If you currently run a business and are still highly tied to daily operations, then you may want to know how you can make your business more passive. Without putting processes and tools in place to make your business more passive, you will be tied to physically running your operation every day, and making an hourly wage instead of a passive income.
How can I make my business more passive? You can make your business more passive by
- Documenting Key Processes
- Eliminating Useless Processes
- Optimizing Key Processes
- Improving Communication In Your Business
- Automating Key Processes
- Delegating & Outsourcing Remaining Tasks
Making the right technology choices can provide a huge hand in doing this.
Even if your initial goal was to build a passive income stream, your business will be extremely tied to you if you do not make it more passive following the techniques we talk about below. This article goes into detail on ways to untie yourself from daily business operations so you can make a more passive income. If you work with a team, this can be an excellent exercise to carry out with them to get the most input possible.
Listen to This Article In The Video Below Would you rather listen to an article than read it? Play the video below for an audio version of this article. Enjoy!
1. Documenting Processes
As the founder of your business, you create your own task list. You prioritize your work, know your KPI’s (Key Performance Indicators), the goals and aspirations of your business. You know what you have to do each day, how to carry out those tasks and the order you should carry them out in.
However, if you do not document your processes, it will be very difficult to make your business passive. As long as you are a key player in the daily operations of your business, it will be difficult to delegate or automate. Before going further, have a look at the current tasks you carry out every day. If you have not yet documented any processes in your business, consider writing out the projects, milestones, task lists, process and daily operations you carry out in the following departments:
- General Management
- Human Resources
How can technology help make my business more passive in documenting processes? You can use tools like Google Drive or Podio to document processes in your business. These tools can easily be shared with others making simultaneous collaboration and communication a breeze. If you are still using paper documents or a local server, then your business will have a harder time scaling than a business that uses cloud technology to document their information. Cloud services are searchable, shareable and accessible from anywhere.
2. Eliminating Useless Processes
Never automate or outsource a useless process
Now that you have written out all the tasks and processes in your business for each department it is time to eliminate! Have a look at the list and color code or sort the following:
- Recurring tasks: Tasks you have to do multiple times per day, per week or per month
- Quick tasks: Tasks that take two minutes or less to carry out
- Time-consuming tasks: Tasks that take up a large amount of time to complete (a couple of hours to a few days)
- Batch tasks: Tasks that can be done in a batch (within the same hour, day or week)
- Projects: A number of tasks that need to be executed over a longer period of time (days, months, years), can be batched under a specific project with KPI’s, a timeline [Gantt Chart], and may involve more than one party.
- Milestones: Elements of a larger project that regroup a number of tasks associated with that project. When milestones are completed, the project also gets closer to being completed.
Have a look at which processes are repetitive and calculate the time you generally spend on each of them. Which ones have a very little tangible impact on your business? Are all of these tasks bringing you towards your KPI’s? If there are things that are time wasters, eliminate them. You do not want to spend money on automating or outsourcing a useless process. Eliminating will help with the next steps, including optimizing, improving communication, automating, and outsourcing.
How can technology help make my business more passive and optimize processes? You can use technology to organize your processes and then decide on what you can eliminate. Technology cannot decide on your task list and eliminate useless processes for you, but it can help you automate the important ones. Keep reading for the next steps on how you can continue to make your business more passive.
3. Optimizing Key Processes
Have a look at the list you now have after documenting key processes and eliminating useless ones. Now critically analyze what can be improved upon. Especially analyze recurring tasks. Technology can play a crucial role in helping optimize these repetitive processes.
If there are a number of repeated actions (tasks) that need to be carried out every time something happens (trigger), you can create workflows that can help eliminate a lot of margin for human error. Humans have a tendency to forget things, whereas an automated task flow will just run every time it is triggered by an event, automatically reminding people of what they have to do.
How can technology help make my business more passive and optimize processes? Technology can play a huge role in optimizing processes, especially where there is repetition. Workflow software can help automate task creation when something recurring happens in your business to which is associated with a number of tasks.
Let’s take onboarding a new client for example. If a training team needs to carry out a number of tasks to complete the project of onboarding a new client, you can have those tasks created automatically when a new client is added to your CRM.
You can also use an automatic booking system embedded on your website if your business requires booking meetings with prospects. This type of technology eliminates a wide variety of low ROI (return on investment) tasks that occur every time someone wants to set up a meeting, and those tasks have very little value for your business.
4. Improving Communication In Your Business
The base of many issues that business face have to do with communication. And most often, a lack thereof. Communication is extremely important in any business. Communication has everything to do with smooth:
- Project management
- Workload management
- Team management
- Effective delegation
- Customer service
- Prospect followups
All of the above-mentioned things will be very poorly managed or carried out if communication skills are lacking anywhere in your processes, may that be between team members, with clients, partners or prospects. If your team cannot communicate effectively, then the information will not circulate and you will constantly be nagging for them to get things done. It is extremely important to have good communication tools in place, we cover some of them in the section below on technology.
How can technology help make my business more passive and improve communication? Optimizing communication is like making sure the gears in a machine are well oiled. If there is no oil, the gears will not turn and may even rust. Without good communication, things will run poorly in your business and may even turn into disputes between your team members, with clients or prospects. Some communication tools for your team include Podio or Slack.
