Making money with little or no effort involved – it’s fair to say that passive income has a great ring to it! But while the idea of having cheques roll in with no active involvement on your part sounds great, is earning cash while you sleep really as easy as it seems?
As you may have seen, the passive income world has generated a huge amount of hype in recent years as entrepreneurs look for the next big way to make money to into retirement.
But are there some unhelpful passive income beliefs that are starting to emerge? Are myths and roadblocks getting in the way of people’s success?
As with any income strategy, it’s important that you do some due diligence checks before you jump in and expect passive income to start working in your favor straight away.
Here we’ve busted five top passive income myths to give you a balanced view on the subject; to help you decide whether this money-making option is the right one for you, and to give you some tips on how to make your dream of passive income sustainable.
Myth 1: Earning Passive Income Involves Little Set Up Work
You can’t just plug into a lucrative niche in a day: there is a lot of set up and strategy work that goes into it.
It may take weeks or months to lay the groundwork for a proper passive income venture, and then it may take awhile for traffic and sales to pick up.
Take traditional passive income, like real estate: even if you use the services of a management company, you will still need to spend time researching, buying, and flipping property.
Lesson learnt: even if you use people to help you automate and streamline elements of your business, a lot of the initial groundwork, strategy, and monetization hinges on you.
A great example of someone who has made passive income from real estate is Paula Pant, who saved the income from her job to buy a triplex – two of the apartments she rented out and one she lived in, complete with zero housing costs.
Since her first purchase, Paula has gone on to buy several other properties, and now she is able to travel the world on the back of the money she has made from her passive income business. In her own words, it has given her “sustainable, long term freedom”.
While this story might sound too good to be true, when you realize that Paula worked extra hours for a long period of time and saved every dime to make her dream a reality, the myth that passive income requires zero work from the outset is busted!
Myth 2: You Can Earn Easy Money While You’re Asleep Or On The Beach
While it’s a lovely image to think that with passive income your bank balance will be increasing while you’re catching a tan or getting some shut eye, unfortunately it isn’t always as simple as that.
Sure, if you are an ecommerce business owner, it is possible for you to receive sales from across the world, 24 hours a day, 7 days a week.
But of course, to have got to that point you will have had to do some hard work first in terms of marketing (and measuring) your products or services.
You will also need to keep checking in with your virtual team or staff, to ensure that standards aren’t slipping whilst you’re away.
And looking at your sales dashboard is addictive: you probably won’t be able to just completely ‘turn off’ anyway.
The same goes for writing an ebook and selling it on your website or a marketplace like Amazon.
Once it’s published, it is possible for you to earn a decent amount of royalties if your content is well written, but you will still need to spend a lot of time promoting your book and interacting with readers.
Some of the best ebook authors are constantly online and engaging in dialogue with their readers.
Take the example of entrepreneur Pat Flynn, who made $7008.55 during the first month of selling an ebook on his website.
Although this figure sounds pretty impressive, to get to this point, Pat invested a ton of time into researching online business, building a readership, making contacts, and ultimately creating his ebook – as you can see it’s almost impossible to get something for nothing.
Don’t expect to be able to create content or launch a site…and then book tickets to the Bahamas the very next day.
Myth 3: People Will Find You
You’ve got a great idea, and you know it’s something that’s going to take off. If you make it, people will buy it; and if you build it, people will come. Whatever your product or service is, there will always be someone out there who needs it right now, right?
Well, sort of. If you have done your market research right, you should already have a good idea of what people need, but the hard work doesn’t stop there. Now you need to tell people about it.
Making a product or creating a service is unfortunately not enough – you need to get out there and promote it using a mixture of marketing channels in order to generate interest from potential customers.
It’s a lot harder to get people to care than you might initially think — and you will need to be both aggressive and strategic in order to generate enough traffic and interest. This might mean using PPC, Facebook ads, email, SEO, social media, and referral marketing all at once.
One clever way to maximize exposure is to not only focus on bringing in new customers, but keep existing ones coming back by building a relationship and creating customer loyalty.
An easy way to do this is by using incentives and nurturing your email list with great content and personalized offers.
Myth 4: All You Need Is A Website To Earn Passive Income Online
This myth is one that comes up time and time again – but to be honest, the idea that all you need is a website in order to make a large amount of passive income online is false.
Of course, a website is part of the overall picture, but it’s all the supporting elements like your social media channels, your email list, your processes, and online infrastructure that really enable to you take your business to the next level.
A great landing page is awesome, but it’s what you do next that really matters.
Spend time building a business that is lean and optimized across the board. From data management and CRMs, to sales processes and social media automation: make sure that everything you do is geared towards generating more income, and making the most of your current traffic and customers.
Myth 5: Investing Is only Suitable For Those With A Large Amount Of Capital
Nowadays, it’s easier than ever to get involved in the world of investing, and you certainly don’t need to be a financial expert to make some good money. Plus, contrary to popular opinion, you don’t need as much money to get started as you think.
In fact, according to Nasdaq, you could invest through a brokerage firm or discount broker for as little $1000.
For as little as $100, you could also purchase government bonds or invest in a mutual fund that is more diversified (i.e. contains a mixture of stocks and other investments) and is therefore a lower risk option if you’re just starting out.
Online, your investment options are even more diverse. You could invest in high-income blogs, or build your own blogs and sell them on.
People pay good money for great content. You should also think about buying and selling ecommerce stores — a growing sub-niche of website flipping, it’s getting easier than ever before for stores to change hands and for people to make a tidy profit from their ecommerce venture.
With everything said, the most important thing to remember is that if a passive income strategy promises six figure returns for zero legwork, then there is probably a big catch somewhere.
With that in mind, there are genuine passive income success stories out there (like Pat Flynn’s), but you’ll quickly find that if someone has made it big, they’ve had to put in a lot of effort first.
Victoria Greene: Brand Marketer & Blogger
I’m an ecommerce marketer by trade, and I run a blog in my spare time where I like to talk about content, social media, and blogging. I love taking people’s ideas and making them into digital realities.