Make money while you sleep!!!

It’s the go-to war cry of the digital entrepreneur.

It’s a declaration for freedom and independence — a 1-sentence manifesto — and it’s motivated countless 9-to-5ers to quit their jobs and start an online business.

And who can blame them? The whole thing is impossible to resist 🙂

Who doesn’t love the idea of sipping Piña Coladas by the beach while your business cranks out money on autopilot?

This fantasy has been driven home by countless lifestyle entrepreneurs with their making-money-on-the-beach photos and the “if I can do it so can you” attitude that goes with it.

I hate to burst the bubble but that whole “passive income” thing… it’s nothing like people say it is.

The Way of the Dodo

Before you ever get near that beach, you have to invest a ton of time, money and energy getting those passive income streams up in your business.

And even if you do all of the work, even if you create kicka$$ products, pay for ads to attract the right audience, implement ninja marketing techniques on email and social media and everything else…

There’s no guarantee it’s going to work out the way you want it to. 

Things have changed online and purely passive income is rapidly going the way of the Dodo… it’s pretty much extinct.

If you’ve been part of the Live Your Message tribe for a while you might have heard me say, “before you can make money while you sleep, you have to be able to make money while you’re awake!”

It’s not super sexy but it’s true.

So, if you’re going for consistent, reliable income… 

If you want to make sure the business stays alive for longer than a month or two…

It’s less about going for passive “set it and forget it” income and more about generating leveraged and scalable income.

The Piña Colada Effect 

Let’s get some distinctions straight…

Passive income is “The Piña Colada Effect” everyone’s after 🙂

It’s where you create your product just once and then you get paid for it again and again and again with little to no additional effort.

This money comes in “on autopilot.”

Leveraged income happens when you serve multiple people with your time commitment like in a live group program or in-person workshop.

Scalable income is when you serve an indefinite number of people and there’s no fixed upper limit to this model, though it does require ongoing effort to market and deliver your products.

You can usually get to scalable income by growing your business and scaling resources – like hiring more team members and adding new marketing channels – so you can reach thousands or maybe even millions with your offers.

Lots of entrepreneurs can get to leveraged income, some can get to scalable income and very few can get to purely passive income.

Here’s why… 

Real People, Real Relationships

 Market expectations have shifted.

We live in a world where people prefer high-touch over automation.

Customers are demanding real relationships… they want real people and real interactions behind the products and services they invest in.

More and more people want that 1:1 attention.

If you’re offering products, group programs and courses, they want live feedback, they want excellent customer support and they want to have their questions answered in a live setting like inside a dedicated Facebook group.

And here’s one other significant thing to think about before you jump on that passive income bandwagon…

Ads, leading into automated sales funnels, are a big part of creating workable passive income streams.

And if you’ve tried running ads on any major social media platform lately, you probably came up against a big, fat problem pretty quickly…

Cost.

Running Out of Space

Ad costs are sky high and while lots of people complain about it, not many know what’s really going on.

And the truth is that all the big social media channels like Facebook, LinkedIn and Instagram are running out of ad space.

Here’s what I mean…

As more people jump from “traditional” ads on print, TV and radio to running ads online, top social platforms don’t have enough ad space to meet the demand.

And as ad space shrinks, costs shoot up.

Right now, the  cost of running online ads is getting to the point where it’s beyond most people’s ability to see a positive Return on Investment — especially new entrepreneurs with an unproven model.

Plus, skyrocketing ad costs mean you can’t just “set and forget” your ads. You have to spend time, money and energy monitoring and optimizing your ads on an ongoing basis.

In other words, when you rely on ad traffic to get your products and services in front of more people, you’ll probably never get to the purely passive income stage.

Think about it…

Even if you manage to “set and forget” product delivery (which is next to impossible due to the market shifts I talked about earlier), you can’t “set and forget” your marketing — you need to constantly keep a close eye on your incredibly expensive ad campaigns.

So, here’s what I recommend…

Don’t shoot for passive income right away. Start by creating leveraged income, then move up to scalable income.

While it’s not wrong to try and build passive income streams in your business, never focus exclusively on just that one option. 

And definitely don’t start your business just to “make money while you sleep” because that’s not going to end well!

It’s important to recognize that “passive income” isn’t truly passive and what most people mean by “passive income” is actually leveraged or scaleable income. 

Even giant membership-based companies such as Adobe, Netflix and Amazon require huge staffs to maintain them. 

So, now that you know the truth about passive income, I’d love to know…

Has the passive income model aka The Piña Colada Effect ever worked for you? 

Or did you find my “before you can make money while you sleep you have to be able to learn how to make money while you’re awake” closer to the truth?

Share your thoughts and questions in the comments. I personally read and reply every, single one!