Oh, the alluring myth of passive income. I laugh when I see ads and websites for people offering me an… The post The myth of passive income appeared first on The Joy of Business.
Oh, the alluring myth of passive income. I laugh when I see ads and websites for people offering me an easy way to develop passive income. So much passive income that I’d actually not have enough hours in the day to sit on the beach counting my money.
You’ve probably seen the same kind of thing, offering to show you the exact way someone else has built a “six-figure launch” or a “six-figure business” in six months. For some reason, it’s usually six-something.
The story goes something like this
You build an online product, such as a workbook on pricing for small businesses or an online course. You knock this up in a weekend. I’m having a particularly ironic laugh at this, as my Sweetspot Pricing book definitely took more than a few weekends to put together. You build a quick website, throw together some blogs, and add a PayPal link for people to send you tons of cash.
Get a virtual assistant, and she will do a fantastic Facebook ad campaign for you, sending you tons of traffic to your new website.
You sit back and watch a six-figure launch while drinking cocktails on the beach. You never have to work again.
The problem with these passive income myths
You’re unlikely to have a six-figure launch. It is probably more likely to be a three-figure launch.
Most information products take a considerable time to build up. That’s because to make a success from online products, you normally have to have a range of products and cross-sell between them. I call this a product ecosystem, and it’s pretty much essential if you want to make a successful product-based business, rather than a side hustle or tiny extra income stream.
And the other big myth here is…
The idea is that six figures is enough to retire. It’s not. Six figures is just 100,000. Even if you did magic up a six figure launch, you’d probably do something sensible, like pay off a chunk of your mortage, and carry on working, rather than sit on the beach doing nothing.
The trouble with the whole set of myths around passive income is the word passive. It appeals to the lazy side of all of us. Who wouldn’t want to follow a particular recipe and have money pouring in after knocking up a product and not have to do any further work?
The truth about passive income
I’ve worked with some pretty clever and famous people, who have had very successful digital product businesses, and one of the things I’ve noticed about all of them is that they’re not lazy, and they never sit still.
There are always going on to the next product in their ecosystem. In fact, they’ve got a product rollout schedule and they are so excited about what they do, that they’re constantly creating more blogs, podcasts and videos to communicate with the world about what they love.
Maybe I don’t hang out enough at the cocktail bar on the beach here in Brighton, but I don’t think that the Fortune of War pub is crammed on a Tuesday morning with online entrepreneurs celebrating their six-figure launches.
I think that you know that these passive income myths are a load of nonsense because they are too good to be true.
As with just about everything else in business, you can do a rubbish version of this very quickly, or you can do it properly so that people love it, recommend it and will buy more things from you. Guess which one brings sustainable success.
How long does it takes to make a digital product?
Start with your tribe
When I’m advising people who want to sell some kind of online product, we don’t even start with the product. We start with building what I call your tribe.
The tribe is your fan base, the people who are interested in your way of solving a problem they experience. We want to get that tribe engaged and get permission to send them emails.
It’s only when we are clear who our tribe are and we’ve started finding a way to talk to them regularly that we start building the product.
Even if you have got a tribe already, you’re going to need to build it further. This is where you need some sort of lead magnet to bring in new potential customers for you so you can begin to nurture them.
Writing content, building email nurture lists, even testing out your Facebook ads, these will take time, expertise and some love and care.
Why the myth of passive income makes me cross
I get very cross indeed about people who boast to others about their six-figure launches, their passive income streams, and how easy it all was. And I could write in detail about the weird psychology of all of this and why people need to boast in this way to cover up their own anxieties.
The most obvious way to inoculate yourself against these boasts is to ask yourself why these people are bothering to sell you the secrets of their huge success?
If they have so much passive income, why aren’t they just sitting on the beach, enjoying life? Why are they on Facebook, trying to get some of your money if they have so much already?
Most people are building online products because they want to change from a service business, or to just add some more money to their turnover on top of selling services.
It takes time to do this. It takes time, concerted effort and online marketing, so don’t expect to be drinking cocktails on the beach right away.
Well, maybe just one pina colada to celebrate your first sale, but then it’s back to writing blogs and improving your email sequence.
Realistic optimism, not the myth of passive income
I’ve written this to reassure you if you’re ever caught by those people who promise instant results and six figure launches. Or if, like me, you get furious when you see this.
You can of course make a good living (enough to buy a cocktail after work now and again) from a product-based business, while recognising that passive income is a myth. Recognising that building a product-based business takes just as much time and effort as building a services-based business is realistic optimism. You can do it, but it’s never that quick fix.
To find out more about what’s involved in building your ecosystem of profitable digital products and productising your expertise, with a healthy does of realistic optimism, check out Adventures in Products.
Photo credits to Piotr Usewicz, Garett Mizunaka on Unsplash; money time, beach, laptop from Pxhere and Giulia Forsyther on Flickr
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