I’ll be debunking some myths and clarifying some misconceptions about passive income and I’ll let you know some truths as well as revealing some of the ways you can leverage your time and make your online business more passive.
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Links and Resources Mentioned
Affiliate Disclaimer: Some of the following links below may be affiliate ones, which means I earn a commission — at no extra cost to you — if you end up purchasing anything after clicking through those links.
- Parkinson’s Law
- Pareto’s Principle
- Tim Ferriss’ Margin Manifesto
- Pat Flynn’s Smart Passive Income blog
- How to know when to outsource
- OBFM Podcast Episode 2: 15 Reasons Why Starting an Online Business is the Best Decision You Will Ever Make
- UpWork
- Fiverr
- The 4-Hour Workweek by Tim Ferriss [Affiliate Disclaimer: This is an affiliate link, which means I earn a commission — at no extra cost to you — if you end up purchasing this product through this link]
- Rich Dad, Poor Dad by Robert Kiyosaki [Affiliate Disclaimer: This is an affiliate link, which means I earn a commission — at no extra cost to you — if you end up purchasing this product through this link]
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Thank you again and I see you in the next episode of the Online Business FM podcast!
Louie
Transcription
Hey, hey!! What’s going on, my people?
Are you having a productive week so far? I hope so! If you aren’t, you can still turn things around.
Remember Parkinson’s Law:
«Work expands so as to fill the time available for its completion.»
And the opposite is also true:
If you have little time, just laser-focus on the most important tasks (put Pareto’s Principle in action here), make sure you finish them and forget the rest.
You can still do it!
Anyway, I and my cat welcome you to the third episode of the Online Business FM podcast.
Yes, I said my cat. I’m an animal lover. His name is Kiko, although I use a bunch of other names to call him: Chiquinho, Branquinho, Macaquinho, etc.
I could spend tons of time talking about my cat, and my family of cats who I love and will always love, but that’s not the point of this show, is it? Nopsy, dopsy.
Today we are here to talk about Passive Income and answer that question you see in the title: Can you really make money while you sleep?
I’ll be debunking some myths and clarifying some misconceptions about passive income and I’ll let you know some truths as well as revealing some of the ways you can leverage your time and make your online business more passive.
All right… ladies and gentlemen, it’s time to get the show started!
Myths
What Passive Income Is Not
If I were to ask you “what is passive income?”, what would your answer be?
Would you say:
- That it is a set-it-and-forget-it kind of thing? Or…
- That all you need is to create something quickly (like an information product, for example) and, almost automatically, money will start rolling in? Or even…
- That anyone can do it without too much hassle, all you need is an idea, “build it and they” — the customers — “will come”.
All of these answers (and similar other ones) are nothing, but myths.
They do not correspond to the reality of things.
In fact, it’s even worse. They couldn’t be further from the truth.
Here’s the thing, a lot of people’s idea of “Passive Income” is based on misconceptions.
Misconceptions such as:
- You can make millions with almost no work at all.
- Or, you can spend most of your time — if not all — on vacation, enjoying the sun, the beach, the cocktails and the parties, the beautiful landscapes and the life-changing adventures and you only have to check how your business is doing on your laptop once a month.
Why Are There Such Huge Misconceptions?
It’s no wonder that many people think like so, especially if you take into account the countless overnight-success stories we’ve all heard about, the tons of programs, trainings and products that “sell” you in on the promise that you’ll also be able to live the passive income dream, quit your job and make money while you sleep.
You’ve probably also heard about or read Tim Ferriss’ book The 4-Hour Workweek [Affiliate Disclaimer: This is an affiliate link, which means I earn a commission — at no extra cost to you — if you end up purchasing this product through this link] — which, according to Wikipedia, has sold over 1.35 million copies worldwide.
That book might have influenced people’s perception of the whole “passive income” concept, as well, making a lot of folks think it can be done and it is easily achievable with the least amount of effort.
Killing the Myths
Well, I am here to kill the myths and burry the misconceptions once and for all.
I’m sorry, myths and misconceptions, I have to do it. It’s my job here. Your time has come.
The overnight-success stories? Naaa… they aren’t… exactly as you think they are!
They are one of two things:
#1. There was a lot of research, hustle, effort and sweat involved that wasn’t made public.
Those stories are missing the so-called “messy middle”.
They only tell you about the “before” and the “after”. How about what happened in between?
The true story, the struggle, the hesitations, the fears and mistakes, the ups and downs, the failures, the wrong choices, the lucky breaks, the breakthrough moments, the people that offered an helping and decisive hand?
Or…
#2. There can one or two real overnight-success stories but…
They were probably born out of pure luck and, as such, those won’t be lasting businesses because they lack the proper foundations.
They are the exception, not the rule, and they’ll disappear as fast and easy as they have come.
The Passive Income Dream?
I mean… who doesn’t feel attracted by the idea of doing little and making millions?
That’s the dream of most of us, isn’t it?
No worries, no stresses, no debts. No effort and lots of money in the bank.
Stop. Don’t get fooled by false promises.
Marketers know how to use your own dreams and hopes to convince you to spend your hard-earned money on their products, trainings and courses.
