Did you ever wonder what separates the best passive income streams from the rest? Is it the amount of income that it produces? While this may seem like the logical answer, it is not necessarily true. If your number one goal is to earn money with no regard for your time, then you probably are not building passive income. Chances are you are investing a ton of hours of effort if money is your number one goal.

While earning money is an important part of building solid and successful passive income streams, there is something much more important. Having the ability (or freedom) to do what you want, when you want to do it is what most passive income earners are striving for. The money or income is just the side effect that allows for this freedom.

So if the best passive income streams don’t necessarily focus on money first, what are the characteristics of a successful one? While the list can vary, there are a few key attributes that you will find in the best passive income streams which are highlighted below.

Does it Fulfill a Need?

Is there a need for your service or product you are offering? Does it fulfill a dream or make life a little easier for your customers? Does it ease the pain of someones hardship?

The best passive income streams fulfill a need and generally make life easier for a customer. Look at what other people want. The rapid success of eHow (whether you like em or not) and the “How To” craze has proven this. There is no debating that people are looking for advice and tips on how to do just about anything.

There is no sense in fighting an uphill battle when you are building a passive income stream. You don’t want to find yourself spending a ton of time and money creating a market for your product or service that doesn’t exist. Instead, you want to find a market that already exists so that you can save time and effort.

If you are looking for ideas on finding out what people want, take a look at the How To Directory on eHow or even Dummies.com for helpful ideas on what people are in need of. These are a few places where you can start brainstorming your next big idea for a passive income stream.

Automation

Can your income stream be automated? The best passive income streams are built so that the owner (YOU) is taken out of the equation. This is something that Tim Ferriss stresses throughout The 4-Hour Workweek and is critical to building passive income streams. If an income stream cannot be at least partially automated, then there is nothing passive about it.

A perfect example of building the best passive income streams using automation is setting up an online store. In fact, this is something that I will be working to setup this year. In order to create a successful online store (one of my SMART Goals), I need to be sure I can successfully automate as many tasks as possible. I will be creating my online store using Shopify, which has the tools that will allow me to eventually fully automate this income stream.

More to come on the online store later …

Diversified

Is your income stream diversified? Does your passive income source have more than one channel for generating revenue? Are you offering more than one product or service?

Just as you need to build diversified income streams, it is important to identify additional opportunities for income. For example, if you are running a niche website, then you may want to mix in Chitika Ads with AdSense. It is very important to maximize your potential earnings while protecting yourself from relying on one revenue source.

It is critical to build your passive income with many different options to generate revenue whenever possible. If the majority of your earnings are coming from AdSense, what happens if Google drastically changes their payout. Or what if you solely rely on affiliate income from Amazon and your local government suddenly imposes an affiliate tax? Your income can go away immediately if you are not properly diversified.

Final Thoughts

The best passive income streams have several things in common. First, there must be a predefined market for the product or service being offered. Second, they must be able to be partially automated thus making them more passive. Finally, a sound passive income stream should be properly diversified through a variety of revenue sources.

If you are able to incorporate the three attributes identified above, then you will be well on your way to building the best passive income streams possible.

What other attributes have I missed for identifying the best passive income streams?

There can be plenty of highs and lows when building a niche website to generate passive income. This has been true for me over the past two weeks as I experiment using the The $5 Mini-Site Formula to jump start one of my sites. Last week I reported awesome earnings numbers from working this plan only to come back down to reality this week with a huge decrease.

Here are my recent notes and current status from this experiment.

Outsourcing

I reported last week that my ghost writer had completed the articles that I outsourced. I am only using these articles to help drive traffic to my niche website and writing all the other content myself. I hired a ghost writer to help me save some time with this project. I outsourced 27 articles, each 250 – 300 words to be published on a variety of article marketing websites. I am only a portion of the way through publishing these articles and hope to finish this task up this week.

I have realized there are several reasons not to outsource and hiring ghost writers is one of them. I will admit that I am not a great writer, but I never seem to be happy with the articles that I receive back. This is the reason why I am only using these types of articles to help build links and drive traffic to my niche websites. For the time being, I am writing all of the content for my niche website myself instead of outsourcing it.

