G'day, Troy Dean here and I just wanted to make a short video for you to talk about passive income and the fact that it doesn't exist.
I just want to debunk this myth and dispel this rumour because I've had quite a lot of emails this week and phone calls and coaching calls on Skype from budding entrepreneurs who are wanting to create an online business and when I've been digging a little bit deeper and saying okay, what is it you're trying to achieve and why? The over arching thing that I've been hearing is “well, I want to create passive income online so that I can be location independent and travel the world and live on a beach.”
That's lovely and it's a great fantasy and that's what it is, it's a fantasy. You can, let me just clear this up, you can build a business that creates a subscription based recurring revenue enough and you can put systems and processes and build a team to run that business, so that you can go and live on a beach for a week or a month or six months, no problem. You can do that, but there's nothing passive about it. I just want to explain what I mean. You know, the ultimate form of passive income might be buy a house, rent it out. You don't have to do anything. You just put tenants in there and you rent it out.
Well, even in that scenario there are things, you have to fix the hot water system when it blows up. You have to pay a real estate agent to let the place and to screen the tenants. You have to pay an accountant at the end of the year to do your tax benefits and work out your negative gearing and offset your expenses. You have to have lawyers and conveyances, draw up contracts. There's nothing passive about it. There's still work involved and you're either doing the work or you're paying other people to do the work, maintenance on the property is probably the biggest one.
In terms of passive income, I want you to refrain that to recurring revenue. This is not because I've been banging on about recurring revenue recently. The reason I'm talking about recurring revenue is for this reason. I'm trying to debunk the myth and let people know that there's no such thing as passive income, so please stop reading Tim Ferriss books and listening to Pat Flynn podcasts and think you can create passive income on the internet and go and live in Tahiti. I wish you all the best if you work out how to do that, and it truly is passive, let me know. I'd be very curious to see how you do that, because I don't think it's possible.
The only way that you can build recurring revenue in your business and build a subscription business model, is if you continue to add recurring value to your customers' lives and their businesses.
Now, the business that I'm in in the moment is running to a point where, yes, two weeks ago I spent three days in a recording studio downstairs here with a couple of mates recording three songs, I think we recorded, just for fun, because we love recording music and I wasn't in the business for three days. I just did something else, because I wanted to. On the weekend, I took a long weekend. It wasn't a long weekend, but I took a long weekend because I needed to get out of the city for a few days.
We have amazing staff, I have an amazing assistant, Gin here, who works with me in Melbourne and we have great staff, three here in Australia, three in the Philippines, who run our business and we have processes and systems in place that continue to add value to our customers' businesses every month in exchange for the recurring revenue that they pay us. That's the key distinction I want to make. The only way that you can build recurring revenue in your business and build a subscription business model, is if you continue to add recurring value to your customers' lives and their businesses.
You know, I spent two years and almost burnt out twice building this business. It's now at the point where it's almost running itself and it requires, if I'm honest, the businesses that I've got now require probably actual hands on required in the business maybe three hours a week, four hours a week, maybe. I mean I could probably do less than that, but like any garden, if you ignore it and you don't nurture it, it will eventually wither and die. I just wanted to dispel that rumor and get that, clear the air there because I really don't think there's any, we're doing anyone any favors if we continue to believe this myth, that you can create passive income on the internet.
No, there is no such thing as income that is passive. I hope that helps you in some way and I'd love you to call me crazy in the comments.