Episode #096: The Myth of Passive Income
The Myth of Passive Income
I had to address something I keep hearing from clients, students, and potential customers: "I just want it to be more passive."
In this episode, I'm pulling back the curtain on what "passive income" really looks like in the online course and membership world.
Spoiler alert: it's not as passive as you think. I'm breaking down what I call the Four P's of Passive Income:
Process: Your sales systems and funnels
People: The team you need to make it all work
Predictability: How you consistently fill your funnel
Persistence: The willingness to keep testing and evolving
I share real numbers from our business - we've have near daily sales this year.
The truth? Passive income is really the result of active engagement, active growth, and active management. You can absolutely build systems that generate revenue while you sleep, but maintaining and growing those systems requires ongoing work.
If you've been chasing the "passive income dream" or wondering why your funnels aren't running themselves, this episode will give you a realistic roadmap for what it actually takes to build sustainable, semi-passive revenue streams in your business.
Links Mentioned
Full Transcript:
[00:00:01]:
This is not yout Average Online Marketing Podcast, episode number 96. And in this episode we're talking about the myth of passive income. Is it something you can achieve? How close to we are being there as a business? And is it something you should even be chasing? So without further ado, let's get into it. Hey, hey, hey. Not so average marketers. Welcome to another episode of the podcast. Now. I am so happy to be recording this episode.
[00:00:31]:
It's actually been a little while since I've recorded an episode. You may or may not have realized, but to be completely honest, we moved from one house to another. We've been kind of building our home. I haven't talked a whole lot about it online, but we built a home that's more accessible for my husband and its something that we've been wanting to do for years. And we finally pulled the trigger, bought some land about a year ago, and here we sit about a year later in our new home. Um, but that means the last three months have just been chaotic and I have had a lot of resistance to coming back behind the microphone. I think one of the biggest things that has been a resistance is I just don't have my office set up where I want it. I feel like I don't even know if the audio is gonna be top notch on this episode. Probably won't be, cuz I'm not using my high end microphone because I'm still trying to get my office set up and my desk set up.
[00:01:20]:
But anyway, enough about that. I don't owe an explanation to anyone, but if you were looking for it, there it is. What I want to talk about today is really this kind of idea of passive income. And I wanted to talk about it because I have met with a few people over the last two to three months while I've been a little quieter on the show side of things, who have either onboarded into our agency or have done sales calls or who have even hired me for consulting or even joined our membership that are saying the same kind of buzzword to me, which is I just want it to be more passive. I just want my courses to sell passively. I want passive income from my courses. And I thought it was a really recurring enough that it was time to do a podcast episode about this. And generally my podcasts are very like, here's five steps to run your Facebook ads to grow your business.
[00:02:13]:
But I wanted to instead kind of go a little higher level today if you'll humor me and talk about where passive income comes into play and kind of how we look at passive income in our business. And for me, passive income is like the big P word, right? But there's four other P words that really have to come into play first to even start looking at the possibility, in my opinion, of passive income in your business. And those four Ps are process, people, predictability, and persistence. So to me, passive income is this combination of those four things, right? It's the process. How are you selling your products? And that is where most people, I think stop. They're like, I'm going to create a funnel, I'm going to have passive income, right? That's the process. But the other things are people, who do you need, what butts do you need in what seats to allow that process to run? Then there's predictability, right? What do you need in terms of predictable lead flow, predictable conversions, predictable price points and sales page engagement rates, right? And then the last thing is persistence. And this is the one that I think doesn't get talked about enough.
[00:03:34]:
You've probably heard of like funnel process and hire the right people and you need to get leads coming in somewhere. But where I think most people stop thinking about passive income is persistence. And persistence is, to really sum it up in one sentence, is the ability to stick with it. Right? I want to talk today about how these four things play together to actually create the illusion of passive income or the reality of passive income. And I know that that's not as fun as being like, here's how to make money on the beach and make money anywhere, right? But I think in order to speak from this place of the illusion of passive income that I'm kind of talking about, I want you to understand that in our business we generate sales on a pretty much day to day basis. I'm looking right now at our sales channel and we basically have had a sale every day. The last day that we went without a sale was June 14th.
