There are a lot of myths about how to create passive income and what it is. If you’re an entrepreneur, you’ve likely heard them all! Despite having a lot of misinformation, passive income can totally transform your business, so I’m here to share with you how to create it.
Recently on the Profit Meets Passion podcast, I talked all about how to create passive income. If you’d rather listen than read, you can tune in to that episode here.
First things first — yes, passive income is a must have for any entrepreneur who wants to have a thriving business. But I’d bet that what you’ve been told is passive income actually isn’t.
What is passive income?
Passive income is income earned without actively working hours to receive that income.
For example: Sally earned $1000 this week from her coaching business, but she was actually on vacation (and a social media detox!)
To further tease apart this point, let’s say that Sally was on vacation, but she Instagram story’d her entire day, including all those lovely swipe up links to her programs and affiliate products. This is not passive income. Sally is still actively working to drive attention to her business.
So passive income occurs when you are not doing anything to actively earn income, but you’re still raking in the dough!
Does passive income really work?
So, what are the benefits of passive income? Let’s break them down so you know if this is something you want to invest your time and effort into.
Benefit #1: You have the freedom to set and manage your own schedule.
Let’s say you’re a health coach. If your business is based on passive income, you would be able to take time off without worrying about meeting financial goals. Since you aren’t relying on working with people one on one, for example, you don’t have to factor in someone else’s schedule or invest the 2-3 hours (minimum!) per client.
Benefit #2: You are able to help more people.
Using the example of a health coach again, if your business is based on passive income, you will be able to help more people. Most people aren’t able to afford a one on one session with a health coach, so that limits your client base. And then you are limiting yourself again because you only have so many hours in a week!
But if you offered a passive income strategy like a self-paced online course, you’d help way more people!
Benefit #3: You can worry less about money.
The whole point of passive income is earning money consistently, regardless of how much or how hard you’re working. With passive income as the backbone of your business, you can more easily save up for expenses and even take that dream vacation without worrying about loss of income.
Benefit #4: You have more availability for life!
Real talk: ever since COVID-19 hit I’ve been working way less. But I still pulled in a livable income. How? Passive income is the backbone of my business. When you rely on passive income, you free up your time for what truly matters to you. I’ve been able to spend more time with my daughter without worrying about making ends meet.
Common myths about passive income
While passive income really is as great as it seems, there is a lot of misinformation and mis-marketing about it. Let’s bust some common myths about passive income.
Myth #1: “Create an online course if you want to create passive income.”
Truth: Creating a course is not passive. In fact, it’s one of the most time consuming things you can do in your business!
Now, it’s true that the income you’ll receive from your course after the fact may be passive. But you still need to invest a significant amount of time and effort into creating a course in the first place–at least, creating one the traditional way. My course, Wellness Course Academy, can guide you through creating a course in as little as 4 days.
Myth #2: “Launching your online course is totally hands off and passive!”
Truth: Depending on which launch strategy you choose (more on this in Wellness Course Academy!) it could take several months to pull off a successful launch. Real talk: it’s super draining. Definitely not what I’d call passive!
Myth #3: “Affiliate programs are great sources of passive income.”
Truth: Teaming up with someone else to promote each other’s products may seem like a great way to double your exposure and, therefore, generate passive income. But this isn’t the case. First, you’re now promoting someone else’s product. Um, definitely not passive! Second, building these kinds of relationships with other entrepreneurs takes time and effort.
Myth #4: “Sponsored content can create a lot of passive income.”
Truth: When you team up with a brand for a sponsored post, you then have to create content around the product or brand. This is definitely active, especially when you factor in the communication and editing you’ll undoubtedly need to do.
Myth #5: “Creating a sales funnel is passive.”
Truth: Nope. Creating a sales funnel takes a lot of time, insight, and effort. An effective sales funnel could take four or more hours to create. In the context of an eight hour work day, that’s half your entire day (though, let’s be real: most entrepreneurs aren’t having consistent eight hour work days!)
Myth #6: “Recurring payment plan income from previous clients or purchases is passive income.”
Truth: Money coming in from a payment plan from a client who purchased your program last month is not passive. Technically, it’s just the money you’re owed, but delayed. You still put in all that work to sell the product.
What IS passive income?
Don’t get me wrong — I love a good digital product! In fact, I consider digital products essential to running a successful wellness business. The distinction I am trying to make is that none of the above strategies are passive in and of themselves. It’s how you leverage those strategies that can make them passive.
Example #1: Reaping the benefits of a sales funnel you created years ago.
When I put in the work to create my sales funnel for my nutrition program so long ago, I knew that I’d be creating passive income for myself for years to come!
Example #2: Income from affiliate programs promoted in a welcome sequence.
I’m definitely going to talk more about this in later podcasts, but another great source of passive income is sales from affiliate products included in an automated welcome sequence. For instance, if someone signs up for a newsletter or freebie and is entered into your sales funnel, they’ll see those affiliate products in your automated welcome sequence. If they purchase any of these products, that is considered passive income because you did not ACTIVELY promote them.
Example #3: Diversifying your revenue streams.
Having multiple sales funnels and welcome sequences for a variety of products and services generates passive income!
Example #4: Seeing payment notifications about a product or workshop you created previously!
This is my favorite! Getting an email notifying you that you’ve earned money from a product you created three years ago is such a rush.
My 2019 journey with passive income
In 2019, I made $23,542.45 total in passive income.
Note that I didn’t earn that money from any of the new programs I launched or any payment plans I had from previous clients. None of that income is included in the figure above.
I also didn’t include income from any of my Beautycounter business, which is a huge part of my business overall.
That entire $23,542.45 was completely passive. I could have been sitting on a beach, phone off, and still made that money! Imagine if I hadn’t set up the systems to bring in this passive revenue years ago. I would have been leaving nearly $24k on the table!
This year, I plan on putting more of my digital products into passive income systems. By doing so, I can anticipate earning at least double that amount in 2021, without lifting a finger next year.
How I’m going to grow my passive income system to earn $50,000 without working
As I mentioned above, that $24k was just the tip of the iceberg. I have so much more earning potential in setting up more passive income systems.
Here’s my current plan to set up passive income systems in 2020:
- Create limited time offers for all of my digital products
- Create sales funnels for all of my digital products
- Generate more affiliate revenue for my welcome sequence
- Grow my Beautycounter team (note: this isn’t totally passive, but I am including it because building these relationships with the women on my team doesn’t feel like work to me!)
- Generate more traffic to my website (check out this podcast episode to learn why this is so important!)
How to get started earning passive income
First, start thinking about how you can leverage your current offerings for passive income. How can you use what you already have to create passive income? Break out your journal and start brainstorming!
Check out my free email series, Keep Calm and Profit On, on how to start making passive income in the wellness industry. You’ll learn:
- The phases of making money as a wellness entrepreneur
- Email sales strategies that ACTUALLY work
- How to beat the Instagram algorithm
- AND how to make an Instagram sales funnel!
I’ll dive in deep on sales funnels, marathon launches, email sequences, and so much more in upcoming episodes of the Profit Meets Passion podcast!
If you’re ready to get started and you’re willing to invest in coaching that guarantees results, head to Wellness Course Academy to see how you can get paid while you are creating your online course.