A Wakeup Call About Creating a Passive Income Online

by Sean Bryant on August 30, 2012

Many make money online blogs and websites talk about building an online business that creates a source of passive income for you. The better blogs, such as Pat Flynn’s Smart Passive Income, tells it like it is. You have to work hard to create your business(es). In fact, you can just look at him and see that — most of his income comes from his main blog, and he writes 3 posts per week, as well as handles interviews, podcasts and social media. He’s a busy guy.

Now on the other hand, there are blogs that give the perception that you can make a lot of money right away. And once you have that passive income rolling in, you’ll be on the beach in no time, sun bathing while drinking Mai Tai’s.

This is a dangerous misconception for a lot of new, excited, action taking beginners to have.

Passive Income Doesn’t Mean Hands Off

It’s a dangerous misconception because, for one thing, passive income doesn’t mean hands off. According to Wikipedia:

Passive income is an income received on a regular basis, with little effort required to maintain it.
Granted, it says “little effort,” but “little” is relative to what your business is, the service it provides and where you’re at with it — did you just start it yesterday, or have you been turning a profit for the last couple of years?

I think it can be easy to forget some of the important tasks that need to be done, that still require your time:

  • Your business and/or website still needs to be marketed. This can be guest posting, running media buys or buying traffic on Facebook (amongst many other methods).
  • If you don’t handle the day-to-day tasks of running your business, be it writing content, building links or shipping orders of sea monkeys to unfortunate 7 year old children across the world, you need to manage the person that does.
  • There is still admin work to handle, such as paying invoices, contractors and keeping track of ad spend.

Of course, you can build a team that handles these things for you, but for one thing, you’d have to train people to do it all, and secondly, you’d still have to check in every so often to make sure it’s being done, and being done well.

And if you were at the point where you could build a team to have stuff like this done for you, chances are you wouldn’t be reading this article.

Online Business Can Be Volatile

It’s important to remember, too, that having a business online means that you’re going to face more volatility. Things just change and evolve so fast online. If you’re not ready for it, your site, network or ecommerce business can literally tank overnight.

Take Google for example. How many of you have (had) sites tanked from some animal themed update? I have, and it sucks. To be 100% honest, my site deserved it from a off-site SEO standpoint, but from an on-site SEO standpoint, my content was better than anyone in my particular niche – it was a catch 22. However, I know of several webmasters who had done nothing wrong, and yet their sites were punished. You just never know when it might happen to you.

Other examples of changes include affiliate programs changing their guidelines, not paying you or going bankrupt and the constant changes and additions in social media.

The point is that things change so fast, and someone has to be on top of it all. Otherwise your passive income will become not so passive as you frantically try to dig it out of the ground.

Creating an Online Business is Real Work

Last, it’s important to remember that creating a (real) online business takes effort. It’s real work. If it’s not, I’d question what you’re doing, and more so, how you’re doing it. Anyway, look at all the work that goes into starting and maintaining a business online:

  • Getting started — During this phase you need to plan your new business. What problem are you solving, who are you solving it for, what solution are you providing and how much are you going to charge for it? These are things that you have to ask. You also need to start development of said site and solution, start marketing and generate leads and/or customers.
  • Maintenance – Once you get started, you need to keep the ball rolling, otherwise you might lose all of your momentum. To quote Newton: Every object in a state of uniform motion tends to remain in that state of motion unless an external force is applied to it. In other words, once you get your business going, it’ll keep going, but only if articles are being posted consistently, your ads are running and emails are going out. Basically all the things that got you to this stage. Stop doing any of those and you put the brakes on any momentum that you had.
  • Scaling – Once your business goes off the ground, you’ll most definitely want to take it to the next level. This might mean scaling your niche site out laterally (new related niches), hiring a team of content writers or renting out a warehouse and hiring a team of workers to ship the thousands of new orders you’re getting everyday.

Obviously, these things might be easier/more difficult depending on the actual business you run. But they will need to be done regardless, unless you have no desire to create an ever growing long term business.

Strive to Create a Passive Income, But Don’t Forget That It Isn’t Easy

I know that I’ve spent the entire time telling you that creating an online business is hard and that it’s probably not as passive as you think. I apologize for that — I just want people to understand that it’s not a walk in the park. If it was, everyone online would be rich, and everyone not online and struggling would make their way online.

That said, you should still strive to create a source of passive income for yourself. It will give you more time for your friends and family, as well as for hobbies that you may enjoy. Just know that the amount of “passiveness” depends on the business you want to have, the goals that you set for yourself and the systems & staff that you have in place.

About the author: Hey, my name is Matt – thanks for reading my article. I’m the owner of www.Creditology.org, a site that helps people understand how finances work. If you have any questions or comments about my post, let me know about them in the comments.

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Sean Bryant

Sean Bryant created OneSmartDollar.com in 2011 to help pass along his knowledge of finance and economics to others. After graduating from the University of Iowa with a degree in economics he worked as a construction superintendent before jumping into the world of finance. Sean has worked on the trade desk for a commodities brokerage firm, he was a project manager for an investment research company and was a CDO analyst at a big bank. That being said he brings a good understanding of the finance field to the One Smart Dollar community. When not working Sean and he wife are avid world travelers. He enjoys spending time with his daughter Colette and dog Charlie.

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