Passive Income Doesn’t Exist
We’ve all heard it before—“making money while you sleep.”
We’ve been regaled with tales about how easy it can be to have money flowing into our bank accounts without us having to do anything.
Passive income stories are everywhere.
So, why does it seem so unattainable?
Let’s debunk some of the myths around passive income and take a clear, hard look at what it really requires, and if it’s even worth pursuing.
What is passive income, really?
Passive income is the art and science of creating multiple streams of income from products that don’t need fulfillment, i.e. you don’t need to ship, mail, pack, or otherwise touch the product to get it to the buyer. It all happens virtually, and usually, instantly.
What people think that means:
You get to make money without actually having to do anything.
What it actually means:
You get to make money from products that took time, effort, and sweat to create, while you’re marketing them to an audience you’ve already built (likely over months and years) and quite possibly teaching your affiliate/sales team how to market them, too.
Why that’s important:
Turns out, passive income?
Not so passive.
(That doesn’t mean it’s not fun, though.)
Let’s take a closer look.
Why passive income is so appealing
Hours for dollars is not the most profitable business model
Most entrepreneurs approach business ownership like they approach a 9 to 5 job. They work a certain number of hours, and more or less expect to get paid for the number of hours that they worked.
There’s nothing wrong with this model, except that if you’re not actually working, you’re not earning any money.
So if no one’s on the massage table or in the therapy chair, you’re not getting paid.
This would be fine if that’s all you had to do in your business. But the challenge of entrepreneurship is all the other stuff you have to do to keep the lights on.
You still have to run and market your business
There’s an established theory that small businesses spend fifty percent of their time marketing their businesses and another twenty-five percent running their businesses (e.g. doing administrative tasks).
I know. Crazy, right?
I read that years ago and could not believe it.
But then I started thinking about how much time I spent writing blogs and newsletters, hosting teleclasses (Remember teleclasses? Those call-in workshops that we held before there was enough bandwidth to hold webinars? Anyway …), and going to networking meetings and having discovery calls and …
Damn, if it wasn’t almost half of the time I spent in my business!
Insanity.
And of course, the problem with that is it only leaves about twenty-five percent of the work week to actually do your work.
So, if you follow this formula at all, it means that if you work a 40-hour week, you’re only getting paid 10 hours a week. Most entrepreneurs I know work around 50 or 60 hours a week, which honestly doesn’t make this formula look any better.
Even if you’re one of the lucky entrepreneurs who can get away with less marketing because you get lots of referrals and you’ve automated and streamlined things like scheduling discovery calls, you’re probably still overwhelmed with the admin tasks associated with your growth.
And simply raising your prices isn’t the answer.
You really can’t raise your prices enough to make up for the exhaustion metrics.
Most of us underestimate the time, effort, and energy it takes to run our own businesses. Even the most premium pricing schedules and packages don’t take into account the full workload of being an entrepreneur.
This leaves us tired, exhausted, and sometimes even resentful of the work we used to enjoy doing. That’s where passive income becomes so important.
Passive income products serve you (and your ideal clients) all the time
Passive income products never stop serving your primary demographic.
They never stop selling your business, establishing your expertise, letting people know more about you, and making you money because they provide 24/7 value to your primary demographic.
2 Types:
Let’s quickly review the main two types of passive income.
Your Intellectual Property
These are things that you create from your body of knowledge and sell to your ideal clients.
(Image from Pocket Prep)
Some examples include:
courses,
books, e-books,
workbooks,
paid, pre-recorded webinars, workshops, and masterclasses
private podcasts (that you pay to access),
design templates (think graphic design templates in Canva or website design templates in Squarespace),
software templates (think Asana or Trello),
print and utility templates (like invoice templates, client welcome package templates, thank you card templates, etc.),
scripts (think email marketing and sales pages),
pre-made spreadsheets and trackers (think budgets and calories),
and so many more!
Pricing and perceived value:
Keep in mind that each of these has its own perceived value. People are willing to pay different prices for the exact same content depending on the kind of experience they get from that content.
For example, courses usually garner a higher price than ebooks because most people feel more connected to the material if they watch a video and go through a course instead of “just reading” an ebook.
Even if the content is exactly the same, they feel like they’re getting more from it.
This is the same reason that scripts and templates are perceived to be worth more than say, a workbook with prompts. Scripts and templates feel done, like they’re getting a finalized product, even if the content in a well-thought-out workbook is essentially the same.
How to come up with ideas:
To start brainstorming ideas that make good products, consider the questions below.
Each product should enhance your list of services and make your business better overall.
(Consider creating a product for #1 and #2 just to make your life easier.)
What do you tell every client/customer?
What do they need BEFORE they come to you?
What do your competitors do that annoys you, and how do you address that in your biz? How can you turn that into a self-directed product that will serve your ideal clients?
What is a small and very specific problem that’s really bothering your ideal clients that you could address or help with a self-guided product?
2. Affiliate Marketing (the non-sleazy kind)
This is when you either get people to sell and market the intellectual property (IP) product you made above for a percentage of the profits, or you sell and market someone else’s products for a percentage of the profits.
Passive Income Marketing
Now that you’ve got your products, how do you get the word out? You need to have a few things in place to launch a successful passive income strategy.
A Website with High Traffic
Passive income is traffic driven.