5. Automating Key Processes
Now that you have documented, eliminated and optimized, it’s time to further automate your business. You can start to make more passive income once your business no longer depends on you trading your time for money and being physically present executing daily operations.
Automation can be applied to repetitive tasks such as customer support, correspondences, data entry, approvals, inquiries, processing payments, and other related services that can take up a lot of time and usually have low ROI. Instead of paying someone to do these things, you can use technology to automate them. Not only can this save you time, it will save your business money in the long run.
How can technology help make my business more passive and automate processes? Here are some aspects of business that can be made more passive with automation:
- Sales/Lead Generation/Customer Support: Chatbots can be a great way to automate all of these
- Knowledgebase: Having a KB can help automate customer support by providing 24/7 answers to common questions about your products or services. Knowledge bases can be geared towards your team, your prospects, your partners and/or your clients
- Excel: Macros in Excel can help automate data entry
- Apps: Zapier is an excellent tool to create automation between popular apps
- Emails: MailChimp provides an excellent email automation tool for marketing campaigns, conversions, onboarding, and ongoing support
- Recurring processes and tasks: Podio + Globiflow [Will require development skills]
Automating your processes, tasks, and services can be a great way to reduce your operating costs and enhance the accuracy of the information that is provided to your clients. Automating your business is a very passive means of generating income. You spend less time dealing with most of your repetitive processes, save on operational costs, and ultimately boost productivity. It is easier for you to keep track of your activities while running other important tasks without worry. Now let’s have a look at delegating and outsourcing the remaining tasks.
6. Delegating & Outsourcing Remaining Tasks
Now that you have documented, eliminated, optimized, and automated, you should be left with tasks that necessarily need to be carried out by a human. If not, run those tasks back through the above process. Outsourcing consists of delegating work either to employees (people you hire into your company on payroll) or independent contractors. Let’s have a look at both scenarios.
Delegating to Employees
Hiring people to help run your business is a good way to make it more passive. You can have them handle most of the operations of your business while you focus on other tasks. You can complete tasks without having to be physically present by having them fulfilled by someone other than yourself. Hiring people can improve the quality of work, create diversity, and bring in new ideas that can help improve your business.
Finding the right employees depends on a number of factors that include qualifications, personality, knowledge, cultural fit, coachability, experience, and other additional skills. It is key you find the right people for each job and that they understand your goals, including freeing yourself from daily operations. In such a case, you should look for highly qualified and trustworthy managers who can ensure the rest of the team is fulfilling their role. Your goal is to duplicate yourself.
However, the hiring process itself is not very passive. You will have to be actively involved in recruiting your prospects and finding out how they can add value to your business. Large corporations have well set up departments such as HR that can handle most of the job for you. If your business has just kicked off, this task may fall on you, although you could always delegate part of the process to a recruiting agency. They will find ideal candidates you can then interview to fill the job offer.
After you successfully hire and train your team, you can expect to generate income much more passively. Hiring may cost you money from wages and employee benefits but you can be assured of making much more and meeting most of your business targets with good management. Hiring is a good option if you own a brick and mortar business, whereas outsourcing may be a great option if all or part of your business can be managed remotely.
Outsourcing to Independent Contractors
If you are looking to grow your business at a low cost while making it more passive, outsourcing is a great way for you to start. Outsourcing consists in hiring people remotely to carry out tasks in your business. You can generate a considerable passive income stream by outsourcing some of your work like customer support, development, project management, accounting tasks, and financial tracking to other people.
Outsourcing is excellent for small tasks (logo creation) to larger, ongoing tasks like customer support. It can save you a lot of time and money and is ideal for most businesses (from a grocery shop to a major corporation). According to Deloitte, when executed properly, outsourcing delivers competitive advantage through the transformation of business operations, making them more agile, efficient, and effective. Outsourcing is one of the best ways to build your business value as you can accomplish much more in a shorter time. You can easily use Fiverr to do so. Have a look at this page on our site where we talk more in detail about what you can outsource to independent contractors.
The Importance of Technology
As you may have noticed, technology can play a crucial role in documenting, optimizing, automating, and outsourcing work. Making the right choices can go very far in your business. Here are other tools that can help you make your business more passive:
Some Examples of Passive Income Businesses
Almost all kinds of businesses can benefit from automation. Businesses like Laundromats earn passive income through automating laundry services and hiring less staff to run it. For example, automation helps Tim Cowell earn more income from his Colonial Laundromats by keeping them open 24 hours with only one attendant.
“Three of our four Laundromats are located within a college town, and students are notorious for keeping odd hours. Our biggest problem was turning customers away,” he says. “Customers would come in late and employees would want to be leaving, so it was easier just to stay open.”(source)
How do I automate my work? You can automate all or part of your work by using the right technology. Some things that can be automated include sales, lead generation, customer support, data entry, emailing, and some aspects of marketing. Many recurring tasks can be automated using workflow software, helping avoid human error, eliminating low ROI tasks, and freeing up time.
What is passive income small business? Some businesses can naturally be set up to be passive. These include Food Trucks, ATM’s, automatic car washes, self-service stores, self-service storage services and more. These businesses can be partially or fully automated with the use of technology allowing for very little human interaction and making for excellent passive income.