In my first year of college I started an online business that sold more than a quarter million dollars worth of digital products while I was a full-time student.

The same business has continued to make a full-time income for the last eight years; completely automated, with zero affiliates and only promoted through highly optimized Google Adwords campaigns.

Here’s the story of how I did it along with a process that you can use to do the same:

In 2005 I started a bachelor degree in the beautiful city Maastricht in the Netherlands. And while the course was quite demanding, there was still enough time to enjoy all of the aspects of a great student life: fun activities, dinners, nights out etc.

But I quickly realized that an interesting student life comes with a price tag and also that the degree of fun you have is somewhat related to how much change you’ve got.

The first semester went by and I was looking at getting a student job. The options were quite disappointing. Most jobs weren’t very well paid and didn’t really offer any useful experience either.

So I researched a more interesting alternative: how to start a profitable business online. I would often read until late at night about topics like online marketing, copywriting, advertising and product creation.

It was like getting two degrees at the same time, one college degree and one hands-on degree in starting an online business.

(It turns out that rather than the college degree the self-acquired knowledge was responsible for all of my career success later.)

During my research I kept jotting down any ideas I had in a little black Moleskine notebook. My girlfriend at the time called me intriguing for keeping an idea book, probably because I never let her read what was in it.

I didn’t keep my ideas secret because I thought they were so great but rather because I was sure she would have laughed about how weird some of them were.

In my summer break I sat down with a cup of coffee and my idea book. I went through every idea and compiled a shortlist of the best ones. An afternoon of extensive research and number-crunching helped me select the one idea: ”publish a digital information product about student grants”.

Within a week of my summer break I had written a first version, put up a basic website and started running a Google Adwords campaign to test my idea.

I had hoped for a few hundred dollars per month on the side. Instead I was blown away when the product made 4-figures in the very first month.

Interestingly enough, none of the people I asked for feedback on the initial idea thought that it could work. Sometimes you just need to go with your intuition when you believe in something.

I continued to launch more digital products in markets like health, fitness and even sold products to car owners. Within a few months I was making a full-time passive income all while I was still a college student.

The secret to success with all of these product launches is a process to find profitable ideas combined with strategic testing.

Step 1: Capturing Ideas

The most important part of generating passive income is finding an idea or market that lends itself to this purpose. The way you find these markets is by keeping your eyes open at all times.

More importantly, you need to not only keep your eyes open but also capture ideas immediately when you get them. I wrote about the power of idea books here. They are the most valuable tool for collecting and structuring your ideas.

They key is to make it a habit to write everything down. No matter how small the idea or whether it seems to have little potential – write it down.

Another great way to find product ideas is to browse the Amazon Bestseller Lists, both print and Kindle bestsellers.

Step 2: Market Research

Once you have a few ideas you need to do some market research to see whether it’s worth launching a product in your markets.

Initially you need to determine whether your market is actually spending money on products. My first digital product was a guide about student grants.

While there were no digital guides at the time when I did my research there were plenty of books on Amazon. That confirmed the fact that people were spending money on information in this area.

The second aspect is the size of your market. A good rule of thumb I have found is that any market where the main keyword has a monthly search volume of 100,000+ is enough to create a product generating 4-figures in profit per month.

I use the Google Adwords keyword tool to determine the search volume for the main keyword e.g. “student grants” as broad match.

Step 3: Idea Testing

With my very first product I didn’t approach testing in the smartest way. I actually created the product, then wrote a sales page and tested it using Google Adwords.

The better way to do it is to write your sales page first and pretend that your product already exists. You then spend $100 on Google Adwords or Facebook ads to test the product. You can often find free vouchers online for your first $50 or $100 ad spend.

Your sales page should have some kind of checkout process that looks like the product actually exists. It’s not enough to just ask whether people would be interested in buying.

Make it look real and when people actually go through the checkout process you direct them to a confirmation page that tells them that the product doesn’t exist yet and that they haven’t been charged for it.

You also need to collect their email address in the process so that if you decide to create your product you can notify them once it is available.

Step 4: Product Launch

Even if you only broke even or made a slight loss on your test in step 3, you most likely have a winner for a number of reasons.

First, there is always room to optimize your ad copy, your sales page and your product presentation once you’ve launched your product. Your initial setup is nowhere near optimized therefore you can expect improvements of at least 30% to 100%+.

Second, even if you only break even on your initial sale, you gained a new customer that you can offer additional products to in the future. The lifetime value of this customer is much higher than just the initial transaction.

At this point you just need to repeat the process again and again until you are satisfied with your results. Over time you will develop an intuition for the kinds of markets that work best and your hit rate will continue to improve.