A couple of weeks ago, I was chatting with a friend and she shared a story with me about her friend who’s working to build a “passive” income business.
My friend was asking me for my honest opinion of what I thought of the concept and plan her friend had mapped out, based on a system she’d learned from some internet guru.
As you can imagine, my assessment of the situation wasn’t good…and this conversation actually prompted me to write this post. Why?
There’s a real lack of perspective out there about what it takes to build a business, let alone a business that generates passive income.
And, my dears, I’m tired of it. I’m sick to death of innocent, talented business owners being sold a BS dream of passive income that’s unlikely to happen for them.
Enough already. There are so many misconceptions about what’s involved and how easy it’s going to be that it’s keeping people broke as they hustle hard to make the dream happen.
The truth. Passive income dreams when you’re just starting out have the potential to keep you broke as you chase the dream.
Truth #1: The Rag to Riches Fairytale is Marketing
Yes, there are success stories everywhere you turn of people who made the passive income dream happen, but I’ve yet to see/hear/know someone legit who did it without a services business in place first, and/or have years of business experience.
Plus, let’s be honest, those stories…they make for compelling marketing. The rags to riches fairytale is a classic story that internet marketers use to sell their course/program/system to you. Human nature is that we want to have the same type of success story too.
Often what those success stories don’t share is the backstory of what led them to the point where passive income became a reality. That’s why it’s important to be able to know when you’re being marketed to and to take a look at the bigger picture of what got someone to where they are today.
Truth #2: Passive Income Isn’t Passive At All
The dream of a business where you get paid while you sleep is real. I know because after many years of building my business, some days I get to wake up and there’s literally been money made while I sleep.
But that money, it’s not passive. Far, far from it. It took time and money to create, launch and market those offerings, and it was definitely not an overnight success.
In our case, we developed these offerings while running a services business so we were able to invest in things like building a membership site, design, content production and more. All while not worrying about being able to pay ourselves or our bills.
So many times, people don’t realize how much goes into creating, marketing and launching your offer, and all that time could be used to book clients and scale a sustainable business.
Truth #3: Being Broke Is Bad for Business
You didn’t start a business to be broke, now did you?
Yeah, me either. That’s why it’s time to ditch the quest for passive income and do what it takes to bring money in the door now.
That’s where services come in. Most of us have marketable skills that lend themselves to services, and every single time in a business, services are the fastest path to cash.
The math is simple. It’s going to take much more time, energy and patience for you to sell 10 units of your $97 courses than it will be to book one client for a $997 package.
If you need to make money, services will help you inject money into your business relatively quickly. And with money in the bank, you’ll get to a place where you can make decisions based what’s best for you and not having to hustle your heart to move $27 ebooks.
Truth #4: Engaging an Audience Takes Time
Building an audience takes time, and you can do everything “right” and it may take waaaaaay more time than people realize.
It’s not as simple as starting to write blog posts and then watching your audience reach critical mass so you can monetize. There are so many factors at play that impact how quickly (or slowly) you can actually build a loyal following of people who are ready to buy from you.
Variables that you need to take into account are your industry or market, competition, your promotional plans and more, as they will all impact the speed at which you can build your audience.
Over the years, I’ve seen some clients literally have a runaway success rapidly growing their email list and a loyal following. In those cases, the clients typically had one thing in common – they were in a very narrow niche with demand for what they had to offer.
This kind of result isn’t typical and usually consistent, quality marketing is necessary to establish an audience who are ready to invest in programs or passive income products.
And those stories you hear about people with a teeny tiny email list who launch and have huge success? Usually in a niche and what they’re offering is innovative within their industry. They are literally the first person to offer this type of product. (If you’re in the business of offering something for other online business owners, this isn’t likely to be the case.)
In short: passive income isn’t all it’s cracked up to be, especially if you’re in the first couple years of your business. Look at how you can build a business based on services that are sustainable and going to keep you from being a brokeass business owner.
When Should You Add Products or Programs to the Mix?
If you’re already offering services and you’ve been considering adding products or programs, here’s the truth:
Truth: The time to add products/programs to the mix isn’t as soon as you think.
Many times, when services business owners consider adding this to their lineup, it’s because one of two things are happening. First, they want to scale and they don’t see a way for them to make more money doing what they’re doing. In our experience working with services business owners, there’s much more scale in a services business than most people realize.
If you’re reaching this point, it may be time for you to consider raising your prices, creating a signature service or growing your team before you decide to go into offering products or programs. If you’re not at the $150,000 or more point in your services business, there’s plenty of scale left in your business – you just need to find it.
At the point I added my signature course to the mix, I was well over the $200k mark for the year, and to be honest, I left money on the table as I spent no less than 100 hours developing content, marketing the course, supporting students and more.
Even if I’d billed even half of those hours, I would have cracked the $300k mark for the year. I found myself actually turning down business to work on my program, and that was to the detriment of both my bottom line AND the number of hours I worked that Summer/Fall.
The second common scenario is that programs or products become appealing as a services business owner when you’re approaching burnout.
When you offer services, you’re literally in the business of serving, which, without the right structures and systems in place, can be a recipe for stress as you’re always putting everyone else first.
If that’s the case, it’s time to step things up and start working ON your business, and not just in it. Time to be the boss of your business and not just a freelancer with a bunch of little bosses telling you what to do. (Here are some ideas on being the boss of your time.)
Before you throw in the towel on services, consider how you can make your business work for you. Services are here to stay and people are willing to pay a premium to have things done for them, but it’s up to you to design a services business that serves you first.
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