Why Passive Income Isn’t All It’s Cracked Up to Be

There are books, blogs, and countless podcasts on the subject, not to mention that one friend who seems to have it all figured out and won’t stop humble bragging about it. What is this buzzy topic we can’t seem to escape? Passive income — the all-star of the entrepreneur gold rush we seem to be living in right now.

The idea is nothing short of perfection. Essentially, you set up a stream of revenue that is entirely, or very close to passive. In other words, you sit back and let the income roll in without putting in a 40-hour work week, or even a 20-hour one. It sounds pretty dreamy, right? But is passive income all it’s cracked up to be? In my opinion, no. When I first became an entrepreneur, I did a little digging into the passive income world. I’d been curious for years, so I put my head down and tried to figure out how I could take advantage of it. Throughout my research, this is what I discovered.


Are you prepared to work your butt off?

I quickly discovered that there is nothing passive about starting a passive-income business. Sure, affiliate links can bring in a lot of revenue when promoted in a blog post. But if you don’t have old blog posts to stuff with these links, you’ll have to actually write some, which is no quick task. You’ll also need an audience to read and click on those blog posts each month, without too much marketing effort on your end. The same goes for selling any type of product online or offline. Unless you have an audience ready to buy them and a way to market them quickly on an ongoing basis, you won’t find it all that easy to make revenue.

There are many ways to make passive income, but nearly all of them take a hefty time and financial investment upfront, especially if you’re producing a physical product that requires shipping and packaging. Even if you only have to develop the product once, you have to prepare to manage the production and shipping process for as long as you want to stay in business.


There’s a big risk to consider

Let’s say you do everything you’re supposed to. You do the hard work of researching and developing a product or writing a book. Then, you market your revenue stream like there is no tomorrow. Even after all of that, there is no guarantee you will actually make any money. Like any business, success will come as a mixture of hard work, creativity, and a little bit of luck. Remember that even if you play by the rules, a passive income is never certain. Trends come and go; the factory you rely on to manufacture your products may shut down; your Airbnb listing could get a negative review that tanks your ranking. You’ll have to stay adaptable and be persistent if you want your business to succeed, but keep in mind that hard work doesn’t always bring success.


Like any business, success will come as a mixture of hard work, creativity, and a little bit of luck. Remember that even if you play by the rules, a passive income is never certain.



Marketing will be important

Paying for social media ads, hosting webinars, taking out an ad in your local paper — there are countless ways to market your passive revenue stream. You can automate some of these marketing efforts or outsource them (if you have the money), but there will still be some level of ongoing marketing effort involved. Granted, it may not take 40 hours a week to market your revenue stream, and it may be more than worth the effort, but there will be effort. There can also be costs required to make your marketing plan a success. Do you have the money required to pay for leads or to fund influencer marketing? Sometimes it takes money to make money, so make sure your budget can support your marketing efforts before the passive income starts rolling in.


You have to be ready to compete

If you think passive income sounds like a brilliant option for you, remember that other people feel the same way. There is a reason people are writing books, investing in real estate, house sitting, and consulting. Countless people have jumped on the passive income bandwagon, and I can’t blame them. Competition is not a reason to shy away from creating a passive income business if it is something you are passionate about, but it is worth doing some digging into how you can stand out amongst the very full crowd.


With all that being said…

For some, passive income can really work. Google “passive income income report” and you’ll get all the proof you need. But the truth is, like any business, there can be a lot of work and costs upfront. Not to mention, you really can’t ever completely walk away from your business and expect a consistent income for life. If you have an amazing idea, the skills, and access to an audience who wants what you’re selling, then you can make passive income work for you. Just know that the journey may have its ups and downs. But I guess that’s what makes life exciting, right?