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How to Build a Passive Income Business for Retirement As a retiree, you’ll need a steady stream of income, but you probably won’t want to work that much. One solution to this possibly contradictory dilemma is to build and...

By Peter Daisyme

This story originally appeared on Due

As a retiree, you’ll need a steady stream of income, but you probably won’t want to work that much. One solution to this possibly contradictory dilemma is to build and maintain a business capable of generating income passively – or at least, mostly passively.

But what exactly does this mean? How can it help you retire successfully? And how do you ensure your business continues generating income indefinitely?

What Is a Passive Income Business?

A passive income business, as the name suggests, is any type of business or operation that allows you to make money without having to expend effort to make. Traditionally, people make money by exerting effort; they earn income in the form of wages, salaries, or profits derived from services rendered or activities pursued.

Passive income businesses, at least hypothetically, circumvent this need. Once established, they’re capable of continuing to generate income, without much, if any, effort on your part.

If this makes you suspicious, good. As we’ll see, there’s no such thing as a source of “truly” passive income, at least not in the purest sense. But there are some business opportunities that can generate mostly passive income for you in retirement.

These are just a handful of the options available to you:


In the eCommerce world, you aim to create a website that generates sales on your behalf. That could mean building a website that sells physical products directly, digital products directly, or physical products indirectly by marketing existing products and dropshipping them from another source. You’ll have to devise strategies for marketing, sales, and, perhaps most importantly, order fulfillment. But with a solidly supported order fulfillment strategy and enough marketing juice, you can sell just about anything. Once established, with a steady stream of traffic, you should be able to generate consistent sales every month. As long as you have the right technologies and services in place, you shouldn’t have to do much in the form of maintenance or adjustment.

Digital Product Sales

You can also create digital products for sale and list them on already-established platforms like Amazon or eBay. If your digital product is evergreen and useful enough, it can continue generating sales for years, if not decades. For example, you could write a series of educational books on a topic you happen to be knowledgeable about, or you could create an entire digital course teaching people how to do something. As long as your digital product is created and desired, it can continue earning money for you in the future.

Affiliate Marketing

Another option is to start an affiliate marketing business. In this avenue, you’ll focus on creating content or attracting people to a central online location, like a website or a landing page, through some other means. Once you’ve hooked these people, you can pitch them various external products and services, earning a small commission for each sale you make on behalf of the external party. With big enough traffic streams, this can be highly lucrative – though it generally does require some ongoing effort in the form of new content creation.

Stock Photos

If you’re into photography or illustration, you could try creating stock photos and stock designs. Making these pieces of content available could entitle you to a small royalty for each person who buys or uses them. This can be a competitive industry, but if you carve out a niche for yourself, it could work.

Rental Property

If you’re not interested in starting a business online, you can start a passive income business by buying and managing rental property. The goal is to choose profitable properties, secure reliable tenants, and collect rental income in excess of your monthly expenses. As a landlord, you’ll have to take care of maintenance and repairs, and you may have to deal with tenant issues like late rent payments, but these are generally minimal, and you can hire a property management company if you don’t want to deal with them at all.


Some people earn passive income in the form of royalties from works they’ve created. For example, if you compose songs, do readings of audiobooks, or create other assets that people can use for other businesses, you might be able to collect royalty checks for the rest of your life.

Apps and Software

Yet another option is to create an app, or some piece of software that requires little ongoing maintenance. Once adequately circulated and marketed, you should be able to maintain a consistent user base and collect income through subscription payments, advertising, or any other worthwhile monetization strategy.

Also, it’s worth mentioning that almost any conceivable business can eventually become “passive” with the right approach. For example, you can build up a conventional business, cultivate strong leaders to keep that business running in your absence, and then hand off the reins of control to them while maintaining ownership and profits associated with the business. However, this generally takes much more time and effort than some other options on this list.

There’s No Such Thing as “Truly” Passive Income

At this point, we need to address that there is no such thing as truly passive income. As you might have guessed by reading our list of examples, almost every passive income business requires something from you, at least at the outset.

For example, you can’t get involved with rental property management unless you have the capital to purchase an initial property. You won’t be able to earn royalties unless you exert the effort necessary to produce a creative work. And building an eCommerce business to the point that it becomes self-sustaining could take months if not years. On top of that, you’ll need to regularly monitor and occasionally adjust these income sources if you want them to remain sustainable.

Still, it’s often worth the effort, money, and time to establish these passive income sources so you can live the rest of your retirement years with the mostly passive income.

The Benefits of a Passive Income Business

Why are passive income businesses so valuable for retirees?

Limited ongoing effort: The primary benefit is limited ongoing effort. As you get older, you’ll have less energy and less stamina to work in conventional ways. You’ll also be interested in relaxing and enjoying yourself during your golden years. Passive income gives you an opportunity to earn the money you need without exhausting yourself.

