I warned you in the title that this is going to be a rant. I have strong feelings about individuals telling others that an online business is a great way to earn passive income. It is NOT (just ask my wife)!
Passive income is an income received on a regular basis, with little effort required to maintain it.
Plagiarism. (2013). In Wikipedia. Retrieved from http://en.wikipedia.org/wiki/Passive_income
First, I wanted to define what Passive income is. As you can see from Wikipedia, passive income is income received with little effort required. A few examples of passive income include rental property, royalties, dividends, interest payments, and pensions.
While Wikipedia does list that passive income can include advertisements from websites and online businesses that don’t require direct involvement from the owner, I don’t agree with that part. There are very few online opportunities that allow anyone to set it and forget it. There are no “overnight successes” out there. You may not know about them until they hit it mainstream, but most “overnight sucesses” that are coined by the media have been in the works for months or years.
I started an online e-commerce business from scratch. From the first line of HTML code for the website to the last shipped order. I ran the whole business from start to finish. I even did an interview with Veronica from Pelican on Money about my business. You can check it both Part 1 and Part 2. I have been in the trenches of online business and it is not easy.
I have found that most of the time when you hear about people saying that an online business is great for passive income is because they are selling you something. Maybe an e-book or an e-course about how they succeeded in business and how you can too. It is simply not that easy. Business in general is not easy. Yes, you can setup an online business cheaper than you can a brick-and-mortar one, but you still have to work.
There may be parts of your business model that are passive, such as advertisements and monthly subscriptions, but you still have to work to get those. They don’t just come to you right after you start your business. You have to work day in and day out to get visitors, then get advertisers, then keep advertisers, then get more advertisers. There is not magic switch that you flick on and BAM!, there are the visitors.
I am not selling you anything, I am just telling you the truth. An online business is NOT, I repeat, NOT, a passive income source. It just isn’t. I am sorry to burst your bubble, but it had to be done. I am tired of hearing people from other sites tell their readers that an online business is great for passive income. They can be a great source of ACTIVE income. This type of income is worked for and you have to continually work for it.
If you want to learn about making income from different online sources, then check out Michelle from Making Sense of Cents. She works very hard each and every day to earn her extra income. I doubt she will say that any of it is passive, except for maybe the rent she receives. If you are interested to see how hard running a business is, then check out John from Frugal Rules and his Taking the Plunge series.
To conclude my rant, please stop emailing me asking for ways to make passive income online or asking for my opinion on a great passive income business strategy. They don’t exist. Most, if not all, of my replies are going to be centered around working your a** off. I have had a couple of businesses since I got out of college and each and every one of them required me to work hard. This blog requires me to work hard. If you want to succeed by making extra income, work hard! That is the magic formula. No smoke and mirrors, not bulls**t. I won’t attempt to give you the hopes and dreams that an online business will be for you. If you go into it with the hopes of it making you constant money without having to do any work, then you might as well not start one.
If you want to earn passive income, then rent out a room or you whole house. You can diversify your stock portfolio and invest in dividend paying stocks. You can start investing in Peer to Peer lending like Prosper or Lending Club. These two options are great passive income strategies if done correctly. These are some of the few passive income options. Remember, passive income is a source that you don’t have to regularly work to maintain. An online business is not one of these options.
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