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Creating Passive Income in Your Business

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A question I hear often is…should I create a passive income stream in my business? There are a lot of factors that go into “passive income”.  So I thought it was time to break them down for all of you who are truly wondering if this is a good move for your business.  Let’s start by breaking down the actual definition of passive. 


“Passive income is money earned from an enterprise with little or no ongoing effort involved, but most likely the upfront investment of a passive income stream took time and money.”  The key factor here, time and money involved up front. Here are 7 things to consider when you are contemplating creating a passive income stream.


1. Creating a passive income offer requires time and money up front. 

And usually it’s a substantial amount of time and money. Time…if you’re trying to do it yourself. Money…if you’re trying to outsource it. Don’t think that you can just magically create this. Just being honest with you.  It requires a good amount of your time and/or money UP FRONT!


2. Passive income offers still need to be sold.

So you’re willing to put the time and money in up front, and you create this offer.  But…you still have to remember, it has to be sold. Your audience still needs to know it exists, and you still have to promote it.  

Here’s an example: there’s a coach that I follow, and she has a $7 offer.  She actually has several of them. She has put the time and money in up front. They’re really hot, and they’re usually pretty big offers.  They’re only $7, but she includes it in every single one of her emails that go out. 

Yes, this is considered passive for her, but you also have to remember she has an incredibly large audience. So your audience size plays a big role in passive offers.  So if you have an audience of 200 people, and you create a tiny offer or something less than $49.  If you sell it to 10 people, then that’s only $490. Yes…it’s passive, but again, you have to take into consideration how you can keep selling this product to them. 

Every offer that you create has to be sold. So what is your audience size, and do you have the time and the money to put into it to actually promote it? 


3. Who is your market for this offer? 

Usually a passive income offer is NOT a high ticket offer. It’s usually a lower ticket offer. You don’t want to negate your high ticket offer unless you are maxed out and fully booked with your high ticket offer.  Are you using your passive income offer as your low entry point?  Or is your low income/passive offer a completely different audience where they can just buy it and run with it? You really need to think about all of these things when it comes to this passive income offer.  


4. How much is invested into promoting it?

If you look at all of these tiny offers, the people that create them are putting ads behind them.  I follow a copywriter who actually really shared her behind the scenes numbers.  She has a tiny offer that is extremely successful. I think last year it made her like $100,000, but she put $50,000 of that or more in the ad spend. So that’s $50,000 in ad spend plus whoever’s managing her ads, her web designer, her graphic designer for her social posts, etc. There’s a lot of money involved on the back end. 


5. Passive = quantity. 

Do you have the quantity of people to justify this passive income stream?  And if not, do you have the resources to put into ad spend? It takes a lot of ads to get major reach.  


6. It doesn’t have to be a DIY course. 

Think about it from a different perspective. If you really want to create a passive income offer, it doesn’t have to be a DIY course. It can be products, too. Do you have a product that you love and you want to create a product that complements your business? It could be templates, planners, or physical products like office supplies. These types of things could be considered passive because you can design at once and maybe have fulfillment done by Amazon. That’s fairly passive. 


7. Passive income could be completely unrelated to your current business. 

Do you have another passion or another hobby that you want to pursue?  You could create this passive income offer that is completely unrelated to your business.  Maybe you love crafting or something else that is completely unrelated to your online business.  You could create a passive income stream around a passion project instead of your business.


What to do if you really want to create a passive income offer. 

If you want to add this into your business model, you have to think about a few things. How will you sell this offer? Do you have the audience and the budget for it?  How many do you have to sell to make up for your high ticket offer? If you’re not completely booked out, is this going to take your attention away from that? And if so, are you willing to do that? Who are you going to sell it to and how are you going to sell it? Do you have a budget for ads, or do you have an audience where you can just start sharing this with them and they’re ready and willing to buy? 


Reminder: Passive income does require a lot of time, energy, and resources up front. 

They can be very, very successful. I do fully believe in having multiple income streams. I love the idea of having passive income. But I want you to be realistic about it.  If you’re ready to implement it, lay out all the factors first. Look at all of the upfront time and money it’s going to take you to get it going.  You have to figure out how many of them you have to sell to make up for your time and money up front. It doesn’t become passive until your time and money up front is made back. 

I’m happy to chat with you about it if this is something you’re considering.  If you’ve got an idea and you want to talk about it, don’t hesitate to reach out. I’m more than happy to chat with you about it. I just like to always keep it real, and give you the facts.


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