I recently wrote a post about how I hate listening to people complain about mediocrity when there is so much opportunity out there and in response a fellow personal finance blogger/entrepreneur left a comment about a new side hustle he was starting up. So I asked if he would take my readers through the creation of his recently created side hustle.
This post was written by the Car Negotiation Coach.
As Evan has mentioned many times, anyone can start a side business to earn extra income. It just takes a little initiative.
One obvious way to earn extra money is to use your talents like writing or graphic design. But the less obvious and my preferred approach is to build something that will allow you to earn passive income. What do I mean by passive income? By investing some upfront time (and perhaps a little money) you can build something that may become an ongoing source of revenue with only a little maintenance. Evan’s Pregnancy Pool is a perfect example of this model. He could probably leave it alone and make decent recurring revenue off the advertisements.
I’ve recently created a similar passive income stream myself. I built an application that presents a personalized strategy guide detailing how to buy a car. I did this over the course of about six months in my spare time. You don’t have to be a software developer to build an application, you just need an idea and some dedication to see it through. Here’s how I did it.
How I came up with the idea
My area of expertise is car buying advice. Last summer, I helped a few people save big money buying cars when I coached them through the process. I started out by asking questions about their planned purchase and then tailored my advice based on their answers. After a few coaching sessions I realized that my answers stuck to a consistent formula. I figured out that if I were to put that formula into an application I could have a computer spit out advice instead of me!
So I thought, what if I created a brief survey, plugged the answers into my formula, and then presented a personalized recommendation? By doing this, I could make digital copies of myself and help more people! So with a lot of energy and a very small budget, I started planning.
How I implemented the idea
First I created a detailed specification of my idea. I wrote down my requirements and put a few crudely drawn screens into a Word document. I wanted to create a single document that was detailed enough that it could be turned over to a software developer to start building. One of the keys to this process is laying out the logic in pseudo-code. Pseudo-code is not actual code, just a detailed explanation of what the code should do. Anyone can write pseudo-code, it’s mostly common sense. Just write down the logic for every possible scenario of actions a user can take in your application. The more detailed your specification, the less time a developer will spend asking questions and in the end, the less you have to pay them.
Once my specifications were created, I needed to figure out who should build my application. I used oDesk to find and manage a software developer. oDesk is a website that puts freelancers and potential employers together and handles all of the paperwork and billing for you. You can pay by credit card and even view a time log that periodically shows screenshots of a developer’s workstation so you can verify activity.
Usually I take the approach of posting a job on oDesk and waiting for candidates to apply. You’ll easily get a dozen or so developers in response to your posting, but you must be very selective in your decision. In this case I had a referral for a reasonably priced developer that allowed me to skip the interview step. In fact, he was so reasonably priced that I managed to get my whole application built for under $150!
How I make money from my idea
I don’t charge visitors to use my application, and in fact I don’t even ask visitors to register. I hate having to enter my email address for every little thing these days and I really hate getting spam. So I took the no cost, no registration approach which I think will actually help me get more visitors. But how do I make any money?
Well, my car buying strategy teaches visitors how to use services like car quotes and online financing. I explain how to squeeze every last penny out of these services. The providers of these services need to find customers, so they pay me to send them leads. It’s great because these services don’t cost my users a thing and they actually provide a much needed service. Truthfully, even if I didn’t make any money through these advertisers, I would still recommend them and have used them myself in the past.
I expect my site will grow and soon pay-off the time I invested so far. I do plan to spend more time making this application better for my visitors, but I really could just let it run if I wanted to. For the most part it’s now passive income and I get to help people at the same time. It’s a win/win!
Start your own idea
I hope my story spurred the creative juices and you thought of your own passive revenue ideas. With outsourced development so accessible and affordable, there’s really nothing stopping you from turning an idea into reality.