#72- Passive Income: The Truths, Myths and Tips for Earning Multiple Streams of Income

Show Notes

Passive income, the idea of making money while you sleep so you can quit your traditional job, or without having to do much work, has become a very popular idea in recent times. 
The idea intrigued our co-hosts, Lori Vajda and Nola Boea. So, they decided to investigate and what they learned surprised even them, and in this episode, they’re sharing the myths, realities and action steps you can take to make passive income work for you and your business.

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In This Episode You’ll Learn 

• Why we love the idea of passive income and how influencers hook us into buying the products, programs or opportunities that they are selling. 
• With so many different definitions, we wanted to provide a simple one to define what is passive income, and what it is not. 
• If you are interested in making passive income so you can enjoy more financial freedom, we’re busting 3 myths to help you in your journey.

Key points Nola and Lori are sharing in this episode:
(2:06:37) Defining the concepts of diversifying income sources and professional pursuits. What are they and how can you use them to bring in more income?
(6:45:32)  True or false, generating passive income simply requires you either acquiring or building an asset first? 
(9:31.93) The truth, reality and tips for producing a passive income product that many people overlook. 
(12:04.85) While passive income may be a ticket to financial freedom, you’ll want to follow these tips before getting started.

Resources 
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Transcript

​[00:00:00] Lori: Don't put all your eggs in one basket, as the saying goes, is meant to advise against concentrating all your resources in one area, for fear of losing everything. The same idea applies to your revenue streams. Whether it's losing your job or going into retirement, or if you're, self-employed losing a major client. Having a gaping hole in your income can leave you financially devastated and scrambling. To avoid this from happening, many people are looking for ways to diversify their business and career options. With an array of opportunities available, creating passive income is easier than you think. Or is it? Stay tuned friends, because in this episode, we're discussing what you need to know before investing your time, money and resources in a passive income side business.

[00:00:53] Announcer: You're listening to the Sticky Brand Lab podcast, where time strapped professionals like you learn how to create a business you love in as little as three hours a week.

[00:01:04] Nola: In business, if you offer only one product or service, you're dependent on the sales revenue coming in from that one item. But what happens if the demand for that product or service reduces, or if you can't meet with a client. Case in point, the Corona virus. If the virus has taught us anything, it's that our health, our employment, our income, they're not stable or reliable or dependable. And it's this uncertainty that has many people exploring ways to not only diversify their income sources, but their professional pursuits as well.

[00:01:35] Lori: Yeah. I feel like the idea of diversification of income sources and professional pursuits needs some context here. Because many people, when they think of diversification, often think of retirement funds, checking account, stock investments, things of that nature. Likewise, when we refer to diversifying professional pursuits, someone might think additional jobs like a side gig, and that's not exactly what we're talking about here. So Nola, could you explain what you mean by diversification of income sources and professional pursuits?

[00:02:11] Nola: Sure thing. There's certainly a value in the investments and keeping your investment portfolio balanced and all of those good things. But in the context of today's episode, when we talk about diversifying our income and professional pursuits, we're really talking about it in relation to starting a business or a side business or side businesses, more than one. We are we referring to the idea that you can share your knowledge, your professional experience and expertise, your talents, your interests, your hobbies in such a way that those opportunities are going to make money for you beyond your full-time job.

For example, there was a point in time where I really diversified my income. I had a full-time job as a copywriter. And I also used my expertise and talents to do some freelance copywriting and I had an interest in graphic design. So I did some website design. I also taught business and marketing as an adjunct professor. And for a while, I did all of those at the same time. And while those income streams really did come in handy when my full-time employer folded, and I found myself between jobs, I was really glad to have it. but would not recommend going down that road necessarily because what I just named are all active streams of income, meaning that they all required my active time and attention to generate the income. They all required one-to-one hours to spend on keeping those income streams going. And I found out the hard way that having multiple streams of active income can really lead to burnout. And so while having a stream of active income is great, advisable, what we're talking about here today is multiple streams of passive income. So Lori, for our audience, could you define passive income?

[00:04:04] Lori: So I think the thing that often gets associated with passive income and also what kind of led to the idea of this topic, if you've been on any kind of social media, you will have seen ads pop up or freebie webinars pop up from people who are selling their course on how you can make money designing your own course, selling downloadables, a bunch of products. So the idea here that you'll often hear is make money 24 7 without you having to do anything. Because customers can purchase or rent your product without you being present

[00:04:43] Nola: Make money while you sleep. Right?