Traffic

The $5 Mini-Site Formula uses article marketing to drive traffic to a niche website. Publishing content on sites like EzineArticles and GoArticles that link back to your website is the main focus of this plan. In simple terms, the more of these articles you can publish, the better chance you will send traffic to your niche website.

I have seen steady growth in pageviews to my site since starting this experiment. Here are my weekly pageview results to date -

• #1 – 59
• #2 – 39
• #3 – 79
• #4 – 89

As I work to finish publishing content on several different article marketing websites, I fully expect the traffic to my niche website to see some major growth as well. I have made some decent progress but have a long way to go!

Earnings

My earnings over the past 7 days were a big disappointment. While I am not getting all caught up in the day to day income that is being generated from this site, I still would like to see steady growth. In my last report, I noted that my earnings really took off which motivated me to build this niche website into a $500 per month income stream. After those great numbers, I had a reality check this week.

My earnings took a sharp drop which leads me to believe that last weeks results were a bit of an anomaly. As I continue to track this information, I should have a better overall idea of what I can expect.

Here are my weekly earnings results to date -

• #1 – $0.44
• #2 – $2.32
• #3 – $16.16
• #4 – $1.08

Final Thoughts

On the bright side, I increased the pageviews to my niche website which is a very good sign. Regardless if people are clicking on ads or not, they need to get to the site before they can take any action. Without traffic, there are no possibilities for earnings.

Over the next several days, I will be focusing on finishing up the The $5 Mini-Site Formula by completing my remaining tasks. This includes publishing the remaining ghost writer articles as well as completing the EzineArticles that I am writing myself to send traffic to my site. As traffic increases, I have no doubt my earnings will improve as well.

In case you missed them, here are my first three status reports detailing the The $5 Mini-Site Formula –

• Status Report #1
• Status Report #2
• Status Report #3

What kind of progress did you make building your niche websites recently?

Are you spending your time wisely when you are building your passive income? I thought it would be interesting to run a test from my eHow income stream and see if I could apply the 80/20 Rule. I currently have written over 250+ articles and am getting ready to surpass the $2,000 total earnings mark in less than two years. I wanted to show my fellow eHow writers that not all content is created equal and not to get discouraged.

Just to give some perspective, only about 50 of my articles really earn anything. The majority of the other content earns a few cents here and there with the bulk of my passive income coming from a select few. Let’s take a closer look at the numbers and see if the 80/20 rule applies.

eHow Content

I have been writing for eHow for well over a year now and have had a lot of success building this passive income stream. To date, I have published 256 articles (actually 269 but I had 13 deleted) and earned $1,993.52 for my time spent. If I were to leave today and not publish anything else, I am confident that I could pull in another $1K with no problem in the next 12 months.

Since I am testing out the 80/20 rule, I need to identify my highest 20% earning articles and calculate their total income. Here are my results -

• Top 20% Articles – 51 (rounded for simplicity)
• Earnings – $1,354.58

My top 51 articles have brought in $1,354.58 in passive income which is incredible. Just think if I had not written any of that content? I may have thrown in the towel a long time ago. On the other hand, what if I had written 50 more the same way? I would definitely be closer to my goal of earning $500 per month from eHow.

Do my earnings follow the 80/20 rule? Based on my calculations, my top 20% earning articles have brought in 67% of my total income. While I am a bit off (should have been 80% of the income), I still think it proves a big point. The bulk of my earnings come from a small percentage of my published content.

February Results – 80/20 Rule

The calculation above was an overall snapshot of my total earnings and articles over the past 18 months. Let’s take a closer look at last months passive income and see if the 80/20 rule applies there. At the end of February, I had 249 published articles and collected $184.88 in eHow earnings.

Here is the breakdown for February -

• Top 20% Earning Articles – 50 (rounded for simplicity)
• Earnings – $161.69

Calculating the total percentage, my top 20% earning articles actually brought in 87% of my total income! Now we are talking. While the numbers did not work out overall, looking closer at my February earnings revealed the 80/20 rule (even greater actually) was intact.

What does this all mean?

