What comes to mind when I say the words ‘passive income’? Do you picture yourself on the beach sipping a cold beverage while reading a favorite book? Do you think about things like ‘making money in your sleep’ or spending a dollar and making two?

In this episode, I want to share with you the truth about passive income and what you might need to pursue instead.

If you’ve been around in the online space for more than a minute, you’ve probably heard the term ‘passive income.’ You may have even dreamt about this glorious sounding dream of bringing in money overnight, making sales in your sleep, and having enough income to go on a month-long vacation to the Bahamas while your business runs along seamlessly at home.

This episode will bring some truth talk about this idea of passive income, and share with you a few things I’ve learned in the 7+ years that I’ve been building an online business.

AND I’m going to share with you another option that might be better for you to consider depending on your stage and phase of business.

What Passive Income is, and What it Can Look Like:

Most of the time, when the term passive income is used, it means something like the following: Creating a product (usually a digital product) that you can sell over and over, and that brings in sales on an ongoing basis, without you having to ‘actively’ sell.

In this category can be digital downloads (like ebooks, PDFs, templates, etc) as well as digital courses that are sold as ‘evergreen’ courses (i.e. there is not an open/close launch date).

These types of products are usually priced on the lower end of the spectrum and almost always are a DIY version of something, meaning that there is NOT any active coaching or support provided by the coach.

You can compare these types of digital products to something like a physical book. When someone writes a book, they do a ton of work on the front end to craft the idea and write the book. Then, ideally, the book can sell for months and years to come. And in some cases, those additional sales that come in down the road may mean ‘passive’ income for the author.

But just like book sales, most digital product sales are not exactly passive.

Like we talked about in episode 80, you always need something called TRAFFIC in order to make sales. Whether you are selling a service, a course, or a digital product. There has to be a source of leads or traffic coming to the offer, seeing the offer, and then deciding to buy the offer.

So the truth about passive income is that you still have to find a way to send traffic to the offers you create. Therefore, you must be spending either TIME or MONEY to make the sales. Ultimately, it is not truly passive work in the sense that nothing has to be done.

A Real-Life Example:

A real-life example of one of my own products that can be considered passive income is my mini-course, Podcast in a Weekend. This is a course that someone can buy at any time, and it’s linked up in various places on my website. It’s also mentioned in my podcast.

But the truth is, I make very few sales on this mini-course during any given month.

Now, if I decide to SPEND some money and drive FB ads or Google ads, or some other type of traffic to the sales page, I could expect an increase in sales. But then… is it truly passive? Not entirely!

Even though it sounds appealing, unless you have a large traffic source driving to it, you will not be gaining a large income.

Passive Income from Advertisements:

Another version of passive income that is less common, but is something that can happen in the online space is passive income from advertisements. In this case, you might have a blog that has a lot of traffic coming to it. Often, that traffic is coming through SEO, Pinterest, or a large organic following on Facebook. You might even have a large enough following that you have an Amazon affiliate account where you are generating income through affiliate links through your website.

In that case, you might have gotten enough page views on your site to generate advertising spots on your blog. And you may gain ongoing revenue from those ads.

Likewise, someone can have ads on their YouTube channel or monetize with YouTube’s program if they have enough watching time. You may have ads in your podcast as well, creating ongoing revenue that way.

With these options, usually there is a need for some ongoing content creation to keep the website or the channel up to date and continue to generate new traffic.

Generally speaking, if you need to earn money quickly, this is not going to be the best way to go for you.

The Alternative: Recurring Revenue

Often, the reason people are looking for ‘passive’ income is because they want more stability and consistency in their revenue. They don’t love the ‘feast or famine’ cycle and they want, instead, to have some baseline income they can count on every month.

The alternative to the ‘passive income’ option is recurring revenue.

Recurring revenue is money that is coming into your business, typically on a monthly basis (but sometimes quarterly or even annually) and it is money that you can rely on to be there consistently.

What does recurring revenue look like, or where can it come from?

  • Monthly retainers for services: For example, if you provide a service that someone needs on an ongoing basis, then you may charge a flat amount every month for that service. (i.e.: Podcast management, SEO, copywriting, etc.)
  • Membership or mastermind type program: If you have a membership, often there is a monthly charge for that membership and people continue to pay monthly unless they opt out. With a mastermind, or higher level coaching program, you often have a monthly charge and often your clients are committing to a certain amount of time in the program. This provides stability in your business because you know you have ‘X’ number of people paying each month for that program.
  • Group coaching program: This might not be ongoing every month of the year, but if you run a particular program 2-4x per year, and you have a payment plan for that program, then you can create recurring revenue that way.
  • Ongoing subscription of some kind of digital products or templates: This can be close to the ‘passive’ income we discussed before, but in this case, you often need to be creating something new for the program each month. This is why I consider it more in the recurring revenue category. It’s not something you create once and then sell over and over.

Moving Forward:

If you don’t currently have recurring revenue in your business and you want it, consider exploring these options. Of course, each business is different and the offer you create needs to align with your other programs and services.

Figuring this out and helping you create recurring revenue is something that I work with my clients on inside of my upLIFT Mentormind. If you’re at a place where you are already bringing in consistent revenue, but you’d like to uplevel what you are doing or create more time freedom, have more alignment, and be surrounded by fellow Christian women building an online business, then I’d love to invite you to check out upLIFT here.

A Final Question:

Do you ever wonder if you are focusing on the right types of activities and strategies in your business? Do you ever feel like you are just throwing spaghetti against the wall to see what sticks, instead of doing the things that will truly move you forward?

If that’s the case, I have a resource that will help you out!

It’s my Biz Focus Quiz, and it’s designed to help you understand where to put your focus RIGHT NOW in your business. You just take the quiz, and then I’ll give you your results, which should help you understand the main focus areas for you right now. And I give you some specific ideas and resources to help you move forward in that way!

Quotes to Note:

“Just like book sales, most digital product sales are not exactly passive.”

“ ‘Passive income’ is not always very passive, and is not as easy to generate as people might make it sound.”

“Recurring revenue is money that is coming into your business–typically on a monthly basis–and it is money that you can rely on to be there consistently.”

Connect with Esther:

If this podcast was helpful, consider leaving a rating and review on Apple Podcasts or your podcast app.

Subscribe to my other podcast, The Christian Woman Leadership Podcast

Join the FB group

Connect on Facebook

Connect on Instagram