I’ve spent countless hours building passive income streams, spoiler alert, it’s anything but passive. Let’s start saying leveraged not passive.
I was listening to a the Modern Wisdom podcast the other day and the guest on a particular episode was talking about passive versus leveraged income and I could not agree with him more. So much so that I’m penning a blog post to make you think about leverage not passivity.
Tim “fecking” Ferris put this idea of the four hour work weeks and passive income into our heads, we can setup a passive income stream and sit on the beach while the money rolls in.
If you look at what Tim built in his book, it was a supplement product business. He setup outsourced call centres, had customer support to deal with customer returns and queries.
He setup a distribution service to send out his products for fulfilment and a group of affiliates to sell the products, along with paid advertising to bring in new customers.
That sounds like a hella lot of work to me, that is years of streamlining and systemising.
His final outcome is a business that leverages other peoples time, systems and automation. It took a lot of Tim’s time to get to that point. That was active not passive.
Personal experience has told me, promises of passive income are snake oil, but leverages income on the other hand is something you can definitely achieve.
What Is Non-Leveraged Time
Non-leveraged or active income streams are where you need to provide your labour and time to get a payment, think going to a job, being a freelancer or managing people as an agency / business owner.
You only make money by giving up your time and effort.
How To Gain Leverage
You can gain leverage by using other peoples labour by hiring people or outsourcing to another firm. The effort is still there just not your effort and the other persons labour needs to be managed.
You can claw back time with processes that make what you do more efficient and your effort take less.
By transforming your labour into a product that can be sold many times is another route to leverage, but you need to make that product in the first place
By using automation with software you can gain leverage, for example rather than sending an email which requires your time setup an email automation.
You can use capital for leverage if you have it. Put your money into stocks which return a dividend, it’s leverage but you need to put in effort to earn the capital in the first place, if it’s gifted or inherited that person who came before you sure as hell put in the hard work.
Let’s Talk About The Holy Grail Of Passive Income Streams
The holy grail of he passive income junky is the information product.
Wrap up your expertise as a course, eBook or membership site and you have won the war (or so the courses for $1997 tell us) of passive income.
The outcome definitely is a passive-ish income steam but the massive effort required to make that product is totally ignored.
Bringing in new customers to your courses is not passive, that requires work building a sales funnel and brining new people into that funnel via content or paid advertising, all of which required work.
Customer management is always ignored by he passive income gurus, refunds, answering customer emails all takes time, it’s not make a sale and count the cash.
Yes I agree once the work is done the outcome is highly leverage but it is not passive.
My Own Leverages Income Streams
I have my WordPress consulting income stream stream, that’s not leveraged very well, it is me selling my time one on one. The lead generation and client reach out is done via an automation in my email provider. I have processes in place to ensure things work in the same way each time. I’ve tried to automate where I can to leverage my time to give me as much billable time as possible,
I have my WordPress care plan, this is a leveraged income stream. I have a VA that does most of the hands on work for that service, I have software tools to automate backups etc, I sell this in an automated fashion with an email automation after a project is complete from my WordPress consulting. I need to manage this work, it’s not passive.
I have a diary mapping course, that took an awful long time to record and produce. That sits on Udemy and I leverage their traffic and software service. I am not active with this product so income is not great. It is a true leveraged income stream, last month I made less then $20.
I’m Planning Leverage Income Not Active Income
It’s my plan with every new income steam I think about that it needs to be leveraged, I’ve hit my celling on time I can sell as a consulting, all new income streams need to be one to many, info products or delivered by other peoples labour.
I have no thought in my mind that this will be passive but I will be leveraging systems, software and other people time to deliver these streams.
Wrap Up – Let’s Start Saying Leveraged Not Passive
Let’s pop the passive income bubble, nothing is 100% Passive it’s leveraged and your time in the income stream becomes less.