9 Passive income myths that need to be busted
[Disclosure: this post may contain affiliate links, this means I get a commission if you decide to make a purchase through my links. This is at no cost to you. Please read my disclosure information for more details.]
The dream of making money while you sleep. The adventure that is passive income seems to allude to the fact that you’ll be sitting on a beach, sipping mai tai’s and working on your laptop. Won’t sand get all over it? Never mind.
In this article I want you to understand what you can actually expect from passive income. I don’t think it’s an impossible goal but the effort it takes to set your business up in a way that makes money on autopilot is often hidden from us.
What is Passive Income
Passive income is making money from an asset that you have created once and sold on autopilot many times. Ideally you’d automatize sales and marketing so that your input is minimal.
Myths about passive income
Set it and forget it
This is one of the myths that make passive income sound so appealing. You setup your sales funnel leading to your sales page and then forget about it.
First of all, if you are building a course, for example, you will need to update it with new information and make changes based on student feedback. If you have made a template or spreadsheet you will have to keep those updated.
Second, your marketing efforts might not pan out at first and you will have to try many things to get customers to purchase from you. It’s a continued effort and you must be willing to put aside some time to deal with these issues.
If you build it they will come
This myth is easy to believe especially if you like building websites and creating products. Who cares about idea validation? (Link to validation article) You will be more successful in your journey if before you build that business or create that product you validate your idea. Later after you’ve validated it you can go ahead and build. Unfortunately you won’t be done yet. Marketing and sales strategies come after this, and as I mentioned earlier it takes time to tweak them for effectiveness.
Start a business with no money
Please don’t believe this. I understand you might not be in a position to pay for many things in your startup business but there will always be costs. It’s unrealistic to think you won’t have to pay for anything up front.
Research your online business idea and make a budget with the costs for the first year (at least) so that you know what you need to aim for. You might have to get some part time work or a side hustle that pays fast rather than something that takes time to bring a profit like a blog, and save the money you need to start that business.
You need to set up a full-fledged business
Setting up a business legally takes some money, anywhere from $2000 – $5000 dollars. Apart from the legal stuff you will need to do branding and set up an online presence.
If your side hustle is something simple you can work as a sole proprietorship and report your income that way. Eventually, however, if your business continues to grow you might want to change to a company because in a sole proprietorship you are liable for all debts and there are a lot of benefits.
*I am not a lawyer, and this statement is only for informational purposes.
Products are easy to make
When researching a specific product you’d like to make, like a planner or a printable, you will probably have watched tons of YouTube videos showing how to do it. It looks so easy, right? Well it’s not. It takes effort, talent and skill. Of course you can learn how to do them but that will take time. Even when working from a commercial license template you will have to put the effort in choosing the look and feel of the product and then customizing the template. These things take time.
If you have already made several products, things become easier, but only because you’ve already established a process on how to make them more efficiently.
Great ideas are easy to come by
These days the marketplace is flooded with offers. This doesn’t mean that you can’t come up with a different idea, but you will have to make sure your offering is unique.
Don’t get discouraged if you can’t find an idea right away. Set some time aside to brainstorm ideas based on your likes or your pain points as a consumer. What problems do you need solving and is there a unique way you can solve those problems.
You’ll start earning almost immediately
Unless your side hustle is freelancing or you already have a built in audience you will not see any money coming in immediately. They say a blog takes at least 2 years to take off.
Freelancing can get you that money more easily, just make sure to evaluate properly how much time your projects will take, otherwise you can start losing money fast.
Website design and development is one of the favorites for freelancing, but if you don’t calculate the scope of the project properly or don’t know how to handle new requests from your client, things will go badly.
You might want to invest in a project management course just to make sure you’ve got all your bases covered.
You need to spend money to make money
While you will need to invest some money on your startup, don’t think you have to have that $2000 course to be successful. Remember, you are a startup and you can’t afford to be spending such quantities of money. It’s not only courses but also tools. In blogging, for example, SEO tools are pricey.
You’ll need to be resourceful at the beginning while you set up your business and grow it and it’s making a profit to invest in some of those tools. They might promise to make you lots of money but you have to remember your reality at the beginning stages of your business.
You’ll only need one idea to get rich
If you do your research, you will find most entrepreneurs say that you need to diversify. Not all eggs in one basket and that sort of thing. I’ve seen this most with artists and writers, where they’ll tell you they have 3-5 (or more) different income streams.
The ideal is having several income streams in case something happens to one of them and you lose part of your business. A great example is how many bloggers lose their traffic when Google does an update and it affects their sales. You’ll see them panicking on Facebook groups asking how to fix their site.
Passive Income Business Ideas
This is just a small list out of all the possibilities.
|Start a blog||Rent out your car||Invest in rental properties|
|Promote affiliate products||Invest||Rent out storage space|
|Sell digital products||Buy a vending machine||Own a billboard|
|Create an app||Flip retail products||Buy crowdfunded real estate|
|Sponsored posts on social media||Peer-to-peer lending||Rent out a parking space|
|Create a blog or YouTube channel||Dividend stocks||Rent out your home short-term|
|Sell an online course||Invest in a high-yield CD |
or savings account
|Advertise on your car|
|Sell designs online||Start a dropshipping store||Rent out useful household items|
|Write an e-book||Create a print-on-demand store||Rent out your spare room|
|Sell stock photos||Sell handmade goods||Create no-code apps|
|Become an Instagram influencer||Buy and sell websites||Earn royalties through inventions|
Your online business can bring you some passive income, but you need to be smart in how you set it up and manage it. Investing in different income streams is ideal so that you don’t get hurt by the ups and downs of business.