Here’s a BIG success principle I’m eager to get off my chest about passive revenue…
Passive Revenue is a Myth!
It’s a myth because it ignores or tries to sweep under the rug all the work it takes to set up and maintain the so-called “passive revenue”.
And I’m guilty in the past of seeding this idea. But I want to come clean today and say it’s a myth… and… there is a MUCH better way, a much more accurate way, to think about this.
You see, when the Internet took, off people realized you could sell information and a whole industry was born: Internet Marketing. This included selling information products online. And this is when I got into the scene back in 2005.
I branded myself as the “Info Product Guy” and I helped a lot of small business owners take the information out of their head and turn it into information products, which included home study courses, CDs, eBooks, etc.
But I noticed something shocking with my clients. Only about 20% of them made a lot of money with their information products – in some cases multiple 6-figures. But the other 80% didn’t. Sure, the product opened many doors for them. They attracted new clients, they increased their visibility and prestige, and they got more speaking gigs.
But it really bothered me why they weren’t making even near what the other 20% of my clients were getting. What was the difference between these two groups?
As I analyzed this I discovered that my clients in the 20% group were already in business at least 3 years. They already had a list of buyers. They had a clear niche already established.
The other 80% group didn’t. They were in the early stages of their business and still figuring out who they were in their business, what they really offer, and whom they really serve. The problem was they were using info products as a way to try to figure all this stuff out. And that didn’t work for them.
So then I had to ask, “Well, these are smart, good people. Why are they jumping to info products when they didn’t have a solid foundation?”
I remember I was sitting at a marketing event listening to a speaker when suddenly it hit me. People are being told that trading dollars for hours is somehow really, really bad.
And now this false belief permeates the whole industry of coaches, consultants, healers, and all the other service professionals.
So what do people do? They latch onto the idea of, “I just want passive revenue! I don’t want to work with clients because I’m limited there.”
And now we have a whole industry avoiding what actually works! And I’m committed to help shift things back to a common sense way to build a thriving business.
I want you to succeed – so hear me out here…
The 20% of my clients who made great money with their info products had one major thing that the 80% who struggled didn’t have… They offered a service as a base to their whole business. They never started out JUST making and selling information products. No! For years they provided REAL value through services – usually good old-fashioned one-on-one service.
The info products they created were a SUPPLIMENT their solid, base line service income.
In other words, they had ACTIVE income before they ever had PASSIVE income.
They learned from actually working one-on-one with people what their market really wanted… and most importantly, how to sell their services face-to-face (or phone-to-phone) to real people. They offered real value and saw first hand how their knowledge and systems produced solid end results and benefits to their clients. They then took that practical, real-life knowledge and turned it into their successful information products.
That’s why they made money with info products.
So for me personally in my business, since 2005 I’ve been backing up how I help people more and more. I see the path for you so clearly now.
Let’s build a solid foundation first. Let’s design a service that provides real value first. Let’s get you experience selling your service to real people before we even mess with the Internet or information products. Once that’s in place and you’re earning $10,000 plus a month (from your services), THEN let’s supplement your income with products and programs.
I know this is counter to what you hear the Guru’s telling you. And I know I might lose some of you who insist on trying to do a business bypass and buy into the myth of passive revenue without any active revenue first… but I’m telling you how it works in the real world.
So I have an alternative way of thinking about this for you right now. This is really huge…
I invite you to banish from your vocabulary the phrase Passive Revenue and replace it with the words LEVERAGED INCOME.
Because the term leveraged income is MUCH more accurate and doable. This means focusing on common sense, reality-based strategies to getting better results with less effort.
For example, here are 4 ways to you can integrate leveraged income into your business…
1. Attracting More Clients
Look at what’s been the best, easiest way you’ve attracted clients in the past. Focus your energy on maximizing that WAY before you go off trying some complicated unproven new marketing method. Do more of what’s already proven for you in the past and make it better before chasing the next bright shiny object. That’s leverage.