[00:04:46] Lori: Exactly. Exactly.

[00:04:48] Nola: So, could you just give a few examples of true passive income products that some of these refer to?

[00:04:55] Lori: Yes. So I'm going to use your example of being a copywriter. And I also know that you love making jewelry, so you have an affinity and a talent for that. So I'm going to use both of them to talk about it from this perspective. So let's say. as a copywriter, that you created templates for people to use for email marketing, for example. Or maybe you wanted to create an e-book or even an e-course for people who were business owners with no copywriting experience. Using your interest in jewelry, you might develop a kit that people can learn from you how to create a specific items, such as earrings or necklace or bracelet, all of that are examples of products that someone might sell as passive income to generate money around the clock. Just to be clear, can you take a minute to explain what passive income is not.

[00:05:55] Nola: I would be happy to. Well, it probably goes without saying, passive income is not your job. Meaning it's not income that comes from a salary or wages because you really are trading your time for dollars.

[00:06:07] Lori: Yes I think in this case, active income is more face to face. So you're meeting with a prospective client or a client, or like in coaching consulting, maybe even talking on stage. All ways to think about active income. The piece that really got us is what does it mean to create passive income and you and I had a discussion about this not too long ago, cause this is really both an interest for you, because you believe in multiple streams of income, and a pet peeve of yours in how a lot of these courses to target passive income are marketed.

[00:06:46] Nola: Yep.

[00:06:47] Lori: So without further ado, let's get into Myth Number One: it's only at, or mostly in the creation of your product that requires the most work. Passive income does require work. However much of that work is done at the start. So you can enjoy the cash as it flows in with less effort. The reality is there's no such thing as if you build it, they will come, contrary to the wonderful movie Field of Dreams, which I happen to love. Did you ever see that movie?

[00:07:21] Nola: I did. It was nice.

[00:07:24] Lori: Yeah, it is. So yes, you can put a lot of time and energy into creating your product, but you still have to market it. And this is one of the other pet peeves, is kind of alluding to, and you often hear this is, we're going to show you how to create whatever, and you don't even need an email list because once you build it, people are going to show up. That's not how it works. Whether you are marketing it on your own website or you're using a platform like an Amazon or an Etsy or an online course, you have to drive traffic there. And the only way to do that is to get the word out.

[00:08:07] Nola: Absolutely. So here's a tip: you need to be willing to put in a lot of work upfront and get very little back for your efforts, especially at first. Then even after you've produced and marketed your product, you need to be prepared to spend a little time on an ongoing basis, maintaining your product. And it's position in the marketplace. You are still going to have to possibly handle customer inquiries or respond to like online product reviews. Or if it's a course, information may be outdated. You may need to update that information. You just can't forget about it and move on. So be willing to put in the time and the maintenance.

[00:08:51] Lori: Yeah. You know, passive income requires sales. And sales requires a strategy. So to just be taught how to build a product or to say that the product platform that you're using is going to do that work for you. You're one of hundreds, perhaps thousands selling on that platform. So what are you going to do to drive people to you, or to even raise your level of awareness, to get more people, to find you? Because when you just launched, you're at the back, not at the front where new people are going to see you.

[00:09:28] Nola: That's so true. And that actually is a good segue to Myth Number Two, which is, once you create that brilliant passive income product, or your course, your book, you're going to see returns in a matter of months. And so stick with your full-time job for a few months before it's stable enough for you to step back from the front lines and let the money come in. The reality is that creating a digital course, for example, that can be distributed and sold on demand through sites such as Udemy or Skillshare or Coursera, they not only take a huge amount of effort to create that one brilliant course, but that one course is not going to make you big money right away, if ever. The same goes with selling that one brilliant book on Amazon or that one fantastic version of your craft on Etsy. Reality is, one product is not likely going to make you enough passive income to make it all worth your time and effort. You'll really need to make a variety of products. And be prepared to market those products for many months before you begin seeing even the first trickle of income. It just takes more than one. And it takes that attention and that energy.

[00:10:48] Lori: One of the things you want to think about here, and this is a great tip, is, think long-term. What else are you going to create that might work in conjunction with this first product? So let's say that you came across an amazing cookie cutter that you could maneuver or reshape. So you didn't have to go out and buy different shapes like hearts and circles and stars. You could just finagle this one and get multiple uses from just one.
[00:11:19] Nola: Cool.