[00:04:47]:
Okay? So I'm recording this on July 2nd, June 14th. That means that every day and generally more than one sale a day, we have had a sale every day for the last like 20ish days, right? Why am I even telling you that? Why did I even take the time to share that? Because I want you to understand that we have that kind of sales while you sleep thing going in our business. But it is the makeup of these things. So let's dive in. First things first is in order to have like passive income, you have to have a process, right? So, so many people think that they need to have this perfect automated webinar. Or they need to have this epic deadline based funnel with upsells and downsells and cross sells. But really fundamentally, all you need is a way for you to not be present when people can give you their credit card information and pay you for an offer that you don't necessarily have to be present to deliver. Okay? So, for us, there's a couple ways that we do this.
[00:05:50]:
One is our Facebook and Instagram Ads Bootcamp. It's a $25 product. It's completely evergreen. No Facebook group, no email support. And we run ads through a lead generation funnel that leads to that through automation and Facebook ads. Right? So our process is someone opts into our freebie, they are made an offer to join our $25 bootcamp. If they take it, they go into a funnel for our membership. If they don't, they go into an email sequence to buy the bootcamp via email.
[00:06:23]:
And then if not, they then go into our regular email list which is sitting at about 20,000 people. Okay? The thing about process is that it is just a series of automation and fulfillment, right? I think one of the things that I really hope that people take away from this episode is that there is no perfect funnel, okay? And I've been doing this for 10 years. I have taken a lot of the programs. I think that there's things we can emulate from the people that we like. But just because a funnel works perfectly for Coach A doesn't mean it's going to crush it incredibly for Course Creator B, right? So when someone is like, my funnel is the secret sauce to generating sales, it's like, probably not, right? I try my best when we do our marketing to be like, look, our process is what works, right? Because fundamentally the process is attract people, make an offer, collect a payment, fulfill. And so what you need to think about is what is the process or processes that are present or not present in your business that you need or don't need to deliver on a product, right? And so again, for us, our foundation is a core email sales funnel. And I just want to express, I'm talking about for the passive side of our business, right? We do launches, we do live promotions. I know that's a whole nother topic, but that is the process.
[00:07:51]:
We use an email sales funnel. Okay? The second thing you need to consider in terms of how to bring passive income into the fold is people. Okay? Here is the thing. Your business cannot run without people. Let me say that one more time. Your business cannot run without people. And I know in the age of like AI and automation and auto fulfillment, everything seems great on paper. But here is the real tea.
[00:08:19]:
If somebody buys your product and asks for a refund two days in, who is processing that refund? Because to me, even if I create a highly passive product, right? And you might go, well, Zach, I don't do refunds on my product, so that's not going to be a problem. Great. What if someone loses their login and your software is not working? What if someone files a chargeback and you have to send the chargeback information to the credit card company to keep your payment processor active? Right? Because there are really three prongs to your business that people need to fulfill. There's logistical support, there's fulfillment support, and then there's management and communications, right? And so if you need on pretty much anything you sell to have some way to contact you. Not a lawyer, not legal advice, but in most cases, legally, there is required a way to be able to contact you to ask questions about a purchase, right? And so you have to have someone monitoring that support. And I know what you're gonna say. My AI agent can handle it to a point.
[00:09:25]:
But what if it doesn't? What if it breaks? Which brings us to the second piece, which is the technical management piece, right? Who's managing if your website needs an update? Who's managing if your course platform decides to upgrade and something breaks, right? You still need someone monitoring the business and its success. And then lastly, there's like fulfillment and client communications, right? If you create something like, I'll use us as an example. We have a Facebook Ads Bootcamp, right? What if Facebook updates everything tomorrow? I'm gonna have to rerecord my trainings, right? I would have to go in and do that. So there's also the piece of this is like the creation, the fulfillment, the content, right? And so, yes, you can have this beautiful process that sells everything, but you still have to have the people, the butts in the seats to fulfill, to support, to communicate, and manage the pieces that you're selling now. Now here's where it starts to become passive. It doesn't have to be you, right? Like, my team is really incredible. Shout out to Jessica, Alison, Heather, Vanessa, I love and appreciate you all, but understand that we are able to go to this level of daily sales.