2. Providing Real Value
If spent the time honing your craft and becoming truly masterful at what you do vs. scattering your energy trying to be all things to all people, then you will automatically grow your business. Why? Because you’ll get referrals – the heart of virtually all business. That’s leverage.
3. Getting More From Your Current Clients
One very simple, doable thing you can do right now in your service is raising your rate just 10%. It’s not a lot to your clients, but it adds up to quite a bit for you at the end of the year. That’s leverage.
4. Place More Importance on Sales Than Marketing
This might surprise you, too. But the more time and energy you spend practicing talking face-to-face or phone-to-phone with potential clients and sell them into your service, the more powerful you become. Yes, of course marketing and client attraction is important, but the soul of your business is your ability to communicate with people directly what the ultimate benefit is to them if they hire you. That’s leverage.
Okay, so I’ll be connecting with you more in the future with more specifics around the idea of leverage and how to authentically reach multiple 6-figures.
For now I want you to comment below. Share with our community here how you can start to leverage your business more. Share with me what you think of replacing the words passive revenue with the words leveraged income. Maybe share one small, simple way you can maximize and leverage your income from what’s already working for you.
OMG! I just had that conversation with a client who told me she did NOT want to coach anyone and wanted to just do info-products.
I had to gently bring her into the reality that her brand new business NEEDS her to LEARN a whole lot more about her market BY HAVING those 1-on-1 conversations with the many prospects that were knocking on her door. THAT is what would help her to create the best info-products.
She was actually turning away prospects who were asking her for private coaching! Thankfully after my gentle arm-twisting, she’s now charging $497 for her private coaching and saying “yes” to those prospects who have been waiting to work with her.
So just had to say AMEN to that James!!
And yep, passive revenue is indeed a myth. All of my passive revenue needs me to do some work to make it happen consistently. Leverage is indeed where it’s at! 🙂
Hi Allison – yes, the industry has sold people into the idea they can do a “business bypass” and not master their craft and/or not really connect with real people first. Even the big internet marketers all have big ticket back ends that are all service models. The products are stepping stones to the back end.
And don’t get me wrong – I’m all for info products… just at the right phase of a persons business development. They are great – and for 95% of the time for service professionals, it’s after a solid practice (and list) has been built.
Hi James,
Love your new website, and I agree–it’s so true that leveraged income is the way to go. As I began to offer more group programs (thrivingprivatepractice.com and live workshops), I found I’m able to reach more people in fewer hours. My income has also increased. Thank you. (And yes, since we’re married, I get the privilege of talking with you about this all the time, but I thank you for authentically telling it like it is.)
Love you.
Hi Honey! 🙂 Yes, you are a MODEL example of how to properly introduce leveraged income. Because… 1) You studied your craft for 8 years – you’re masterful at what you do. 2) You got out to the workplace and met with people face-to-face for a few years (You learned how to enroll people into your offer). 3) You introduced leveraged, special packages beyond your hourly service. 4) You then offered a group program that’s been hugely successful. And 5) your first info product, your Meditation CD has been selling very steadily.
In other words, you’re building your products, programs and leveraged income on a rock solid foundation. It’s bound to work then!
Amen James! thanks for talking about this and love your site. xxoo
Hi James,
What a refreshing, welcome message of truth that comes in perfect timing for so many who have been under the misguided notions you have debunked in your video today. Thanks for coming clean and sharing real life ways we can all build leveraged businesses that really work, one and all. I am a believer, and — thanks to many of your fabulous tips and advice — have created just that kind of business. Thank you, and keep up the great service to folks who need your truth in perfect timing to make a great living and make their impact.
Awesome James…so very true! I learned this especially through watching others succeed (and not succeed so much) with products while in Platinum. So many were spending so much time focusing on creating their products that they were not focusing on building ‘active’ income and serving people directly.
