Can you make money while doing nothing? Can you build a business, set up its operations, and let it run itself while you lounge by the pool, occasionally checking your bank account and letting out a satisfied sigh? The notion of “passive income” has gained traction lately, with new entrepreneurs aiming to “set it and forget it.” But is this a pipe dream, or can business operations be automated? If they can, to what degree?
How It’s Done
The best example of passive income comes from Pat Flynn, friend of the blog and creator of smartpassiveincome. He personally built several streams of income by parlaying his credibility into sales, mostly for other businesses through affiliate marketing. He built his own value by producing great content, engaging with his audience, and building a following that he could then leverage into profitability.
But even Flynn had to work at this. He’s had to constantly create content, and ultimately move away from affiliate marketing and towards his own products. He’s built a successful operation, one that continues to be profitable. His work, though, has been anything but passive. No matter where you look in the annals of successful entrepreneurship, you’ll see that it always takes work, no matter how many things are able to be automated.
The lesson is this: you can automate aspects of your business, but not the business itself. It just doesn’t work that way. Even when passivity is your goal, you can’t run a business by refusing to run it. The conductor doesn’t play any of the instruments, but without him, there’s no concert!
As an entrepreneur, your business is about you. Your personality, values, and vision are its foundation. You and it are inseparable. No matter how much work you outsource, you still have to be there. You have to be the face of your business, whether it’s interacting with your audience via podcast or webinar, or interacting with your peers at conferences and industry events. The content has to come from you, no matter who articulates it or designs its presentation. You have to be the leader, no matter how great your managers are.
In the independent world, you are the company, no matter who’s doing what.
How We’ve Done It
Here at our company, we’ve automated as many aspects of our business as we can, while still guiding its course. Nicole and I are constantly producing content, though we’re now able to turn the presentation over to professional designers and editors. We’re constantly interacting with our audience, though we have dedicated social media experts. We’re always thinking about the next innovations, though we have software engineers to implement them for us. We haven’t passed the work on to our team; we’ve assembled a team that allows our work to bear the most fruit!
This is especially true for our software service, WebinarNinja. Yes, we created WebinarNinja a long time ago. But we certainly couldn’t “set it and forget it.” We’re about to completely relaunch the product in its latest iteration, WebinarNinja 5.0. That’s because the greatest products are never “finished.” Complacency is the best way to guarantee failure, especially with soft products. The last “S” in “SaaS” stands for “service,” not “settling!” We’ve got to onboard, innovate, and market. That never stops. That never goes on autopilot.
That said, we don’t have to be consumed by our work. Because we put various aspects of the business into the hands of people we trust, we can take a step back. We’re free to lead as opposed to manage, because we have competent managers. We still run the business, but we can take a few days or weeks off. We’re making an “active” income, but with a favorable balance of work and rest.
Who Needs Autopilot?
No, there is no purely passive income. There’s simply working smarter, delegating, and putting yourself in a position to lead while others do the work on the ground. There’s leveraging your assets, getting the most from your investments, and populating your team with competent people. But there’s no free lunch.
In the end, do you really want one? In my experience, entrepreneurs are people who want to create something, and want to be free to create it as they see fit. They’re not people who are typically averse to work, they simply don’t want to work for someone else! They’re dynamic, they’re active, and they want to make money that way. Entrepreneurship is fueled by the desire to do something, not the desire to do as little as possible.
Leading, delegating, automating, innovating, being creative, responsive and present: these things all require work. When you do it right, you do it in a way that maximizes your potential. You do it in a way that frees you to play to your strengths. If you love teaching, you focus on that while others do the rest. If you love design, you focus on that while others do the rest. Whatever it is you want to do, build the business that lets you do it.
This way, you can find the joy in work that drives successful independent businesses. As for truly “passive” income, there’s only one way to make money without working: marry rich.