Passive Income is Not Passive

A few years back, I wasted almost an entire year of business growth on a project to create passive income. Let me explain…

I hired a coach for a healthy five figure sum and told him I wanted to create some passive income. At the time, I had a bunch of ebooks, and a few online programs that most certainly should be making me rich while I slept.  This guy knew how to do this, he was smart, came with raving endorsements and all in all was a great coach and mentor.

Here’s how it went down:

1. Funnels – several of them all designed to get someone to go from interested in information, to interested in buying.

2. Tripwires – This is an offer you make immediately after they opt-in for something free and you essential “trip” (or trick) them into a super awesome deal for $7 and they become a customer.

3. Up-sells and down-sells –  Once they take advantage of your trip wire, you’ll want to have another offer for them. If they don’t buy the up-sell, maybe you can sell them something for less money, who knew, and it’s called a down-sell.

4. The “if then” formulas –  That essentially means you set up a fancy campaign with decision points. If the person does x, THEN you offer y. If they do a, THEN you offer b.

5. Traffic building strategies – This is all about creating content and ads to drive traffic to landing pages where you get people to opt in for something free.

6. Multiple email sequences –  Because for every if, then formula, you need a sequence of emails to deliver your up-sells and down-sells. That means MORE than one email sequence, and if you decide to do split testing, you need double the number of sequences so you can test which work better!

Confused or exhausted yet?

After seven months, I was ready to close my business.  I was confused about how to make this work, the person working for me didn’t know how to execute the system and I was bleeding money trying to generate passive income.

The whole premise is relatively simple, create an amazing free offer which is followed by a $7 trip wire, and then the buyer is presented with an up-sell. If the up-sell doesn’t work, you send them a series of emails, and then offer them a down-sell. If that doesn’t work, you try another series of emails and then see if they will buy the up-sell.

The golden rule is once someone is a customer it’s easier to sell to them right?

This whole experience was hedged on a $7 ebook.

Seven months in, I had probably sold nearly 100 ebooks and one or two up-sells.

Do the math. 100 ebooks x $7 = $700 in passive income. 2 up-sells x $497 = barely $1000 in passive income.

STOP the insanity.

There is NOTHING passive about creating passive income.

I paid a healthy five figures for this coach, PLUS I paid my VA and my web guy to work on this project for SEVEN months, and I invested a ton of energy and time in it myself.

You need to sell an AWFUL lot of $7 e-books to make back this investment.  Conservatively, I would have needed to sell close to 4000 to break even.

You don’t have time to do this.

The ROI on this type of passive income is not as simple as people would like you to believe.

The dream everyone aspires to is to build a business where you make money while you sleep.  It’s a lovely idea, and yes, on a regular occasion, people do buy The Pilot Project while I sleep but I am not going to get rich off of those sales.

The bulk of those sales happens when I get off my lazy butt and do some type of promotion or campaign to sell the program.

If you’re in direct sales, you must invest money to start your business, then you must recruit and build a team which also takes money, time and effort, then you need to continue to lead that team if you want them to be successful and sell products.  It can take years to build a thriving direct sales (MLM) business that generates decent 6-7 figure passive income.  And once you’ve built it up, you cannot take your foot off the gas for long, or your passive income will pass away.

If you’re a Real Estate investor, this is a great long-term passive income play provided the market doesn’t tank when you most need that income.  You need to save up enough money to make a down payment on the property, then you have to invest $ in upkeep and repairs, and you become a landlord who has to be responsive to your tenant’s needs.  If you’re lucky, the property will be cash flow positive when you buy. If not, 20 years down the road, your rental income will be true passive income once the mortgage is paid off and when you sell the property, you will walk away with a good chunk of money that you’ll have to pay taxes on.

You see, there is no such thing as EASY passive income.

Passive income comes to those who work hard, save money, and then use that money to invest in opportunities to generate more income. There is nothing passive about having passive income.  There is no magic way to do this. Anyone who boasts to you about having passive income has done a ton of work to lay the foundation for that revenue.

In Profit Pods (and if you haven’t applied yet, and you want to work with me, you should) I always tell people the truth.  Focus on big rocks first.  Learn how to build your business with your highest revenue-generating product or service and when you’re business is thriving, and you’ve got some money to work with… then, consider how you might invest that money to generate some passive income.

Don’t get sucked into the online marketing game.  It’s not as easy as you think it is.

Full disclosure, my business was doing over $500K a year when I took this project on. That year, my total revenue grew by less than 5K. The smallest incremental growth since I started.

Have you ever tried creating “passive income?” If so, how did it go? Leave a comment and let me know!