I have your voice in my head all the time (and share with my own clients as well) the concept of focusing on the “lowest hanging fruit” and finding the fastest and easiest ways to make more sustainable income. While I’ve had some products in the past, I’m now (after 7 years) starting to conceptualize and really dig in to leveraging my process and my knowledge with info products as well…plus I’m glad I can review all you’ve taught me about making them really work!
So thanks for being such an authentic and powerful mentor and love the new fab site too ;)!!
Hi Courtney – Thanks! Yes, you offer so much solid value to people. You’re totally on the right track. I would love to see you offering a high-ticket service into your mix if you’re not already. You can easily do that.
Love this epiphany James! I fall into the category of having clients, and THEN entering the info product area. I have had many conversations with others to the effect of, “Yea, gurus say “5 Simple Steps to Creating a 6-figure Biz Using Teleseminars / Your Ebook / Evergreen Videos” but they skip over the fact that there are a gazillion OTHER steps under each one of those “5 simple steps.” Setting up the technology, building a credible list, marketing, etc. all take time and money. I’m not saying it’s impossible … and I’m sure it’s easier the 2nd and 3rd time to build a business from scratch with that approach … but it’s not been my experience. Having clients and then leveraging that business (as you call it) has been my path. P.S. Hope to run into you on Alton next time I’m in town.
This is very refreshing and resonates with my experience 100%. Right on James! I hope a lot of people watch this video.
It’s about time! Thanks for finally articulating this idea! The only one you didn’t cover directly (although you did cover it indirectly) are all the gurus who say. “You DON’T need to even KNOW what your product, service or audience is – We’ll figure it out in this program!”
That’s a LOT of MONEY spent by a LOT of people who were ALL LOOKING for the MAGIC at the end of the rainbow and put their FAITH with someone they truly BELIEVED had the right RECIPE – only to leave wondering what was WRONG with THEM, that THEY couldn’t figure it out like the 20% who did. So thank you for setting the record straight! It’s NOT just mindset (although it could it that as well. Make sure you check first! )
Thanks you at a second level because ONLY someone who has gained a reputable following like you CAN SAY it! There are so many who have noticed it, commented on it – but only in WHISPERS, because the BACKLASH for suggesting there MIGHT be a FLAW in the pudding has been vehemently denied, followed by the suggestion that it must be THEM and definitely not the SYSTEM.
What James has to say is completely in tune with the times! Thanks for spilling the beans! Can’t wait to see what’s cooking behind the scenes now that those myths are revealed!
PS – loving the new authenticity that is finally emerging in the field.
I LOVE working one on one with my clients….it’s the best! I am near launching my first product – a book – and writing it has really helped me understand just how much I give my clients and feel very much happier with raising my rates. Love your work James.
Hi Claire – great job at everything you’re doing! Yes – raising the rate just 10% is so simple and so powerful. Most people haven’t done it in years… now is the time. 🙂
Amen James!!
I was just having this conversation with a friend the other day. SO true.
And I’m tired of people selling “the dream” to people who aren’t ready for it.
Thank HEAVEN you’re being honest.
Love you!!
What a great video James. I wish I had seen this a few years ago, as what you state is true and it was a costly lesson. Love your new site. Thanks for being authentic.
Two more comments now that I heard the entire video…love the replacement of passive income with leverage; it’s such as great word anyway.
I also wanted to mention that I believe there are a certain areas where someone can use extensive knowledge and create leveraged products and sell them without private clients. I have one client that has done this very well, and I have concluded that it is product or market related that has made the difference.
Thanks James!
Thank you! Glad to see you are taking the shift to leverage as it’s quite frankly awesome and what I am all about http://working-freedom.co.uk/articles/
As for not being passive that’s cool with me. Yeah, it’s currently 2am here in the UK but that doesn’t matter because tonight I’m on a roll creating some amazing content for my first big product. I first created a small product to dip my toe into the water whilst also running my virtual assistant business. The VA business was growing due to the use of webinars and I’ve helped a few other people get more sales using them so now it’s time for me to ramp it up with a high quality, high content product designed for female entreprenuers who are craving business growth as well as work life balance A.K.A. Living the Leveraged Life
Here’s the thing; it’s NOT for new businesses. It’s aimed at the people who are going to take it, implement it and get the results. If a new business wants to buy and use the products that’s fine. Follow it well and they will get great results but it’s not marketed to them.
