The Passive Income Myth (& why it probably won’t make you rich).

I blame Tim Ferris. By the time I finished the ‘4-Hour Work Week’ I was convinced, in a matter of months, that I could be lying on a beach in the Bahamas  earning money for doing absolutely NOTHING. Regular work was for suckers and I, for one, would be way too busy working on my tan to have time for any of that 9-to-5 nonsense. There are few amongst us who have not been seduced by the lure of the Passive Income – the idea that we can earn an ongoing income with minimal or no effort. In the olden days this might have been restricted to your stock portfolio or investment property but in 2017 every other entrepreneur out there seems to be promising you a way to earn $10k+ a month for doing Sweet Fanny Adams. Whether it’s selling an e-book (or a course on How to Write an E-book), making commissions via affiliate sales (via the likes of Amazon Prime or E-Bay) or generating revenue via Google Adsales, this Passive Income sounds like the sh**.

When in fact it is – for the most part – mainly Bullsh**.

• Myth No 1. – The Income is Passive.

There is nothing passive about creating a passive income. You need to firstly have an idea (which doesn’t suck). Then you need to research your idea (this can take a long time). You then need the business, technical & marketing good sense to:

Build your business/blog/website.

Create content or produce a product that people will actually want or care about.

Build an audience, mailing list, following or traffic to get people to where you want them to be so you can get them closer to buying your or other people’s products.

Manage your SEO & Social Marketing, join forums and Facebook groups, befriend other bloggers or learn about scary things called funnels which will entice people to buy the things you are selling.

Offer customer support, answer enquiries, comment back on their Instagram comments (Ha, ha @meganharris – ‘aint that the truth), follow lots of other people and sometimes un-follow them (what?), set up automated systems, outsource stuff to your VA in the Philippines (and then spend a fair amount of time editing the work you out-sourced).

Once you have done ALL of this, don’t be expecting to pour yourself a margarita and chill. Not if you want this Passive Income of yours to keep on coming. Putting your well-earned Income Stream into neutral or Maintenance-Mode is unlikely to work. Business markets are continually evolving and on-line even more so. By the time you are back from your meditation retreat in Guatemala there is quite likely to be someone offering the better, cheaper, smarter version of what you were. Someone who is still liking, commenting and engaging with their tribe. The truth is you can’t stay ahead of the competition Passively & you can’t maintain a loyal following Passively.

• Myth No 2. – Creating a Passive Income is Easy.

If it was we would all be doing it.

• Myth No 3. – You Are Going To Be Rich.

Now, I am not here to rain on anybody’s parade – I can ‘You Go Girl!’ with the best of them but like I said in Myth 2. – it is not as easy as it sounds. First up, you are going to have to work really, really hard for no money at all. Yup – this is because this Passive Income game is based on a leveraged income model. You start out with your upfront investment which is your time and your effort with a side helping of risk. You do this in the hope that you will then get paid at the back end and that ultimately the pay off will be greater than the effort that preceded it. In many cases this does actually happen. There are lots of people who have proven it is possible to create an automated income stream (and most of them will happily sell you the E-Book to prove it)….but I can not guarantee it is going to make you rich in a hurry. I was dead chuffed when I garnered my first Amazon affiliate commissions, until I was politely informed I hadn’t reached the Payment Threshold to get paid that month. You heard right – I had earned too little money that month to make it worth their while to transfer me the funds.  With starting commission rates around 4%, if you sell a book for $15 you can be confident of banking upwards of 60-whole-cents. The money you earn will depend on the products peddled – selling books and gardening tools is a hell of a lot less lucrative than selling electronics for instance.

There are other affiliate networks such as Clickbank that pay a lot more (up to 75% +) so you could earn a more appealing $39 for every ‘Leanbelly Breakthrough’ you manage to sell (please click the link* and watch the video – just for the LOLS – it’s a doozy.) But please ensure you read the small print – in addition to payment thresholds you can actually get charged penalties if you stop making sales and activity falls dormant. Passive? Passive Aggressive more like it. What about Google Adsense? There seem to be endless stay-at-home families living off their gardening & knitting blogs so surely these Ads must be generating enough to keep the lights on? According to a kind man on Quora called Mat Bennet, ‘A website serving an average of 3 pages per visit, each with 2 ad units and an impression CPM of $1 would therefore earn $6 per 1000 visits’ – even if you don’t know what any of that means you can see it is not going to keep you in the manner you are accustomed. You can after a few months and a fair amount of effort realistically expect to earn a few hundred dollars a week for doing not very much (recommending sites like Blue Host ($65 per referral) or Shopify (200% of a customer’s subscription fee) – nothing really to write home about and not even close to the big bucks you might have been hoping for.

The big bucks are mainly going to the sites with the most views such as recent Australian Wunderkind Nagi Maehashi, whose food blog RecipeTinEats gets over 3.5 million monthly views (within 8 months of launching she was already generating a $100,000 annualised income.) Specific sponsorship deals and mainstream advertising mean that Nagi is well on her way to being rich…but is her income passive? Hell, No! – That girl works damn hard. For other online ventures the real money is coming less from their passive income streams and more from their active up-sell offerings -such as workshops or one-on-one consulting. Don’t get me wrong – working as a freelancer or running a business from your laptop is awesome. It allows you the freedom to manage your life on your terms -no more 9-5, office politics and being told where to be and what to do – but it does require you to show up and do the work.

• Myth No 4 – A Passive Income will make Happy.

Therein lies the rub. The biggest problem about all this passive income nonsense is that the intention and the end game do not seem to be mutually compatible. Going to the great effort of creating a business and a bank of customers with an end goal of moving away from that business and those same customers might leave you feeling a little….flat. It comes back to something we have covered here before – money & meaning are not one and the same. Most of the people out there who really, truly seem to be living the dream are not the ones lounging around by the pool racking up commissions remotely. They are the people still ACTIVELY involved in whatever it is they have chosen to do because it is something they are passionate about. They are dying to get out of bed every day to keep on doing it. People like Casey Neistat who says, ‘Nothing makes me less happy than relaxation and sitting around with nothing to do’. People like Richard Branson, who despite being worth US $5billion and living on his own private island is still looking to conquer the final frontier. Even people like me, who – despite not always making my Amazon affiliate’s cut, – happily continue to get out there and find ways to make life less crap for people like you.

This GET RICHER tip is brought to you by someone who is still (thank God) making an active income until the passive one decides to kick in.

*Please note – I am not earning any affiliate commissions from the Leanbelly Breakthrough as there are some waters even too shallow for me to wade through.