The Myth of Passive Income

passive incomeWe keep hearing about and seeing ads for this thing called “passive income”. There is a big misunderstanding about passive income, what it is, and how to get it. The first thing is to learn to distinguish between passive income and leveraged income.

Passive income is where you do not do a single thing and money just keeps coming in. The only real examples I can think of would be things like real estate and the stock market. Even with those, you will be required to make some sort of initial ¬†investment in order to leverage the properties and the stocks. ¬†But, once the investment is made, the income will be passive. It is not without risk, but it won’t require day to day management. Most of us would like to have this sort of income coming in.

So, what is leveraged income? Leveraged income, to my way of thinking, is when you are able to generate income on an ongoing basis from work done previously. Examples might include things like writing a book. If the book sells well, you write it once and sales come in. You get royalties. Same thing for writing a hit song. You write the song once. If the right people pick it up, the artist records it, and the song becomes a hit, you will be making money for a good while.

Another example of leveraged income is what we do in network marketing.

We put in the work to do two things:

  1. Get customers
  2. Build a team of customer gatherers.

The key is that we DO the work. Then, as customers order, we continue to get paid. This is where the leverage comes in. As our team gathers customers, and those customers order, we continue to receive commissions over the lifetime of those orders.

This income is not passive. We need to actively collect customers and build a team in order to tap in to this income. This income is leveraged because we are able to get paid over and over again for work we did previously. This income is leveraged because we are able to get paid on the work our team members do as they build their business.

I have been participating in leveraged income for over 20 years. Initially, my income was based on financial services I sold for a company in Houston. I would work to close the deal and I would then receive commissions for as long as that customer was active with the company. In some cases, I received ongoing monthly commissions for years after the initial deal was done.

These days, I apply that same concept in the network marketing world. I provide services that network marketers use to advertise, build their lists, follow up with prospects, and close more sales.

I show travelers how to save money on hotels, rental cars, resorts, etc… and I get paid every time they pay less.

In each of these cases, I’m actually doing the work to get the customers, so I don’t consider this to be passive income. But the fact that I can leverage internet capabilities and team efforts to be paid on an ongoing basis is why I refer to this as leveraged income.

Brian Rooney
http://iambrianrooney.com

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