No more ‘anyone can do it it’s so easy’ it’s all about leveraging current success and if you’ve barely set the foundations; step-up with your ‘A’-game.
I’m going to end the ramblings as I’ve turned a simple comment into an essay. My latest ‘blog post’ turned into a 1200 word resource on the 5 key leverage points of mailing lists.
The old way lacked integrity and it was bound to fail. The loudest voices were all over the internet selling the dream, but where are they today? I applaud you James for speaking up and owning up.
Like you, I meditate and follow a spiritual path of choice. Thanks to the clarity that brings to my understanding, I returned to one on one work exclusively awhile back now, while I slowly work on a book and give presentations. As you said, I draw from my experiences and feedback in the one on one and small groups work to make my book as helpful, salient and relevant as it can be to those I serve and hope to serve down the road.
Hi, I got your email and went to clean my inbox of all my ‘newsletter emails’ when I saw yours and intutively felt “I’ve got to read that one”.
Glad I did.
This year I too have come to this conclusion about the information packaging industry vs tradition business techniques. I even felt some shame for all the time I have spent listening to information packaging coaches for advice! As if I was some kind of schmuck – and at the very least, a person who was hoping to get ‘something for nothing’.
The something for nothing goes against my values on ‘value’. So I was just a sucker for bright shiny object. Like a greedy kid who wants to eat all the lolly jar in one go. Forgetting that it is the pathway not the prize.
I think this video was great, brave and just fantastic for the industry. I hope it attracts lots of wonderful business for you and stimulates a whole new culture of sales processes.
Julie
I especially like that you point out the hidden time and effort it takes to gain passive income. Eventually, yes, some income streams can work with just a maintenance effort. But a whole lot goes into getting to that phase, and it certainly is not “passive” in the way most people believe it to be. Great job!
Hi Sue – Exactly! I’ll be talking about the real hard costs in the future, too. It’s MUCH more leveraged to master the enrollment conversations (sales) and do a lot of them than it is to set up and sell info products. Again, not that products are bad, they are great in the right place, at the right time in a persons business development.
Hi James, yes ‘passive income’ is a silly term. Even once up and running it takes some action to maintain.
I think I may be out of your target market. Due to caring responsibilities I can’t really do appointments so was hoping to do info products where I could work on them in times that suited me and that I could drop when I needed to.
THANK YOU James for this!! FINALLY someone who isn’t glossing over all the hard work it actually takes to set up your business and get the ball rolling properly! Now I know EXACTLY what to focus on!
Brilliant James! Of course passive revenue is a goal but being a new entrepenuer hearing this contantly before you even have a full practice has seemed very counter intuitive. There is a natural progression and a layering process-very refreshing to hear this discussed openly. This is what new emerging entrepenuers need!
James,
Thank you for finally debunking this myth. The longer I’ve been in business the more I would question the whole info-product bandwagon because the simple truth is, if you don’t have a list or a raving fan reputation, then how can you even sell your info product? It’s putting the cart before the horse. The word ” passive” also never really resonated with me. Leverage on the other hand means smart, savvy, business growth. I love it.
Awesome awareness ROCKSTAR.
people first, products second
‘levereged income’ = accurate
Thank you for sharing this James!
with a smiling daisy
Shakaya Leone
Hi Shakaya – Thanks! You’re an excellent example of how to balance products and services. I encourage the community here to check out her offerings. http://earthempress.com/
Wow, thank you!
Btw, I loved the whole process of creating my product The Body Cleanse with you-
it was fascinating to me how you CLEARLY saw that ‘basic’ foundational prodict was missing from my then offerings…it is my signature system I take my private clients through, and has become a big help for those who want to ‘do it themselves’- thanks James!
