will speed up the success of your venture. Speak to an accountant or financial advisor to assess whether there’s potential for your passive income to evolve into your active income.

These are just a handful of ways you could make some extra £££s while enjoying some ZZZs. As mentioned, be mindful when deciding on a passive income generator. Does it have the capacity to become your active income generator in the future, if it proves successful? Don’t rule anything out – invest in an agile idea / platform that can adapt to any future plans you might, or could, have. While many have turned the ‘you snooze you lose’ cliché on its head, keep in mind that by becoming actively involved in its development, you could turn a side-earner into a serious startup.