Passive income is a myth and we need to accept it as such

Passive income is the holy grail of business. Or so we're told by business and marketing experts alike. 

The phrase is so commonly used nowadays that it might seem crazy to question it. And trust me, I get the appeal. 

People are attracted to the idea of steady cash flow month-after-month, especially if it’s presented in a way that makes it seem like there’s little to no effort associated with it. 

Let’s review some of the top headlines, shall we? 

• 12 Uncommon Passive Income Ideas To Pay Your Rent in 2024

• 7 Passive Income Ideas - How I Make $67k per Week

• 8 Passive Income Ideas (HOW I MAKE $58K/MONTH)

• 3 Ways To Make $50,000 Per Year Without Working With Passive Income

Frankly, at face value at least, it all sounds amazing.

The formula to creating passive income is more often than not presented alongside keywords like “easy,” “guaranteed,” and “lucrative.” 

Here’s a great example, 

Blog title: “15 Proven Passive Income Streams That Can Make You $2,000,000/Month”

Subheading: “Passive income is one of the best ways to earn money without having to work for it. That’s because passive income requires very little or no effort at all, which means you can generate money while doing other things or even sleeping!”

I mean, come on. You’d think this one in particular is satire but I assure you, it’s “real” (real as in it’s a published article on Medium, not real as in realistic.)

All you have to do? Build a course, write a book, or create a how-to guide, pop it up on your website or landing page, create a quick email sequence, and then sell away while laying on the beach somewhere sunny and warm.

EXCEPT – it's not realistic and likely won't happen for you. If it worked, those sunny beaches would be full of passive income earners living it up.

There really isn't any such thing as passive income, unless you count investments. But even then, there's work required to earn the initial investment, plus the time it takes to figure out what investments are most likely to generate returns.

I could give you the rundown on my views of our capitalist system, but you're living it, so I'll spare you.

Here’s the bottom line: it takes a lot of work to make money off of courses, books, or guides of any kind, even if you have a large and engaged audience.

And it's getting harder and harder to build a large, engaged audience, too. 

Why? Well, the social networks need to get their piece of the pie, too, so it's rigged against all of us with occasional little shifts in the algorithms that make things better.

The real work required for “passive income”

Let’s review the bare minimum requirements for creating “passive income.” 

1. You need something to sell. 

This upfront work is generally discussed by people writing about passive income. But it’s often talked about like it’s easy; just about “throwing something together and getting it online.” This is simply not the case. 

Building a product (whether that’s writing a book, creating a guide, developing an app, or setting up a course) that's worthy of customer’s hard-earned money requires time, energy, and effort. 

It means coming up with a unique perspective or approach to the content that sets you apart from other products and creators online. 

It means compiling and condensing all of your past experiences, insights, research, and education in a digestible and streamlined way for customers. 

And then it involves putting all of that information in an appealing and accessible format for purchase. 

Important note: please don’t let this deter you from coming up with a product of your own. Your unique perspective is important and if you create a product intentionally, knowing your audience’s needs, desires, and pain points, the right people will find it. It doesn’t need to be perfect or beautifully branded if the information is good. My point here is that it isn’t necessarily easy to put together. 

2. You need a platform to sell it on. 

In order to sell your product – especially in a scalable way – you need it to be easily accessible online. 

This generally requires paying for and setting up a domain name and website hosting, a payment provider (even if this is free you generally have to pay a percentage of your income to the platform), an email provider, and potentially automation software to allow these elements to flow together easily. 

3. You need an audience to sell to, and a marketing plan to sell the product. 

With the amount of digital information, products, companies, and creators online, selling your specific offering won’t happen without strategic marketing and promotion to an already engaged audience. 

Unless you have a product that no one else in the entire world has created and therefore have a complete monopoly of specific SEO keywords related to your product (spoiler alert: this is highly unlikely), your offer is going to be buried in Google and Instagram among hundreds or thousands of similar products. 

When you commit effort and energy over time towards curating an engaged audience though, you have a group of consumers ready to purchase from you (assuming of course that you’ve created an offer that speaks to their pain points). 

Over time, you also have to focus your efforts on getting new people interested in your product, or creating new offerings that appeal to your audience, or your income is going to dry up. 

Your current audience and offering can only take you so far, for so long. 

4. You need to offer ongoing customer service and support. 

Your work isn’t done when someone buys your product. Customers will have questions, tech systems may go awry, and/or clients might require additional assistance. 

The entire process of creating and selling a product requires time, energy, effort, and intention. 

It involves being creative and innovative, constantly marketing yourself, communicating with your audience (before, throughout and after their purchase), data review, tweaking elements of your product or selling process based on data and feedback, and continuously looking for ways to optimize or expand your offerings so you can continue to scale your company and be profitable. 

Doable? Absolutely. Is it an easy, effortless, or passive process though? Not really! 