If they state that you won’t have to do much and that it will only take you a short while to start making boatloads of cash… then you need to run away as fast as you can.
Seriously! That’s a “get rich quick scheme” alert right there.
There is no business model — be it online or not — where you won’t have to do anything and, with just a simple push of a button, money will start pouring into your bank account magically.
If someone is selling or promising such a business, a product or online course to you, stay away from it as they are trying to scam you.
Even with passive-income type of businesses you will always have to put in the work, time, effort, attention and
sweat. There are no fairy tales in real life, things don’t just happen by magic.
The 4-Hour Workweek Book?
What’s important to realize here is that you shouldn’t create an assumption (a wrong one, at least) on just the book’s title alone.
It’s all it is: a book title. A book title especially crafted and tested by Tim Ferriss to sell more copies as he, himself, reveals in that very same book of his.
Tim Ferriss has also stated, on more than one occasion, that things aren’t really 100% like that, as he doesn’t work only four hours per week.
Plus, even though you could build a business that required minimal of time to manage (i.e., just a few hours of work per week), it would still take you a ton of time, effort and possibly money too BEFORE reaching that stage or level where you could be absent for big chunks of time — if and only if, you could ever make it in the first place.
I’m not saying it’s impossible or that you can’t do it, just making you see that it requires an insane amount of time, effort, work, planning and organization to reach and maintain that stage in your business.
(Actually, a bit later in this episode, we’ll be discussing ways to leverage your time and get closer to this stage.)
That being said about Tim Ferriss’ book, if you haven’t read it yet, I highly recommend you do it, but read the whole thing… not just the title, right? Although it’s a bit outdated now, the overall concepts described therein are still super valid today.
Passive Income Is Never 100% Passive
All of this myth and misconception killing for what?
To tell you that “Passive Income” is never 100% passive.
Yes, you do have to work. Yes, it does take time. Yes, it does make you sweat.
Yeap, you will face troubles and struggles. Yeap, you will eventually feel overwhelmed. We all do at some point.
And although it is true that the work you do now will come back as a reward to you months or years later, there will also be a considerable amount of work to do in the future and constant maintenance is needed to keep things going.
There’s also competition to worry about and things tend to keep changing in the online business and Internet marketing worlds — Google and Facebook, for example, are always updating their algorithms.
So you can’t just disappear forever and expect that money will continue to be generated indefinitely.
Wrong Kinds of Motivation to Start an Online Business
The wrong idea of passive income, the illusion of it or its misconceptions, all of it makes people wanting to start an online business come in for the wrong reasons or with the wrong kind of motivation.
- They want to quit their jobs because they don’t enjoy or simply hate them.
- They think they can start a passive-income type of business easily and quickly and sit back doing nothing more or very little forever.
- They think “get rich quick” businesses are true and possible.
- Those people who come in with those false illusions, with those wrong ideas of what “Passive Income” truly is are the first to quit as soon as they realize the amount of work, time, effort and sometimes even money they have to put in their businesses.
Instead, they (or you listening) need to find the right reasons and the right motivation.
- You need to enjoy or love what you do. Hence the “follow your passion” or “leverage what you’re good at” advices I gave you in the previous session of this podcast. Don’t quit the job you hate to work on something else that you don’t love or like either.
- Starting and running an online business and doing all sorts of Internet marketing stuff can be really fun and even addictive (and that’s why many internet marketers don’t stop working once they reach profitability) but not everyone will agree.
- Find your “why” (your purpose for starting an online business) and your key motivations.
- Come in to serve and help an audience first, to build something great and of high value, something that will change the lives of others and, eventually, the world for the better. Think about making money later. If you act like this, you will be rewarded accordingly by the people you help and affect. (Of course, you’ll want to make money but, as I said in Episode 2, making money shouldn’t be your #1 priority.)
Truths
Different Ways to Generate Passive Income
There are several different ways to generate passive income but, again, almost none of them are truly 100% passive.
For example:
Financial investments and collecting interests: — The thing with this kind of business is that you need to be aware of banking rules and economic laws changing and even be prepared to face eventual economic crisis.
Buying houses or apartments and renting them — That’s a smart business, but don’t forget you still need to find and deal with tenants, buy and replace furniture and home appliances, and do some cleaning and repairing.
Buying and selling stocks — is another form of passive income but it still requires a lot of work as you need to stay up to date and on top of things.
These businesses can, indeed, be regarded as passive-income kind of businesses but, to me, building a business online has greater potential and far more advantages than any other way of generating passive-income money.
My Personal Story
I remember when I started back in the long-distant years of 1999 and 2000 as a kid building websites and trying to make money out of them.
Was I thinking about “passive income” or passive-income kind of businesses?
Well, that is a great question.
That concept — or, at least, the name of the concept — didn’t really exist for me until around 3 years ago when I kind of rediscovered affiliate marketing and found myself on Pat Flynn’s Smart Passive Income blog.
When I began, I mostly focused on creating service-driven websites over content-driven ones. I thought I wouldn’t be able to come up fresh, new content frequently because I was still in school and, to tell you the truth, I wasn’t too fond of the idea, either.
