RichardBy Richard
| 2 min read

What makes a passive income idea good?  Are there common characteristics it should have?  What are they?

Characteristics of Passive IncomeOnce you know what makes a passive income idea good, you can begin to evaluate your own ideas so much faster!  Eventually you will be able to green light or trash ideas within minutes.

Charlie Munger (pictured right) – Warren Buffett’s insanely smart business partner – has always touted the benefit of mental models for making decisions.  With this checklist you will get your first mental model for idea testing, and it’s specific to passive income, so rock on!

All you need to do is run your idea through the list below and see what percentage of Yes’s you get.  Above 70% then the idea looks good.

As you’ll see in 33 Steps to Launching Your Passive Income Business though, we don’t decide to go full steam ahead on any idea until we test and validate it.  So use this 21 point checklist as an shortlisting tool, as opposed to a definitive Yes or No tool.

1. Must solve a big f**king problem

The type of problem that hurts people and gives them big ass headaches!  So an info product on how to get a job works (it makes people money), an affiliate reviews site that points people in the right direction for their golfing needs also works (kills information overload and paralysis by analysis), as does a drop shipping site selling a wide range of dust mite bedding for different allergies (makes choosing easy and makes hard-to-find allergy products easily accessible).

2. Evergreen

The passive income idea can run for many years without significant work / changes – ie it’s an evergreen idea.  To illustrate, think abs info product, drop shipping bed sheets, affiliate site for web hosting, etc.  NOT so much website building info product, drop shipping electronics etc.

3. No significant ongoing work

It is actually passive income – ie you don’t need to work on it every week.  Although all of the ideas require massive up front work, most of the ideas should only require a few hours work a month going forward.  If they require much more ongoing work, they’re out.  To illustrate, drop shipping business ideas are in…just.  Since they can require considerable ongoing work unless you automate your fulfillment systems.

4. Can rank at the top of Google

You should be able to get to the top of Google for your key search terms.  Whatever passive income opportunity you pursue, whether online or in the real world, it’s crucial that your marketing is automated and close to free….ie passive!  Ranking in Google (or on Youtube etc) is the way to do that.  But can you with your idea?  I’ll assume you can SEO and produce great content for the purposes of the top 33 ideas.

Want passive income ideas that actually work?

My 3 Favorite Passive Income Ideas

If you’re struggling to think of an idea or you’ve tried out a few ideas, but can’t seem to eek out more than a couple hundred dollars a month, STOP.

I’ve already spent 1000s of hours researching and testing all kinds of ideas. I know what works and importantly, what doesn’t. Here’s 3 of my favorite ideas that actually work...