The Top 4 Reasons Why 'Passive Income' Is A Dangerous Fantasy

Source: Forbes

I’ve been encountering a lot of people lately — particularly young people rightly enthralled with the seemingly limitless potential of the Internet — who have focused their professional lives on developing “passive income.”

You know the fantasy: write some ebook (or better yet, hire freelancers in Mumbai to research and write it for you at $.20/word!) on some niche topic, set up AdWords and Facebook campaigns targeted to the right keywords (you can hire those Mumbai guys to do your keyword research too), put up a cheap landing page (with copy written by… guess who!), press “Go!” on the PPC campaign, and voilà. . . just wait for the money to roll in while you sleep!

Now, with all those dog owners across the globe buying your new ebook on how to help their pit bulls lose weight with Açai cleanses (the keyword research your man in Mumbai did determined that dog training and antioxidant weight loss were hot niches)–you can just check in every once in a while to make sure your outsourced VA is facilitating the transfers from your ClickBank account over to your checking account, and while you’re not working, you can hang out in whatever fine restaurant his Internet research has determined is happening this month on your particular island of Fiji.

I’m caricaturing a bit here of course–but not too much. This is more or less the life plan that many of the “passive income” people I’ve encountered lately have spouted to me.

But there are a couple problems with holding “passive income” as your main goal in business and life:

1. You Can’t Stay Ahead of Competition Passively

If your research really does determine that there is some amazing market niche that until now has miraculously gone unnoticed and unserved—dog owners who wish to help their dogs lose weight naturally, for example—sooner or later, word is going to get out that there’s money to be made there, and someone is going to create a better ebook or info course or product that serves that market’s needs better than yours does, and who markets it betterto them than you do. You can’t manage this competition while sipping margaritas all day from your paradise restaurant on Fiji. You’ll soon see your market share go down the drain—just like all those Açai cleanses. . .

2. You Can’t Maintain a Loyal Tribe of Customers Passively

As soon as your customers realize that you don’t care about them (which you don’t, if you’re trying to get away from them as fast as possible), they will eventually go elsewhere, to someone else who actually does care about them and their needs. ‘Nuff said.

3. You Can’t Lead Great Teams Passively

If you’re going to be building a large, scalable business, sooner or later you’re going to need employees and/or freelancers (even if they’re spread out over the world virtually). You’re not going to attract great talent for the long run by indicating to them that you have no interest in being involved in the business whatsoever.

All the great talent will run the other way from a leader like that (i.e., a non-leader.) You’ll end up attracting people who are just looking to make a quick buck with as little work as possible. A mirror reflection of the person hiring them, in this circumstance.