[00:10:39]:
Because I know if something breaks, if somebody doesn't get access, if a login is lost, if there's an issue like... Full disclosure, we had an issue this week where I didn't realize one of our funnels was sending out bunk links for like a week straight, right? And I was like, I'm so busy, I don't have time right now to go in and fix these emails. So guess what? I shot off an email to Jessica, a Slack really. And I said, can we get this fixed? I don't know what's going on. And guess what? Jessica is incredible. She edits these. So Jessica, while you're editing this, I appreciate you. And she fixed it, right? I didn't do that. So it's like, it's quote unquote passive, but it still required a person to fix it.
[00:11:18]:
Right? So first two pieces you have process, how are you going to sell? And people, how are you going to manage those sales? The third piece that I think needs more time in the sun is predictability. Okay. And I was kind of going back and forth about how I wanted to talk about this because I think when we hear predictability, what I'm really saying is how do you predictably fill that process that you have chosen? So in this case, it's an email funnel. Our predictability is Facebook ads. But here is the thing. Predictability of Facebook ads is not really that much predictability. Right? So what you have to understand is when I'm saying predictability, I'm saying how do you predictably fill the process? Okay, now we use Facebook ads and that's predictable.
[00:12:14]:
But here is the thing. This is where I talked about the myth of passive or the illusion of passive. We have to go in and update those ads every eight to 12 weeks. Now, could we in theory have a person, a person, a people in the people kind of silo creating that content, the copy, the creative to give to us to put into the ads manager and run all that. Yes, absolutely. And realistically, lots of people hire our agency to be that people role for them. Right. But you can't have the predictability of that lead source if you don't have the people who are filling the creative and the copy role for the ads.
[00:12:56]:
Right? So what I hope you're starting to realize, I know this is a little like kind of meta, in your head, intangible. But people, process, predictability, and persistence, which we're going to talk about in a few minutes, are the four legs of a table that keep it from falling over. Right? But they also, you know, if you think of one of those old school tables that have the X through the middle, they're all connected with that X. Right? Each side of the table, each leg is connected to the other leg for extra passive stability. Because if you want a predictable source, and we choose Facebook ads, you also need a person to create that predictability, right? You also need to be thinking about if you don't do something like Facebook ads, or you do something like social media or podcasting or guest hosting or, you know, list swaps or summits, whatever, you then have to think that same conversation, right? How are you creating predictability? How are you making sure that you get a summit every month to get new leads? Are you reaching out? Are you applying? And if you are, who's doing that? What person is filling that role? What process are you going through to get into those summits? Right? So predictability also has one last piece that I think is super important. And this is something that we have gotten really good at in the past 12 months. And I say that not to brag, actually just the opposite. I say that because I want you to know I have been in business for 10 years as of this February, and I feel like we just locked this down in the last 12 months. And that was that you need to measure and track the things that you do, right? So we created, for us personally, we use ClickUp and we're still testing out some new systems and processes and softwares.
[00:14:43]:
I'm also flirting with Airtable. Don't tell ClickUp that I'm flirting with Airtable. But we track a lot of different metrics in our business. So I track my ad spend over the last 90 days, my revenue over the last 90 days, same thing with the last 30, how many leads there are, how many people are currently active in our membership, our year to date revenue, our rolling 12 revenue. I am tracking all of these metrics in our business. Not because it's fun to look at, though. Let's be honest, it is really, really fun to look at all these metrics on fun little graphs. But because what you measure grows. And predictability is about identifying and seeing trends in the business.
[00:15:26]:
And so like even in our membership, we have this beautiful document, shout out to my team for building it over the last few years, which we just call our retention document. And it is literally the master file of our business. Everything that goes on in our business for the membership, right? Because we want to track churn, we want to track growth rate, active members, canceled members, notes on members, what renewals are set, when are renewals set, how many people are joining, leaving, coming, going on a daily, weekly, monthly basis. Because here is the thing. Predictability is not about the belief in yourself that you can do it. Predictability is not about the belief in yourself that you can do it. Predictability is about tracking, measuring, and managing trends so that you understand what is and isn't possible, plausible, and practical. So if you take another thing away from this podcast.