Hey James,
I’m so glad you brought this up- I’ve been getting tired of all the noise and products with a “biz-in-a-box” mentality. Thanks!
Finally we’re starting to hear the truth after so many years of entrepreneurs being misguided.
Selling and getting clients the old way is what made those gurus big in the first place. They just wouldn’t tell newbies all the years and time they put into that simply because that is not sexy enough to sell to a large audience.
Glad to see honesty is coming through in the industry.
James,
You nailed it. I love this post. I’m having the same conversation about websites with my clients. The “set it and forget it” mentality is blocking success because building businesses online and offline is a continual process. The truth is your website is never done, you need to update your content to meet the needs of your evolving clients and to be of true service. Another BIG thing people are missing is strategy… you must have a plan and you must take action consistently. I know you know this and I’m so excited to see you sharing your message to get more people on the right track.
Write on!~
Lisa Manyon
Hi Lisa! Yes – spot on about having a strategy first and foremost. I totally agree. The hole many entrepreneurs slip into is confusing tactics with strategy. It’s not the “Magic Bullet” that will make you successful – it’s your strategy. That is, your overall plan and arc: building a solid foundation, figuring out what people will really pay for, connecting to your ideal market with the right offer, etc. ALL Magic Bullets work… but not by themselves. When we see people who have made a magic bullet work for them, we have to look at the path they took to get there, who they are (some magic bullets fit our personal style way more than others), who their market is, etc.
So yes – Go Strategy! 🙂
Thank you. This just confirms what I had suspected for a very long time. I can only create information products once I have worked with enough people to know exactly what their aches and pains are. Only then can I move into leverage my time by creating products and group programs.
I initially wanted to forgo working 1to1 and instantly add info products and create leveraged income right from the start. Of course, it never worked and I wondered why no one ever signed up to my ‘great’ offerings.
Hi James!
You are so on point! I fell in to that trap myself and for 6 years I struggled to make a decent income. But once I switched to taking the content in those same packaged information products and offering them instead as one on one vip sessions or group programs, my income skyrocketed. I really believe that there’s a place for creating selling packaged information products…but that’s not at the start of your business unless you have a string network of strategic partners to promote you to their various networks or lists. The way to go is to build a reputation and following first with your services, and then multiply your impact and influence with packaged products.
Thanks James for bring this up…love your work. God bless.
I have always taught our Christian Coaching students that there are many, many ways to earn an income and not be limited to the 1 to 1. They seem to gravitate naturally to 1 to 1 coaching so we expand from there.
Thank you for being candid about the way this business works. Ultimagely all the pieces need to work together.
Blessings!
Love this feedback James! You’re exactly right with the focus business owner’s should have!
James,
Excellent video and post that sure hits home. My students have had similar experiences with their information products and it was difficult to convince them that they needed to lay a foundation and build a platform before they could expect great results online. I will be sure to share this with my community.
Connie
Thanks James, for your commitment. I feel relieve by hearing that, because, 6 figures income is good, but first I have to have clear basies.
Yes, Corinne. And the best part is you absolutely can earn 6 figures and beyond with just offering services. Especially when you offer big-ticket services ($2,000+ packages). Then the info products are the whip cream on the top – nice added income, but not the end-all and be-all.
I am not at all a new entrepreneur. I am a veteran 20+ year photographer working at the very high end of the wedding and portrait business. But I can’t keep trading my hours for dollars because I don’t have enough hours for my work and my life as a mom of a teenager! I feel like I should be making so much more money than I do, because I know my work is excellent, but I have zero leverage, terrible branding, no marketing at all, and I am overwhelmed by all of the messages on how to do marketing better (I grew up to hate marketing, advertising, and all kinds of “sleazy” sales-y stuff) I lack focus and clarity about where I want to go next….but I am very clear that it could be huge. I have a tiny client base of loyal, repeat customers, and I only add a couple people each year because that is all I have time for. I keep coming back to you and your messages. I loved your 12 income streams (for Ali’s video) and I am replaying all of those in my head. I can’t wait to be able to work with you.