Supplemental earnings: Living on a single income is tough even before retirement. Even if you have a good pension plan or ample retirement savings, it’s helpful to have supplemental earnings as an extra cushion.

Interest and exposure: Many of these passive income sources are genuinely enjoyable activities. Some retirees like the idea of intellectually stimulating themselves or staying active by pursuing new hobbies and enterprises. It’s also a great way to connect with other people and remain social.

Opportunities for future growth: If you find yourself in a difficult financial situation in the future, many of these passive income businesses provide you with opportunities for future expansion and growth. For example, you could revitalize an eCommerce business and expand the range of products it offers to generate more income.

How to Build a Passive Income Business

So how do you build a passive income business from scratch?

Assess your assets and strengths.

Start by assessing your current assets and strengths. If you have plenty of investments and savings, you may be able to dedicate some of your money to purchasing a rental property, buying a domain, or even buying a passive income business that’s already been established. If you have specific skills or experience, consider whether you can use them to build something new. For example, if you are familiar with graphic design, you may be able to earn royalties from novel designs you create.

Develop a thorough business plan.

In the future, your passive income business will be able to generate revenue without much intervention on your end. But for now, you’ll need to put effort in upfront. That means doing your research and putting together a comprehensive, thoughtful business plan to serve as the groundwork for your enterprise. It’s important to research the industry surrounding your business, including the target demographics, your closest competitors, and the outlook for the future in this space. You’ll need to address key challenges that stand in front of you and key opportunities for future development and growth. It’s also a good idea to make some financial forecasts, so you have a realistic idea of what you can expect to generate in the future.

Consider strategies to reduce effort.

Some passive income businesses provide opportunities for you to reduce effort strategically with the help of external services or technologies. For example, you could use automation to cut out most of your required ongoing manual effort or hire a management company to take care of some responsibilities for you.

Give yourself flexible options for the future.

The more options you have, the better. When developing your passive income business, think of all the ways that you can transform it, adjust it, or adapt it to changing circumstances. Could you pivot to target a different demographic? Or, could you take your business to a new geographical area? Could you offer different products and services? Could you pursue a different monetization strategy?

Dedicate upfront effort.

The more work you put in upfront, the less work you’ll have to do later on – at least for most types of businesses. For example, if you start an eCommerce business, it’s important to build the best, most persuasive website you can from the very beginning; this way, you’ll have less maintenance and adjustment to do once the website is generating revenue.

Accurately track your earnings.

Remember that you’ll want to pay taxes and account for any earnings you generate in your passive businesses. Develop a thorough system of accounting so your records remain organized and accurate.

Soft close and move on.

When your passive income business is in place, initiate a soft close and move on. This business can now generate passive income on your behalf, so consider spending your efforts creating another one.

Making Passive Income Sustainable

What steps can you take to make your passive income more sustainable?

Maintain your primary investments.

Even if your passive income sources seem promising, maintaining your primary investments’s a good idea. Maintaining a portfolio of stocks, bonds, mutual funds, and alternative investments will keep your nest egg safe and help you remain more stable in your retirement.

Diversify your passive income “portfolio.

If you’re familiar with any investing terminology, you probably know how important it is to diversify your portfolio. It’s also important to diversify your passive income portfolio. That means pursuing many different businesses and activities capable of generating passive income differently. This way, if any single industry or business is disrupted, it won’t affect you significantly.

Revisit, upgrade, and refresh on a schedule.

Stay organized so that you can revisit, upgrade, and refresh your various businesses on a fixed schedule. For example, you might check on your eCommerce website once a month to evaluate traffic and sales – and make any necessary changes to keep your income in line with your goals.

Consider hiring people when appropriate.

Some passive income businesses may require more effort than you originally thought. If this becomes the case, consider hiring people. It might eat into your profitability, but it’s going to make your life much easier. The trick is to hire competent people you can genuinely trust, which isn’t always easy – but do the best you can.

Reinvest your excess earnings.

Finally, when your passive income sources generate more income than you need, consider reinvesting the excess earnings. Diverting those earnings to investments that generate passive income on their own, like dividend stocks or peer lending, can help you accumulate more wealth and income in the future. This can easily lead to a snowball effect, which is valuable even deep into your retirement.

Passive income businesses aren’t always easy or inexpensive to build. Still, if you work strategically and are willing to diversify your approaches, you can turn these opportunities into major pillars of your retirement finances. Everything starts with a single source of passive income, so focus your attention on whatever seems most interesting to you at the beginning. With experience, you’ll find it much easier to build other passive income sources in the future.

[Related: The Best Changes You Can Make to Your Home in Retirement]

Featured Image Credit: Photo by Tima Miroshnichenko; Pexels; Thank you.

The post How to Build a Passive Income Business for Retirement appeared first on Due.

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