Is Passive Income Really Passive?

I’m a huge fan of passive income, but I want to talk about the realities of it. How much work does it really require? Can you really just set it up, ignore it, and then watch the money roll in?

First, let’s make sure we understand the basics about creating passive income. You spend a lot of work and time up front creating a digital product that people want. Then you set up the product so that people can buy it anytime, and it is delivered automatically. You don’t have to do anything when someone buys it, so you can literally make money while you sleep!

To take it a step further, you can also set up systems that will help you acquire new customers with very little work. That means you would have a freebie that website visitors can sign up for. When they do that, you have a follow up e-mail sequence that will help sell your product. Again, all this work is done up front, so you don’t have to actually do much work when it’s up and running.

Also, when it comes to passive income, it’s very scalable, meaning there’s not really a limit to how much product you can sell and how much money you can earn. When you sell a physical product that you create, you do have a very real cap on how much you can sell and earn. Even if you could work 24 hours a day, you still can only physically create so much product in those hours.

All this sounds great, right? Who doesn’t want to earn endless amounts of money without having to clock in to a 9 to 5? But is there a catch? If it were that easy, wouldn’t everyone be doing it?

As someone who has built a full time income from passive income streams, I can tell you that it’s definitely not easy, but it’s worth it.

First, you can’t gloss over the up front work required to create amazing digital products that people want. You have to research what people want, come up with a creative idea, and actually spend lots of time and effort creating the product. Also, even with all that work, sometimes products fail, and you have to go back to the drawing board. Sometimes you have to go back to the drawing board a few times and go through a few failures! The good news is that because it is so much work, there’s not a lot people willing to really buckle down and do it, so there’s less competition.

Second, you’ll need an audience to buy your product, so you’ll need spend a lot of time up front building that audience. Really, there aren’t any huge shortcuts or magic secrets to building an audience. It takes time and effort.

Third, there is still a decent amount of work involved once you have it all up and running. This is the part that I think can be unexpected. If the product is entirely passive, what’s left to do?

If you sell a large volume of digital products, you’re going to have a lot of customer service type e-mails to answer. There will be people who can’t figure out how to download / open / access your digital product, people who expected something different, people who have questions about your product or how to use it, people who just want a refund for no reason, etc. On rare occasions, you’ll even have people who are just plain rude and leave you in tears. In our peak season this past January, we were selling 100-200 sweet life printable planners every single day plus several other things. My husband who answers our e-mail was spending 2-4 hours each day answering e-mail (and even more time on Monday’s when the e-mails had all weekend to pile up).

Also, you will consistently need to go find new audiences and new customers. You’ll need to create more products for the customers who have already purchased from you. If I were to leave my blog and social media alone for a few weeks, traffic and new customers would dwindle. You will need to update your product and marketing. The internet changes so fast. If you created a product 2-3 years ago, it will quickly grow stale and outdated if you don’t keep updating it.

Ideally, you’ll get to the point where you can hire enough help to minimize the time and effort required by you (if that’s your goal). However, most people have to go through some growing pain periods where you are greatly ramping up sales, but don’t quite have a steady enough income yet to really hire a lot of help.

All that said, passive income truly is amazing and I LOVE it!  I definitely don’t want to discourage you from doing it. There are so many benefits, but I just want to paint a realistic picture of the work involved. I can’t imagine any other way that I could work 25 or so hours a week from home while earning a very good full time income. There are lots of bloggers who are able to take most of the summers off to travel and spend time with their kids or spend a year traveling the world while still maintaining their income because of passive income.

What do you think? Do you think passive income is really passive? Are you ready to create some passive income for yourself?

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