How Passive Income Can Change Your Life As An Architect / Engineer
Do you have your own architecture or engineering business? Then this story might sound familiar.
A friend of mine, let’s call him Brad, almost had a burn out recently. He’d been running his own architecture business for three years when he realized he never had time anymore — for himself (he used to be very active), for his family (his wife and two kids), for growing his business, or for enjoying the true art of architecture.
Why? Because he was always busy working for (pushy and demanding) clients, jumping from one deadline to the next, answering calls and emails, rushing to site meetings, working on the next deal, and doing other administrative “have-tos”. It felt like a never-ending rat race.
I know how Brad feels. A few years ago, I was in a similar situation in the software business. We were building online software and mobile apps on-demand, in the same way you complete projects for your customers. I love building software — but I knew that doing project after project wasn’t helping my business grow. Simply put, it wasn’t scalable.
Our Switch to Recurring Revenue
Though we could have hired more developers and accepted more projects, that would’ve raised our costs and overhead, as well as our level of stress and blood pressure. Instead, we wanted to switch to a business model based on recurring revenue. So we decided to build a product. And I’m so happy we did.
Today, our product ArchiSnapper generates more than enough recurring revenue to keep our business going, freeing us of the need to accept any project thrown our way. We still do and accept custom projects — but only ones that are exciting and profitable. No longer do we need to think: “Ugh, guess we better take on this project since our cash flow is dropping.”
Introducing Passive Income
Wouldn’t it be nice if you could focus purely on profitable and fun projects you truly enjoy? Not only would that allow you to enjoy your work more, it would also mean more time: time for investing in and growing your business, time for yourself, and time for your family.
In the next series of blog posts, we’re going to outline how architects can build up a recurring — and passive — income stream, alongside their typical service business offerings.
With active revenue, there is a direct trade between time and money: the more you work, the more you earn. That is why active revenue is not scalable. There are only 24 hours in a day, of which the average person is able (or willing) to spend 8h – 12h working. The only way to earn more active revenue is by working harder, longer, and faster (or by raising your rates, – which has it’s limits as well –, more on that in a later blog post).
Passive revenue, on the other hand, is infinitely scalable — as your time is not directly involved or related to the revenue you generate. Once you truly understand this (and bring it into practice), your life could change drastically: taking a week off won’t mean a direct drop in revenue, and earning 50 times more — without working 50 times harder — is possible.
You’ll generate income on autopilot. Instead of trading your time for money serving your architecture clients, this revenue stream keeps rolling in –whether you’re working, sleeping, laying on the beach, or drinking a cocktail with friends.
Passive income is all about an upfront investment of your time. Note the importance of the word “investment”: you will need to make an upfront effort to generate an automated stream of recurring revenue at a later moment.
Examples of Passive Income Streams
To make it a little more tangible, here are some examples of passive income streams in the A/E business that you could pursue with some time and effort:
- Run a blog targeting architects that generates $500/month in ad revenue ( $500/month)
- Sell 500 copies of a $39 eBook ($19.5K)
- Have 200 A/E users using your software at $49/month ($9.8K/month)
Though these are just three examples, we will cover many more scenarios and case studies in future posts — so stay tuned!
Imagine you could build up $2,000 of passive revenue each month, for a total of $24,000 a year. With this safety net of automated revenue, you would no longer need to accept every project, because — that’s right — you’ll already have part of your revenue stream covered. You could be pickier, accepting only fun and profitable projects. Which, in turn, will give you more time to grow your passive income stream. (And you know what? The more selective you are, the more people will want to be your customer: having to refuse potential customers shows them you must be really good, increasing your value in their eyes. -Strange but true!)
What Are Your Goals?
Sorry if this sounds cheap and cheesy… but think about it. What would you do if this were your last year to live? What would you do? Who would you spend time with? What are your true goals in life? Who and what is really important to you?
Now imagine what your ideal business (or job) would look like so it could serve you and your dreams (and not the other way around). For me, I want to live a simple life. I want to focus on my friends and family, enjoy financial stability, work with like-minded people, have fun, play a lot of saxophone (I’m a jazz fan — sorry, I know), and be time- and location-independent in terms of my career.
Earning a whole lot of money is not a goal in and of itself, although I want to earn enough to not have to worry. I want to be financial independent. More important than the amount of money I earn is how I earn that money; I don’t ever want to be a slave to my work. So for me, a passive business model is my ideal business — and three years ago, I took action and decided to go for it. I slowly but certainly turned my software service business into a products business.
(By the way, I know many people who think differently and have different goals — and they are perfectly happy as such. Cool! I’m not judging anyone whatsoever.)
Is Passive Income for You?
For those who think their personal goals match with the idea of passive income, I should warn you that it’s not easy! Generating a passive income stream requires a huge upfront investment and a lot of perseverance in the early moments (read: years). Whatever “get rich quick without moving a finger” websites might promise you, there is no silver bullet that will get you a significant automated revenue stream. It requires a lot of time, dedication, passion, and hard work. Also, once the revenue starts dripping in, there is some effort required to maintain and increase it –so don’t think you can lay back and see the money coming in forever without doing anything.
Still intrigued by the idea of passive income? Then I think you’ll find this series of upcoming articles very interesting. I’ll explain some ways you can generate passive income as an A/E, as well as share my story in detail. Not only that, but I’ll also profile some very interesting and inspiring guests: architects just like you who have managed to leave their architecture service business behind and now subside on passive income.
If you’ve read this far, I’d guess that you’re interested in learning more about passive income. If that is indeed the case, make sure you don’t miss a post by using the red bar at the top of this page to subscribe.
Do you know an architect or engineer in need of more time? Share this blog post with them, so they too can learn about the power of passive income. (We bet they’ll thank you!)
Peter, Founder of ArchiSnapper