Is Passive Income A Myth or A Viable Business Model?

Passive income isn’t something I’d refer to as a myth, but it's worthy of exploring more deeply.

It's certainly not what most entrepreneurs think it is.

Passive income is something that happens for you, with very little to no effort.

Social Security is one example of this. Then again, you did contribute to it for decades and worked hard to earn it until you retired, but once you receive the benefit it’s passive income!

Investing in the stock market is another example of this. Each year, I contribute money to my Roth IRA. My financial planner then manages where that money goes and how it grows, and every year I see some level of returns. The average growth is between 6-7% per year.

The same goes for interest I earn from my bank account. I put money into a savings account, it grows by 3 to 4% per year, and all I need to do is keep money in that account to keep earning interest on it. All of which I will do by default, so it's not adding any extra work to me.

"Every business has its share of work and challenges."

Ad copy needs tweaking every few weeks, new contracts need to be created, vendors need replacing, your Zaps fail, the landing page crashes, customers ask questions, people demand refunds, you get a bad review, you’re asked to create an affiliate program, competitors undercut you – the list goes on and on.

Passive or evergreen offers are also not something I think a lot of us are inherently designed to do well – for a few reasons.

Passive offers are counterintuitive.

On one hand, you want to create the offer quickly so it truly is “passive” and working for you. Any offers that are thrown together simply for the purpose of generating “passive income” never last.

I've heard stories of entrepreneurs throwing together offers knowing they wouldn’t last and just blasting ads to sell as many of them as they could before they’d switch to the next business model.

On the other, you want to create offers that are highly effective and proven to work so they can scale on their own until (hopefully) the end of time.

These offers take time to build – and even more time to master the sales process and marketing language (that’s really the secret sauce) behind it.

Often, once you figure out that sweet spot you’re working against the clock to maximize your efforts until you need to re-work it all because of new restrictions with ads, trending keywords, or exhaustion on the buyer's side.

In my opinion the best "passive" offer is a word-of-mouth referral.

Imagine you take the time to build that second type of offer.

It's proven to work, gets amazing results, and has built-in customer feedback loops. Every person who buys it gets a massive transformation.

While you can absolutely run ads to that offer and fill it up with even more amazing people, nurture your customers to tell other people about the offer, too.

Ask for the referral, the warm introduction, the connection – introduce an affiliate program, talk about how excited you are to meet more amazing people like them – don’t be afraid to do this!

I ask for referrals from people within a week of them joining my program.

If that shocks you, I’m not surprised! A lot of people are afraid to do this early on. I get it, you want to make sure people get results and give them a win, and I think that can and needs to happen earlier and more often.

Last year I was coaching a nutritionist, and she told me it takes 6 months for people to see results in her program.

I immediately said, "No it doesn't! One shift to their diet can help them sleep better. Two pounds can be the difference between feeling confident and sexy and hating their body. You can give them support and self-awareness that changes how they see themselves or even engage with others."

Then, she got it, and more customers came, with less effort.

These are wins, and you want them to happen quickly – and call attention to them when they do happen!

"Build in feedback loops and pay attention to what your customers are saying and feeling."

Passive offers require active attention.

Passive income is made to look effortless, but there's a lot of work going on behind the scenes that people just don't talk about.

You’re never just sitting around watching money roll in without effort – especially if you’re working solo which is what a lot of entrepreneurs who create passive offers do. You’re running their business alone, trying to earn from multiple income streams, and end up burning out because of unforeseen work.

It takes work to maintain your results, just as it takes pressure on the gas pedal of a car to maintain your speed. It can be low effort, but it requires attention, patience, and skill to keep it going consistently. Someone will always be doing what you do (or a version of it) better, cheaper, and less passively than you.

"Be prepared to react and be proactive."

If it was truly that easy to toss together an idea over a few days, launch a couple ad sequences, and start generating thousands of dollars, don't you think every human on the planet would be generating millions of dollars?

I have a group on Facebook called the Business Building Academy. It’s free, and every month I host a series of live training events there.

Some would call this a passive income strategy because I generate ads to push people to the group, run events (which I could do recorded but I love doing them LIVE), and inevitably convert some of those people into my paid program.

This is far from passive income!

Every month, I’m researching and planning these events in detail. I’m developing landing pages, multiple email sequences, setting up call reminders, writing social media content, going LIVE to talk about the event, creating ad copy and graphics, testing each ad set, creating presentations, practicing the presentations, dealing with tech integrations – a lot goes into this!

I was describing my business to a client the other day like this:

"I'm like a car manufacturer. I make it easy for you to get in the car and just turn the key and it works! Meanwhile, I'm sitting there figuring out how to design that vehicle to work, hand selecting every piece to fit, making it efficient with gas mileage, designing the body style to appeal to you, making sure that when you turn the key the engine turns over and there's no issues so you don't get into any accidents."

All you see from the outside is, “Oh fun! Justine's doing a training today” and I like it that way.

That said, I have automated a lot of this process by hiring help for my ads and social media posts, creating systems and templates to cut back my time significantly, and I do feel like I’m able to do a lot more than most in a short amount of time because of these systems.

Is it passive? Absolutely not.

Your time is valuable. I can see why you want to pursue something that takes less of your time so you can make more of an impact.

Just keep in mind that the person buying your offer is also an important part of that equation, too.

Make sure that whatever you're putting out there is something that’ll live up to the hype, give them what you promised, and create real change in their life so that they want to tell everyone they know – because, what’s the best "passive" income stream?

Word of mouth referrals!