Why Digital Products Might Be the Perfect Business or Side Hustle
No inventory. No shipping. No limits. Just freedom.
The best thing about failing in business is it teaches you more about what you DO want and what you DON’T want if you are brave enough to step up to the plate again.
I’ve certainly had my share of business failures that have helped crystalize what it is that I DO want and I’m grateful for the context I now have.
The Garage Floor Epiphany
A few months ago a close friend reached out seeking guidance after his garage floor resurfacing business collapsed. He had poured years into it, juggling manual labor, sales, and marketing. It was draining.
I remember thinking, That's the last business I would buy.
Not because it was a bad idea, but because it didn't align with what I value: freedom, scalability, and passion.
I’m not judging people who do labor or trade jobs (I actually think they are a smart move because they are very AI resistant).
But I also have declared to myself that I will never start a business that I’m not passionate about. This is my #1 rule in business.
Lessons from My First Online Venture
In 2005, facing over $100k in credit card debt, I launched my first online business selling automotive racing products through drop shipping. It felt like the perfect setup: work from home, flexible hours, and no inventory.
But as giants like Amazon and eBay grew, competition intensified, margins shrank, and I eventually had to let it go.
The experience taught me that even drop shipping isn't immune to the pitfalls of physical product businesses—inventory issues, shipping hassles, and fierce competition.
I will never again mess with physical products, even if they are shipped by someone else. This is my #2 rule in business.
Defining My Ideal Business
If I were to make a list of everything I want in a business or side hustle, here is what mine looks like. I call it The Perfect Business.
No Physical Products: Avoid the complexities of shipping, warehousing, and manufacturing.
Passion-Driven: Engage in work that excites me—writing, teaching, designing.
Location Independence: Operate from anywhere, anytime.
Scalability: Build systems that grow without trading time for money.
Automated Sales: Leverage content marketing, SEO, and sales funnels.
Passive Income: Earn continuously, even when not actively working.
Multiple Income Streams: Diversify to ensure stability and resilience.
No employees: I don’t want to deal with the headache of hiring, training, paying and potentially firing employees if they aren’t a good fit.
Does this sound like a tall ask? Well I believe that when you hold yourself to high standards you will usually get what you ask for.
Why I LOVE Digital Products
Digital products check every box on my list. Here's why:
Low Overhead: No need for physical inventory or shipping logistics.
High Profit Margins: Once created, digital products can be sold repeatedly with minimal additional costs (basically credit card or platform fees). No material costs.
Scalability: Reach a global audience without the constraints of physical goods. I can sell to anyone, anywhere.
Automation: Sales can occur 24/7 through online platforms and marketing funnels. Set it and forget it.
Flexibility: Work from anywhere, at any time, on your own terms.
As highlighted by Easy Digital Downloads, "Running a digital product store requires far less overhead cost than a physical product store. Just think about the upfront expenses you get to avoid with your startup: No raw materials, No manufacturing, No storage and warehousing, No packing and fulfillment, No shipping expenses and materials."
Building My Digital Empire
Digital products aren’t my only source of passive income, but they now play a major role in my Passive Income Ecosystem.
Here are the 5 channels of passive income that I am growing:
Affiliate Marketing: Recommending tools like Kajabi and earning commissions.
Digital Downloadable Products: Creating and selling templates, courses, and guides on platforms like Etsy, my website and the Kajabi Marketplace.
User-Generated Content: Participating in programs like Amazon Influencer to earn from product reviews.
Real Estate: Investing in rental properties managed remotely by Specialized Property Management.
Investments: Reinvesting profits into dividend-paying stocks, high yield savings and money market funds.
Each stream complements the others, creating a robust and diversified income portfolio.
Crafting Your Perfect Business
Your ideal business might differ from mine, but the process remains the same:
List Your Preferences: Define what you want and don't want in a business.
Align Opportunities: Seek ventures that match your criteria.
Start Small: Test ideas and iterate based on feedback and results.
Automate and Scale: Implement systems to grow without increasing workload.
Remember, it's about creating a business that serves your life, not the other way around.
PS: If you have a service based business, selling digital products can also become ‘paid leads’ that allow you to tap into a wider audience via marketplaces. More on this idea later.
Ready to Build Income That Works While You Sleep?
If you’re serious about creating freedom-based income streams using digital products, content, and automation — The Passive Income Playbook is your next step.
It’s a 118-page downloadable guide packed with proven strategies, tools, and systems I’ve personally used to build multiple streams of passive income across Etsy, Medium, Kajabi, Amazon, and more.
👉 Grab your copy here and start building your own passive income ecosystem.
Go get it my friends.
Simon