While I am currently on a earnings diet, I still think it is a good idea to review your results from time to time looking for trends. By analyzing where the bulk of my earnings are coming from, I can focus in on maximizing my time and increasing my passive income. Let’s face it, my article about How to Read Wine Labels was fun to write, but it definitely is not going to let me retire early.

By focusing on where the majority of my earnings are coming from, I can eliminate a lot of the clutter and focus on what works. This is a real life example of how the 80/20 rule can be applied to your earnings. I have actually been using this rule for quite some time on writing my eHow articles but thought it was time to share it.

Miscellaneous Numbers

Here are some additional numbers that I found interested after looking at all of my eHow articles I have published.

• 17 have not earned a cent (some well over 1 year old).
• An additional 46 have earned less than $1.
• 2 have earned over $100 each.

Final Thoughts

Do I use the 80/20 rule only on eHow? No. In fact, I could argue that I should focus more of my time on affiliate marketing in place of writing content on eHow. The earnings potential from affiliate income is much, much greater than the income created from eHow. But that doesn’t allow me to properly diversify my income streams.

Calculating these numbers can give us a good understanding of where your time can be best well spent. Keep in mind however that these are just numbers and don’t portray the overall picture. If you are able to analyze and use your results to manage your time better, then your passive income will grow much faster.

Do you use the 80/20 rule to dictate where you are spending your time?

After a frustrating couple of months as an eHow writer, I decided to take the month of February off. This was the very first month since I started that I did not submit a single new article. I had several motivating factors for not writing any new content.

First of all, I am focusing the majority of my time building up my niche websites. I have set some aggressive but manageable SMART Goals for this year. Increasing the passive income generated from these sites plays a major role in meeting these goals. These sites take a lot of time to setup and get running, so I took a break from eHow.

Secondly, based on all the issues surrounding the eHow UK site, I wanted to run a test. I wanted to prove that while eHow has gone through some rough patches recently, it is still an incredible way to build a solid recurring income stream. While you don’t fully control the site and content, there are plenty of nice trade-offs to still make it worth it. Check out my results below if you don’t believe eHow is still a viable option to earn passive income.

Let’s take a look at my monthly results -

February Updates

As I mentioned earlier, I did not publish a single article in February. This was the first time in 18 months that I didn’t add any new content. Just because I didn’t add new content doesn’t mean I stop earning income. That is the beauty of building solid passive income streams. They can continue to payout even while not actively spending any time or effort on them!

My earnings dropped by over (11%) in February compared to the prior month. While this may seem significant, the month was shortened by 3 extra days. If I were to prorate this difference, it would be less than a (2%) drop compared to last month.

Here is the breakdown of my eHow earnings from the past 18
months -

• February (2010)
  • Earnings – $184.88
  • Articles Published – 0
• January (2010)
  • Earnings – $208.36
  • Articles Published – 13
• 2009 Earnings
  • Earnings – $1,568.76
  • Articles Published – 216
• 2008 Earnings
  • Earnings – $25.98
  • Articles Published – 20

GRAND TOTAL (18 Months)

• Earnings – $1,987.98
• Articles Published – 249

Are you looking for a free way to start increasing your income? If so, eHow is one option that allows you to accomplish this goal. There are people just like you earning over a $1,000 each month on a recurring basis just by writing “How To” articles. If you are new to eHow, one place to start is by checking out a great resource called – How to Earn Passive Income on eHow.com: Maximize Your Online Earnings. I purchased this resource several months ago and have made my money back within the first month using the guidelines laid out.

Milestone – 100,000+ Article Views

I hit a milestone in my eHow career last month surpassing 100,000 article views from all of my articles. While earnings do not always translate directly into earnings, it is still a good sign to see your articles getting a lot of hits. I think this is a good visual indicator of the authority that eHow still carries.

100 Article eHow Challenge – February Results

I challenged myself last year to jump start my eHow passive income stream in an attempt to accelerate my earnings. Last August, I launched the 100 Article eHow Challenge, where I had a goal to publish 100 new articles (finished with 72). I have been tracking the status of these articles each month to see how the challenge turned out.