Now, there are also an unfortunate number of people who don’t put this time and intention into their products. 

My research on passive income

A few years ago, I invested a lot of money buying various digital products to analyze them. 

I looked at the emails businesses sent, the pricing they set, and the tactics and tools they used to upsell. 

I checked out the tools creators were using for email marketing, landing pages, websites, learning systems, and more.

I wondered how this oversaturated market could possibly make anyone money. 

More importantly, for those who had pages full of products they were selling, I wanted to know whether there was any value to them.

What I learned from my curiosity

I've already shared my opinion that passive income is a myth. There's genuinely nothing passive about it for most creators.

What I wasn't expecting to learn was just how much digital clutter is out there for sale these days. 

I purchased a few "tools," guides, and courses out of curiosity because the promise and the price seemed too good to be true.

And they were.

Whether these business owners are taking advantage of their audience or their dominance in the market, or just don’t have the experience required to make a truly transformative product, it’s hard to say. 

But what was apparent is that many people are okay slapping a price tag on something and taking a payment, even when what they’re selling is essentially useless.

Are these the same people making thousands on “passive income” and promoting it as a lucrative, easy business? I’m not sure. 

I can’t imagine they have many repeat customers or clients promoting them via word-of-mouth, which are both important keys to a successful, sustainable business model. 

You don't need passive income

I'm big on under promise, over deliver. I want to give my audience more than they're expecting from me.

I would rather give someone – whether they pay me or not – the best quality tools I can give rather than fluff that isn't going to help them get what they need. 

When I build a template or guide, I put my years of experience into the development because I don't want to hand something over to my client (or a subscriber) that isn't going to make a substantive difference for them.

I don't just tell people to create content that adds value. 

You can read that in roughly eleven billion blog posts and it's equally as helpful as when I say it. Instead, I'll give examples of different ways to add value so readers can get inspired.

If I delivered the kind of tools and content some people are out there selling, it would hurt my brand far more than it would help it. 

Not to mention, anyone who openly talks about their desire to live on passive income turns me off of working with them because I know they don't genuinely care about working with me (and maybe don’t even care about their own customers).

They’re looking for “easy” results. They want to get from point A to point B as quickly as possible. And quite often, they’re not willing to do the work to get there (especially because society has over-sold them this idea of passive income). 

Here’s the thing. 

There’s going to be work involved regardless of your business model. 

So why not put your energy towards creating a business you love? A business that inspires you? A business that is built on changing the world in the ways you desire? A business that involves work that you enjoy (although there will almost always still be work involved that you don’t love so let’s not set our expectations too high here!). 

Focus on quality over quantity and people over profits

I love helping small business owners and not-for-profit organizations that are making a real difference in the world. 

When my clients share the successes they're having—mindset, money, or otherwise—I get excited when it comes as a result of our work together.

I want to work with people and leave them empowered to make better decisions about their marketing.

I want my clients to come to me with beliefs that allow me to give them a different perspective and (maybe) see them change their mind.

I don't need to be a multimillionaire (and definitely not a billionaire – no thank you) to live a good life with my family.

Don’t get me wrong, I still have goals that inspire me, and income aspirations that excite me. But these goals and income desires also align with my values and lifestyle. 

I’m opting for quality over quantity.

I’m choosing people over profits. 

And I would encourage you to do the same. 

Simplify, connect, grow

For 2024, I chose three words that resonate with how I want to focus my energy this year: simplify, connect, and grow. 

These words are about simplifying my life and work to hone in on what works best for me getting things done. 

They're about leaving space to make connections with new people and staying connected with the folks I already know and care about. 

They're about growing my ability to discern and make wise choices day to day.

Why do these words matter when it comes to passive income? Because they're why I advise clients against pursuing passive income models for their business. 

Creating scale in your business is never going to be a passive activity. There will always be work involved, so don't buy into the myth.

Instead, accept that there will be work and make plans that keep your business life as enjoyable as possible. 

Keep things simple but impactful. Create products that you can stand behind 100%. Be proud of the work that you’re putting into your business. Invest your time and energy into your customers and clients. And stay connected to the core of what you do so you can grow in alignment with your values.

One final thought. I know the idea of laying on a beach collecting cheques all day sounds appealing to most. But is that really what you desire for your life? 

While it might be enjoyable for a week or two, or even a couple months, I can almost guarantee that if you’ve read this far in this post, you’d get bored after a while! You’d crave more for your life and your audience. You’d still want to grow and expand your business and offerings. You’d desire to make a bigger impact in the world. 

So don’t let click-bait titles fool you. Stay true to who you are and the transformation you want to create for your clients. Pursue business opportunities that excite you. And focus on actively creating your life – not standing there passively as it passes you by. 

Isn’t that more invigorating and exciting anyways?