According to the IRS, there are three categories of income: assets, liabilities, and portfolio.
Active is what it seems. You do income-generating activities from which you earn income.
Portfolio is also what it seems. You invest money in things like stocks, real estate funds, or other investment vehicles, and at best, your investment produces a profit or income.
Then there is passive income.
The holy cow of network marketing companies and continuity/membership site experts.
The goal of every type of overworked, low-income, self-employed person praying for a miracle.
Passive intimacy without work. You, on the beach, cocktail in hand, checking your PayPal account for sales every few hours. Or, even better, you, on your sofa, in your pajamas, watching GOT or House. Again.
I’ve googled a ton of content on passive income, and while there are some solid possibilities out there (for example, lending money for interest), many take a solid idea and execute on it immediately, like this one that admits you have to get the job done for get to passive: “first you need to get off your ass and do something crazy, say write a quality 20,000 word ebook (crazy not passive lol)” but this is where it gets crazy: “but then you can sit and enjoy watching PayPal sale messages pop up on your iPhone every morning as one sale after another is made… continuously and without any extra work. That’s passive piña colada flavored goodness!”
There are some seriously delusional thoughts.
Let’s look at digital products. You write or create it once, set it up on a landing page, connect the cart, drive traffic, and head to the beach to pick up your moolah.
A well-made e-book or virtual program requires hours of research, writing, production, formatting, etc. Those hours cost your time, and during those hours you are not making money. But okay, we can all agree, there has to be work on the front end, right?
Right, but it doesn’t end there.
Now we have marketing. If your landing page is optimized, your copy is great, and your ads are perfect (something that requires daily monitoring, by the way), and your ebook, product, or program is targeted to the right audience, you could see recurring revenue from this. evergreen product.
Phew. We’ve done quite a bit of work so far and there are a lot of “if’s” from a marketing perspective. (If your landing page converts because you have converting copy and the page is SEO optimized, and you are targeting an audience that wants what you have, and so on.)
And marketing doesn’t end if you want sales to continue.
What about affiliate partner management, returns, customer service? Even outsourced, there is still active participation.
This type of income, as you can see, is far from being passive but rather leveraged.
Leveraged is good. This is how businesses grow and, in our case, entrepreneurs, how we get out of the trap of limiting revenue in the fee-for-service model only.
I don’t want to bring Debbie down, but part of my commitment to my clients and to you, my readers, is to bring the truth; illuminate the traps, the false gods and the naked emperors.
Am I suggesting not to do an ebook, virtual show, or continuity show? NOT! (Well, I might in the case of the membership/continuity program, and I’m rounding up some experts to break down the good and the bad and who should and shouldn’t and when. I’ll have details next week here.)
I suggest you examine your attraction to a marketing idea before you jump in. No idea will “save” a shaky business – sales is the exception here – and an idea that promises to “change everything” in your business is not likely to deliver on its promise. What you really require is only going to be found in the type of mouse: that fine print at the bottom of web pages and print ads that give you the disclaimer.
Always read the type of mice.
And start researching leveraged income streams. Find out what it really takes to set one up and get started. It may not be passive, but it is income that requires less of you one-to-one or one-to-many. And that means more time to work on your bag or pina coladas.