Here are my earnings from the 100 Article eHow Challenge -

• August – $119.48
• September – $113.95
• October – $75.47
• November – $73.45
• December – $59.86
• January – $37.00
• February – $42.70

Total Earnings – $521.91

My earnings from these articles gained a bit of ground in February but still did not pop as much as I had originally expected. These articles hit the 7 month mark and I normally see a significant increase in my earnings once an article has been live for 6 months.

Now that these articles have hit the 6 month mark, I won’t be tracking their status in the future.

Final Thoughts

The past couple of months have been a very wild ride as an eHow writer. I get the feeling that things have calmed down somewhat and many of the issues that came up are now behind us. I am actually starting to see some increase in daily earnings again, which seems to be a good sign.

I plan to write 50 articles this month as I want to see if I can reach $500 per month in earnings by the end of June this year. Based on what I saw in February, I am comfortable again adding new content to the site. I am also using these articles to help drive traffic to my niche websites by leveraging the Add Additional Resources section of each post. My keyword topics are coming directly from my niche site, so I don’t need to spend a lot of time on research which will help me save time.

Where do you think eHow is headed from here? How did your earnings compare to last month?

Niche websites can be a great way to build passive income streams. There are plenty of methods or strategies that have been successful in creating these types of sites. One strategy that I have been using recently is called The $5 Mini-Site Formula.

I have just completed my third week implementing the $5 Formula on one of my niche websites. I am finally starting to see things pick up over the last couple of days as a result of some hard work put in. I am still only a portion of the way through the steps laid out in the formula, but am starting to see my traffic pick up as well as my earnings. I think in a couple more weeks, I should be earning over $5 per day from my niche site!

Eventually I plan to earn $500 per month ($16.67 per day) from this niche site that will align with my SMART Goals. I am using the $5 Formula as a test to try and jump start this income stream.

Here are my recent notes and current status from this experiment.

Outsourcing

The ghost writer I hired has completed the assigned task of writing 27 short articles centered around the key words I am targeting for my niche website. I requested each article use identified keywords so that I could publish them on several different article marketing websites. Each article is between 250 – 300 words in length.

The total project will cost me $81 and I plan recoup these costs in less than one months time if everything goes to plan. One of the reasons to outsource this type of work is to help take some of the time burden off myself and make this a passive income stream.

I will spending this week taking the articles provided by my ghost writer and publishing them on various article marketing websites (not EzineArticles).

Traffic

The $5 Mini-Site Formula focuses on driving traffic to your niche site through article marketing. According to the plan, I need to send about 120 visitors (17 per day) to my site each week in order to bring in $5 of income per day. Up until a few days ago, I was only averaging about 7 pageviews per day.

Just in the past couple of days, I have seen a sharp increase in the visitors and pageviews to my niche website. At this point it is hard to tell if it is just a fluke or a result of some of the hard work I have put into this project.

Here are my pageview results to date -

• Week #1 – 59
• Week #2 – 39
• Week #3 – 79

The number of visitors to the site also jumped in the past couple of days. The next couple of days will be an important indicator of the sustainability of this increased traffic.

Earnings

My earnings have really started to take off which is a huge motivator for me. I can finally see all those hard hours I put in paying off. I am very pleased with my choice of keywords and know that as I continue to send more traffic to my niche website, the more my earnings will increase.

Here are my earnings results to date -

• Week #1 – $0.44
• Week #2 – $2.32
• Week #3 – $16.16

I averaged $2.31 in earnings over the past seven days. I am almost half way to the $5 goal and I have not even finished 50% of the required tasks laid out in this formula. While I don’t want to get ahead of myself, I can really see the potential income that this site can bring someday!

Final Thoughts

Over the next several days I will be publishing the articles provided to me by my ghost writer which should help increase traffic and earnings overtime. In addition, I am writing all of my content to publish on EzineArticles and still have 15 to go (only have published 12 so far). I hope to knock several more of these articles off this week to see additional earning growth.

The past couple of days have been a real eye opener for me. Maybe there is some other explanation for the jump in traffic and earnings, but I believe it is a result of my hard work. I am very excited about the potential this niche website can bring and look forward to sharing my results with you!

In case you missed them, here are my first two status reports detailing the The $5 Mini-Site Formula –

• Status Report #1
• Status Report #2

How are your niche websites coming along? Are you using the $5 Formula?