Hi Tanya – Yes, I understand. Adding more leveraged streams makes A LOT of sense for someone in your situation who’s already built the foundation of service. You have a lot of options and possibilities: scaling up your current services (expanding your staff and clients), teaching how to build a thriving photography business (The train-the-trainer model), offering classes/workshops, adding even higher-ticket services (really bringing up your brand and services to work with high-end clients), etc. Each model requires some work and skills different than what you’ve used to get where you are today, and that’s okay. I would encourage you to look at top performers in your industry to see which business models suit you. Then focus your energy on trying it out and see if it fits. (If it were me, I’d look at positioning myself as super high-end. In other words, less clients but more higher paying clients. Because it’s the closest to what you’ve already been doing – it’s just a slight 15 degree shift to refocus who your target market is.)
Hi James,
I’m so glad you’re talking about this and thank you for being forthright and honest about it especially being well known as “the info product guy”!
After a few years of gathering knowledge and information and following a lot of experts whom I admire on how to build a thriving business through internet marketing, creating a plan and implementing “tactics”, I recently had to step away from the noise and chatter and am going back to the basic strategies of sales & marketing in order to attract more clients, build my list and gain financial traction for my business.
It was no coincidence that I signed up to get your free online program which I absolutely loved. I’ve read your Entrepreneurial Journey before but this revised version really resonated for me especially at this point in my business. I loved the statement where you noted, “Passive revenue or what you’ve now coined leveraged income comes after you first have active revenue.” I think you’re absolutely right – this is exactly what’s missing in the 80% of entrepreneurs who are not as successful selling their products and programs and those we feel defeated and have ultimately gone back to the “security” of full-time jobs.
Keep up the great work, James!
Much love & gratitude,
Karla
Hi Karla,
Thanks! Yes – it’s been great to get this off my chest. I see a brighter alternative than the old school Internet Marketing model. And you’re right, it goes back to basics of offering a solid service… just in a new leveraged way.
It’s been great to re-connect with you.
Warmly,
James Roche
Internet marketing–and even running a business–are fairly new for me, and I’ve learned the concepts you talked about in your video over the past few years.
I agree with you, and realize I understood some of that already. For me, “passive income” was really just the ability of products to potentially generate income through online sales 24-7. But people don’t just stumble upon your site, and without the wisdom that comes from in-person work, how would I have anything valuable to put into an info product.
I like this new way of thinking about it though–maybe because it’s only a tiny shift for me. I look forward to seeing what else is new with you.
James – What if someone were to prove to you that passive income were not a myth (and I mean passive income without ebook sales and “guru” products); would you delete this post? 😉
If someone is selling you an ebook about making money that just tells you to go sell people an ebook about money, well that is of course a scam.
But info products are only one tiny aspect of passive revenue picture: You’re ignoring real estate, outsourcing arbitrage, Adsense on community sites w/ outsourced curation, driving mass traffic, outsourced offline marketing of online businesses, vacation rentals, royalties, licensing, coin-op, robotics, computer automation, equipment rentals, stocks and shares, stock photo, viral Facebook pages… to name but a few… Whoa!
All these things take some effort and skill to set up, but don’t necessarily involve working with clients, or selling, “guru status” and don’t involve trading hours for dollars. Passive revenue isn’t a myth – it’s just typically hawked by people who don’t know much about what they are talking about, and who have hopped onto the “guru info-product” bandwagon.
The part about providing real value is absolutely accurate of course, but there are countless ways to do this other than trading your time.
Alex.
Wow James thank you for the shift in thinking. There is still many people that are talking about info product and passive income. I love your idea about Leveraged Income. Thank you for your great ideas. It is all about the Value.