Blogs and similar kind of websites were still to come and I figured that content wouldn’t be my best bet.
My website portfolio back then included service websites and tools like a free online SMS or text sending tool, a banner ad exchange program, and a virtual postcard website.
I even managed to have a customized number where people would send a text message to along with a code in order to buy logos, graphics and ringtones for their cell phones from me.
Basically, I wanted my websites to work for me, and not the other way around. I would just have to manage, improve and market them to increase my chances of making money, whether I was online, or not.
They were thought and built to work on their own, automatically, without my presence.
That’s why I preferred service websites, so that I wouldn’t have to spend time coming up with content on a regular basis.
So yes, I guess the idea of passive income was already there, although I wasn’t totally conscious about it or had a name for it.
What Is Passive Income?
With everything that we have discussed so far, how would we best define “passive income”?
Here’s that question again: What is Passive Income?
My definition of Passive Income is as follows.
Passive Income is a methodology where our businesses are designed and built to work for us by making use of systems and tools of automation that allow transactions and growth to happen all day, every day without the requirement of our physical or virtual presence.
The intent here is to create flexibility in your schedule and freedom in your life, together with wealth growth by building assets that allow you to do so, like Robert Kiyosaki, author of Rich Dad, Poor Dad [Affiliate Disclaimer: This is an affiliate link, which means I earn a commission — at no extra cost to you — if you end up purchasing this product through this link], teaches in his book.
Passive Income Benefits
The benefits of such a methodology, concept or approach, however you want to tag it, are:
- More Freedom
- To build and manage businesses on the go.
- To decide what and how to do things on your business.
- More Free Time
- To travel.
- To spend more time with yourself, your family, pets and friends.
- To take breaks when you feel like it or need to.
- To relax and enjoy the “dolce far niente” every now and then.
- Less Amount of Ongoing Work Involved
- Since a big part of it has already been done in the early stages.
- You just need to focus on managing, marketing and taking important business decisions.
- Higher Business Scalability
- Since you’re not trading time for money.
There is also…
Which allows for a…
Passive Income is a very smart way to improve your life and that of those around you.
Ways to Make Your Online Business More Passive
Contrary to regular 9-5 jobs, with the passive income approach you’re not trading your time for money.
Just think about it:
If you’re working a 9-5 job, how can you make more money?
To increase your income, you’d have to work for longer periods of time.
But there’s obviously a limit there, as days only come with 24 hours and you’re a human being, not a machine.
In the passive income scenario, on the other hand, increasing the amount of money you make or even reaching profitability (if you haven’t done so already) is not directly tied to the amount of time you spend on your business.
Actually, as Tim Ferriss put it in his Margin Manifesto:
«Profitability often requires better rules and speed, not more time.»
And I would add, it is not how hard and long you work, but how smart you do it that really matters, here.
That being said, despite the fact that there are no 100% passive-income businesses, there are lots of ways to make your online business more passive.
- You can, for example, set processes that describe each and every step you, your virtual assistants or employees and online business need to take in several situations like when you’re launching a new product or a website.
- Or outline SOPs (standard operating procedures) that will give your team the right directions and answers to deal and face with repeated tasks, events or common problems that may arise without having to ask you what to do every time.
- By building systems your work will become much more effective and efficient, increasing your productivity, flexibility and decreasing the amount of time you have to spend to achieve the results you want.
Again, the idea is to work on your business, not in your business.
So, with your processes, SOPs and systems in place you can now turn to outsourcing — and you can read a post I’ve written that explains how to know when to outsource on my blog — and hire individual contractors on websites like UpWork or Fiverr or hire agencies to take care of the most repetitive and non-managerial tasks for you.
You’ll end up with more time, freedom and flexibility allowing you to focus on the most critical aspects of your online business.
And, more importantly, more time to spend living and enjoying life with yourself and the ones you love.
And now the million-dollar question you’ve been waiting for to get the answer…
Can you really make money while you sleep?
Totally!
With everything I mentioned here, your online business will be making money for you passively, even when you’re sleeping, on vacation or just absent for other reasons.
Things may never be 100% truly passive, but you’ll have plenty of time to spend on other things besides work, much more than you would if you were stuck to a regular 9-5 job.
Conclusion
That’s it for today!
I hope I’ve debunked some myths and cleared out some misconceptions on this episode of the Online Business FM podcast while, at the same time, made you see what Passive Income is really all about.
To get the show notes, the episode’s transcription, all the links and resources mentioned in this session, just visit the following URL: onlinebusiness.fm/3. Again: online business dot fm slash 3.
Valentine’s Day is coming soon so… don’t forget to say “I love you” to everyone that’s important and matters to you… your wife, husband, boyfriend, girlfriend, kids, pets and friends and not why? Yourself.
Show your love to me as well :-))) by subscribing to this show on iTunes, Google Play or Stitcher (and you can also find it on Spotify), leaving a rating and a review, if possible.
That’s the best way to thank me, support the show and give me motivation to keep it going.
Bye-bye, have a super Valentine’s Day with tons of kisses and hugs and I’ll see you soon on another episode of the Online Business FM podcast!