Primarily, you sell your products from your website. You will probably also sell some from posts on social media and other outlets, e.g. guest spots on podcasts, etc., but your primary source of revenue will likely be your website, so getting traffic to your website and through your sales funnel is important.
Drive traffic to your site with:
A blogging/free content strategy
Stellar SEO
Affiliate Marketing
You need to already have your brand figured out, a rock-solid website created, and a good idea of who your ideal clients are and how you most want to work with them, and …
2. A Well-Developed Services and Products Strategy
Passive income products are only one piece of the puzzle. An effective passive income strategy should complement and enhance the services already in place for your business.
A very basic content/product strategy involves three things:
Free content (blog, articles, podcast, YouTube channel, free talks, etc.) that establish:
Your likeability (your lovable personality)
Your expertise (content that invokes trust that you know your stuff)
Build your list
Incorporate a list-building strategy like content upgrades, contests, challenges, etc.
A low-ticket product ($20-$200) that builds on your free content
Higher priced products that provide more value (e.g. a few hundred dollars to $2K-$3K) that build on your free content and your low-ticket product
Consider product relevance in your funnel
Make sure that each level of product leads into the next one.
For example, if you have a blog that gives gluten-free recipes, then your low-ticket product better be either fancier recipes that are more complicated than what you could put in a blog post or video tutorials of some special gluten-free cooking technique.
If instead, your low-ticket product is about the best hiking trails in Colorado, you’re not going to have many conversions because the people who come to your site for gluten-free stuff won’t have anywhere else to go with you.
So keep your products relevant to one another and make sure they solve similar, but increasingly complex, problems as pricing gets more expensive.
Leveraged income - maximizing your services
Consider your services, too. It’s not always about products. You can increase your revenue by offering leveraged services.
Leveraged services are classes, group coaching, workshops, or any other service you can offer to many people at once.
These services almost always have a lower price point than your 1:1 service, but since you can sell them to more people at once, they often have higher revenue.
Remember, the point here is to do less work for more money.
Teaching a group and giving online classes are great ways to leverage your time and expertise to make more money for the same amount of time you’d spend during a one-on-one session.
Think big in terms of your 1:1 service.
You never know where the next influx of cash and profits will come from. Plenty of my clients have been pleasantly surprised when they took a chance to put up an expensive VIP or long-term package and a bunch of people bought it.
It’s also valuable market research. These services will eventually inform the self-guided products you create for passive income.
3. Tools
When you’re ready, get familiar with tools and software to make your life easier and implement your funnel.
My recommendations are:
Website: Squarespace
Email Marketing: ConvertKit
Payments: Stripe, Paypal, or Square
Design: Canva
Screen Recording: My hands down favorite for this is Loom. It’s easier to record in and pause than Zoom, and it’s the easiest way to record screen videos for courses.
I also have a longer list of tools and resources for your website in general.
4. Affiliate Marketing:
Affiliate marketing has gotten a bad rap, but it’s actually a beautiful way to receive love and support from people who love and believe in you.
Once you have your products in place, people can sign up to become affiliates of yours. As an affiliate, they’ll get a portion of the sales they drive to your website.
Most affiliate programs pay between 50% and 70% of online (passive) profits to their affiliates. Some pay as much as 100% or even 110% because the addition of those very qualified leads is so valuable.
To start your own affiliate program, you’ll need an affiliate management tool. Some platforms like Kajabi, have this built into their platforms, but for Squarespace and others, you’ll need a third-party tool like Referral Candy or Tapfiliate.
Do it with integrity
Don’t affiliate with anything you don’t know, haven’t experienced, or don’t completely trust. Also, don’t let your affiliates sign up with you if they haven’t actually purchased your product.
Build a loyal, dedicated “sales” team to help you get the stuff you’ve just created out into the world.
OR
Find products you’re loyal to, and market those yourself as an affiliate.
What to expect when you build passive income streams
Be prepared to come up against your stuff.
Launching anything is nerve-wracking. When you’re putting your expertise in black and white and taking a stand for the change you want to see in the world, it’s likely to bring up stuff you have about money, receiving, and your confidence.
Be gentle with yourself while you’re creating and marketing it.
Done is better than perfect.
Any task, no matter how small, is always better off completed, rather than perfect.
If there is an exception to this rule, I haven’t found it yet.
Be patient with yourself and others.
Big changes are awesome. And scary. Take good care of yourself while you’re creating something new in your biz. Don’t bother comparing yourself to others.
Reward yourself for effort, not results.
Don’t take anything personally. Treat of this like an experiment.
You’re going to launch things that do incredibly well and you’re going to have some flops.
It’s all okay. Everything is an experience that makes you a smarter and more savvy business owner.
It will all contribute to your success, and if you can take your lumps without taking it personally, it’s going to be so much easier.
To Sum Up:
I got this mug from Alcatraz. This was actually an official rule there, but I love this message for my own creativity. It reminds me to respect and honor whatever wants to come through me, and to prioritize the time and energy it will take to create it.
Rather than a get-rich-quick-scheme, passive income is really about doing more of what you love.
It’s about writing the book, building the program, or whatever else that you want to create, and then providing it in a way that it serves others and supports you.
It’s a fantastic investment of your time now into multiple streams of income that can pay off well into your future.
Want to simply see if your website has what it needs to build a strong foundation for your passive income strategy? Get your Free Website Audit Checklist below.
