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?

 

  • Bobby Yeck

    Trust me when your body gives up on you and can no longer work, you’ll wish to God and everything that’s Holy you’d started a passive income streams I’m a full-time investor now at 32 in the stock market, I was diagnosed with a severe lung disease at 27 I was working a horrible job at the time, my doctor told me to get my finances in order, so I started investing heavily in the stock market for dividends, at age 29 my right lung burst in my chest and had to go through 2 agonizing surgeries, I finally quit working in 2018 because my chest pains are so unbearable I can’t hardly stand for long, now I’m a full-time trader and investor, believe me, passive income is not an illusion, it is very real, but you do have to set it up first! I’ve always hated being an employee so I’ve never advocated getting a job! People that hate on passive income have never experienced it like I have, it’s amazing, as a 32 year old male unable to work, unable to get on disability, it’s a godsend to have built my portfolio to take care of me now!!

    • Ed Howard

      Care to share your tips?

    • Lola Patton

      Can you PLEASE share any tips. I am beginning to invest and the stock market intrigues me!!! Very interested in trading on a full time basis.

      • Erik JC

        Tip #1: Drop the word “trading” from your vocabulary. Invest in good companies at a fair price, sit back and relax.

  • Juan

    This is a pretty dumb argument. You are working very hard right now at your job and are getting paid for your time or articles.
    If something happens to you where you are unable to work such as a medical or family emergency, you have to miss work and therefore not be paid. There’s insurance for that but it does not nearly cover everything, especially considering the extra costs associated with such a situation.

    Alternatively, in addition to your job you could work on something like a blog or whatever other (or multiple) passive income stream to give you a little boost to your monthly income and yes you will be working hard at it. But you should be working hard at your job anyway so there’s nothing new there.

    The difference is if you have built a sustainable system, you will continue to receive revenue from those sources even when you aren’t actively (or as actively) working it. Therefore you can focus on the situation instead of having the additional stress of how am I going to pay for all of this.

  • Doug Muir

    Nice clickbait title, while failing to effectively prove that passive income “isn’t all it’s cracked up to be”. The majority of the article has you stating it’s not as EASY to establish and be successful as some make it out to be, which is accurate. So then just say that in the title.

    In the end, you got us, as the clicks and ad revenue on this page will essentially add to your own passive income. I see what you did there.

  • Stephen Sokalski

    I agree on the click bait statement. I made millions a year as eBay’s #3 affiliate in the world. I did it by buying expired domains that had links and put items related to what the site use to be about. I bought and set up 11,000 sites. I created a system to do it quickly.