This 40-year-old makes $160,000/month in passive income—his No. 1 tip for building a 6-figure side hustle

When I started my first business in 2009, I had no idea what I was doing. I just knew I had a passion for music production and needed to make money.

Since then, I've built two online businesses — my music blog and business coaching brand — which generate $160,000 a month in passive income. I only work about five hours a week.

I teach people how to launch and grow businesses. What I've discovered after working with thousands of clients is that every six-figure business has one thing in common: they serve not just any audience, but a hungry audience.

If you're looking to start a side hustle or full-time business, here's my best advice:

Before you even begin building a product or service (the "what"), you must understand the audience you're trying to target (the "who").

Hungry audiences have a problem that needs solving, and that problem is serious enough that they are willing to pay for a solution.

The easiest people to serve are the ones who are like just you. What growth have you experienced in your life? You could help others overcome a problem and evolve in the same way. Or, what problem do you wish you could solve? You could help yourself and others fill that gap.

Talk to people about what is lacking in their lives. What are their biggest challenges? Get on the street, start a group chat with your friends, or lurk on Reddit and Facebook Groups.

Keep a record of what you discover and pay attention to trends.

Author and performance coach Rich Litvin has a simple framework for how to craft a compelling offer:

• Make a list of the five biggest challenges your audience has.
• Write out one or two unique points of view you have on those challenges.
• Ask yourself: What is the transformative solution someone would get after working with you or your product, thanks to your point of view?

Another way to think about this is how you'd quickly brand your offer on social media. Your Instagram bio, for example, gives you only 150 characters to make people care.

Here is a simple formula you can use to create an offer: "I help [X hungry audience] achieve [X outcome] without having to [do X thing people want to avoid]."

A few examples:

• "I help entrepreneurs earn six-figure income streams without having to work eight hours a day."
• "I help apartment owners make the most of their square footage without having to spend thousands on new furniture."

Remember, what you sell, whether it's a haircut or an e-book, doesn't matter nearly as much as the transformation you offer your audience.

Graham Cochrane is the author of "How to Get Paid for What You Know″ and is a business coach to over 2,800 customers worldwide. Follow him on Instagram and Twitter.

Don't miss:

• This 39-year-old makes $160,000 a month in passive income: ‘3 businesses you can start today for $0’
• A self-made millionaire shares 8 money secrets rich people know that ‘most of us don’t’
• 31-year-old makes $105,000 a month in passive income from her side hustle: ‘I work just 2 hours a day’

Want to be smarter and more successful with your money, work & life? Sign up for our new newsletter here!