[00:16:27]:
I was going to say if you take one thing, but I already said that. So another thing I hope you take away from this is that you need to track and measure the things you plan to monitor, manage, and grow. So if you are not monitoring your results, you don't know if they're getting better and you don't know if they're sustainable. Right? I watch my ad spend and my lead costs on a week to week basis and a month to month basis and in the next few years, a year to year basis, so I can see the trends and understand what is actually going to happen and what actual predictability I have. The last leg of the table, if you will, is persistence. I see a lot of people that I work with or have worked with over the years fall into this trap. And that trap is that when something doesn't work, it means try something else. Right? Let me give you a really specific example.
[00:17:19]:
Cause I know that's vague. It's like I did a webinar. People didn't show up. Webinars don't work. I need to try a challenge. But what I have learned, whether it's passive income, challenges, or webinars and you know, or this illusion of passive income, if you will, it's that you are only going to get the result you continue to test, iterate, and evolve with. What I want you to understand is that the key to this kind of passive income, if you will, is that you have to be willing to keep doing the work till you find what works.
[00:17:56]:
So many people are not willing to change and evolve, right? If you think about like, like Apple, right? Like let's use Apple as an example, you could argue that the App Store or the Movie store, where people just buy movies that Apple doesn't sell, that's passive, right? But it's got all those things. It's got the Apple Store process, it's got the people maintaining the customer service, the tech, the support. It's got the predictability. They have the iPhone user base that they can tap into anytime, that they monitor, maintain and keep statistics on. But guess what? They don't stop. They iterate and evolve. They make new iPhones to bring in new users. They update the App store, they update the software.
[00:18:34]:
They continue to grow and change and evolve. And I think this is not to be the proverbial bubble popper. But this is why passive income, in my opinion, is not like this massive true thing that you can ever achieve with the online course model, because you have to grow and evolve your business. If I was marketing my business today the same way I marketed it in 2015 when I first was starting, I can, hand on heart, say I would not be getting the results I'm getting today back then. Because things change, things evolve, things iterate. And if you are not persistent in your evolution, in your growth, in figuring out what works and iterating and growing with it, guess what? The business will fall flat and you won't see the growth. And so all of this to kind of put a bow on it. And this is why I kind of said at the beginning, it's not that you can't create passive sales.
[00:19:33]:
It's not that you can't get paid while you sleep, but it's that it takes all of these elements to create this illusion that the business is passive. Because guess what? We get, in theory, passive income. Right. I'm looking at my sales today. We had two people join our membership. We had two people join our bootcamp. We had four people join the summer camp offer we've been promoting. But guess what? That is all a result of active work.
[00:19:59]:
The active work of hiring my team to help support that. The active work of setting up the funnel. The active work of setting up Facebook ads and monitoring and managing and maintaining, right? Passive income is a result of active engagement. It is a result of active growth and a result of active management. And it's a really incredible thing that you can build into your business.
[00:20:22]:
So, yeah, I hope that you got value from this episode. I know I'm not always super cerebral and introspective, but I don't know. Coming back to the podcast, this just felt like such a fun topic to talk about, especially because I keep hearing that word passive starting to make this really resurgence in the zeitgeist. And I hope you got massive value. If you want, you can head over to heartsoulhustle.com/nyap096. Again, that's heartsoulhustle.com/nyap096. If you want to see the show notes or a transcript from today. And feel free to DM me on Instagram over @zachspuckler. I love hearing from you guys and it's been a little hiatus, but I love to know what you thought about this week's episode.
[00:21:05]:
I have loved recording it. I hope you enjoy receiving it and if I can leave you with one little thing: Passive income is this awesome, elusive thing because it is truly a myth in the sense that passive income comes from active work. And you can create systems and process, people, predictability, and persistence that allows you to generate things as a byproduct of not working. But to maintain that, to engage with that, requires proactive work, proactive thinking, and proactive growth. And now that you know that you are a not so average marketer just like me. I hope you have an incredible rest of your day, week, month, year, and until next time, stay not so average.