[00:11:20] Lori: Yeah, that would be great. Matter of fact, there's an idea for me. But you have this one product. So in order for people to find you, you have to show up in their search. You're more likely to have that happen if you can sell within the family. So what goes along with a cookie cutter? Well, it might be a silpata mat that you could bake the product on. It might be a line of icings, or it might be a line of sprinkles. Because you're in the baking genre. Right? So when you're thinking in the short term, also think in the long-term of how you might diversify those products in order to make them more interesting to your potential audience, as well as multiple streams of income.

Which brings me to Myth Number Three: Passive income is your ticket to financial freedom. The idea here is that if you have enough products to sell, you'll generate plenty of income so that you can do with your time whatever you want, and still be able to pay your bills. You may even see news headlines with people who were able to quit their job because they're making $5,000 or $10,000 a month, which is kind of also in one of our heated discussions is what got us to do this kind of a podcast episode. Because this is one of your bigger pet peeves. The reality is yes, sales can happen at any time around the clock, across the globe, but you have to be prepared to invest your own money in getting those products launched. If you want to sell a physical product, you have to have inventory. If you're on an Etsy site or an, an Amazon site, they have a payment process, they take a cut of your income. Whatever you price your product at, you have to be ready for others to get a share of that. And you have to be ready for your competition, to undercut your prices. So there's a lot that you have to be prepared to do or outlay in order to reap the benefits. And that comes from the beginning.

[00:13:38] Nola: Absolutely. That's a very good point. And another part of that myth, that passive income is just a ticket to freedom is, you can do all of the above. You can diligently apply all of the tips we've given you and done everything wisely. But if you've created your product or service or offering in a vacuum without doing your research, you still may not sell a thing. Those sales may never happen. You will have wasted your time and money. You really need to know and understand your market. You need to understand if it's a physical, the sources of your products. And to Make sure that there's a customer base for your products and just the whole landscape. Yes, it might be a great idea for you, but are other people willing to pay for what you have to sell? You have to answer that question.

[00:14:37] Lori: Yeah, here's an important tip. There are many ways to find out about customer interest or audience interest, products that are out there. For example, when we were doing our Amazon episode, we had a subject matter expert, Keith O'Brien and he works with big companies. But one of the tips that he had shared with us is that even on Amazon, they have kind of similar to the way a keyword search works, they have a product search. By putting in keywords along the product that you're interested in, you can see how many people go to the site looking for that particular product. So you can use tools. What he did share is that there's a free version, but it's not going to give you the type of information that the paid version will give you. So invest your time upfront to do the research is an important tip. But the other one is, create something or acquire a product that's really of high quality, high value. Not necessarily that you want to sell at a premium price, although that can be your target audience. Just know that the product price point that you're going to sell matches the level of interest by the consumer. Otherwise, you could have a great course, a great item to sell, but if nobody's interested in it or it's priced out of their market, or if the quality I could find anywhere for free is already exists, then people won't take the time to purchase.

[00:16:13] Nola: That's right. So, after all of the reality checks we've just given you, you may think that passive income is not worth the time or money that it's going to take to get started. And that's not what we mean.
[00:16:31] Lori: Not at all.

[00:16:32] Nola: So really go for it. But rather than focus solely on the challenges of getting something off the ground, it will be challenging, but reframe it. So instead of challenges, think opportunities. Your products are worthwhile opportunities to create multiple streams of passive income. Go for it. Just do it with your eyes wide open.

[00:16:54] Lori: Absolutely. Thank you so much for listening to this episode. We hope it makes all the difference in you getting started on your business so you can create your best and most exciting life. If you found the information shared here today helpful, let us know by posting here, where you're listening, or on our Facebook page.

[00:17:13] Nola: Not sure how to turn your idea into a profitable side business? Contact us at stickybrandlab.com/contact. We'd be happy to help you.

[00:17:22] Lori: Be sure to come back next Tuesday and every Tuesday for another informative, inspiring and motivating episode. And remember. Actions create results. So tap into your desire to create a business and brand you love by taking 1% action every day. Small steps, big effects.
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[OUT-TAKE]
[00:17:42] Nola: Oops.
[00:17:44] Lori: I guess it'll get cut out.
[00:17:45] Nola: Yep. It will. While I'm editing it behind the scenes. All right.