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Welcome to episode 18 – The Leverage Ladder – When Does It Make Sense To Skip Ahead To Passive Income
If you haven’t listened to episode 17 yet I definitely recommend listening to that first. In that episode I talked about growing your business and when it makes sense to start working on passive income.
Notice I said “start working on” because it will take work!
We talked before about what you need to make passive income and it’s not just a product to sell.
For it to be worth your time and for you to make what most people would consider a salary rather than some pocket money you need:
- You need to know your stuff well enough so that you can create a high quality product that you know for sure your clients will be able to follow (without you if it’s passive) and get results from. (Strong Process)
- You need to have strong enough marketing and sales skills so that you can sell this product. It will be harder to sell than anything personalized. (Good Online Marketing & Sales Skills)
- Then you need people to sell the product to and if you don’t have a community of people that know like and trust you already you are going to need to pay for traffic and the traffic will need to be warmed up (People)
And remember the lower the price point is of what you are offering the smaller amount of wiggle room you will have to be able to make a sale at a profit. And generally our prices increase as we have more experience.
That said, there are some cases where you just get to skip ahead – hooray!
So when can you just skip ahead to passive income?
When you’re in one of the following positions:
- You have really solid skills on online marketing funnels already.
- You’ve built an audience already, preferably in the thousands so you have people already interested.
- You’ve got enough money to pay for someone to handle your sales funnel and manage your traffic. Meaning you don’t have to rely on your own ability to sell or the numbers of people you have already.
Let’s look at that in more detail.
In all of these cases you have one of the important factors of process, sales skills or people handled – you have the people to buy it already, or you have the skills required to get the people, or you can pay for the skills to get the people.
Unfortunately the one you have handled already can’t be your process because even if you know it well enough to create a stellar product is not going to cut the mustard.
Creating an amazing product is one thing but you have to get people to buy it.
In other words if you are starting a new business with a passive income product like an ecourse you really are making it hard work on yourself. You spend months creating it only to then have no one to sell it to.
And that’s the thing that most of these marketers are forgetting, maybe you really can create something amazing but you are only getting a return on investment on the time you spent creating it if you can sell enough to make it worthwhile.
Remember the smaller the amount of support your product has, the less you can charge and the less you charge the less available funds you have to be able to spend on marketing to sell it. Meaning you are in a difficult position when it comes to making sales.
Your time and energy and financial resources are finite when you are in startup mode so you definitely want to be doing something that’s going to make money.
Passive income is great, but you do want to limit your risk
When you are ready passive income through ecourses or memberships or other leveraged products is a wonderful thing.
If you do have online marketing experience already, an audience already or funds to pay a funnel/traffic expert that’s wonderful.
If you are going the route that probably 99% of us are, which is moving up the Leverage Ladder from one on one to group to ecourse to more leveraged products, I would invite you to limit your risk.
The way to really limit the risk is to continue to sell your less leveraged products while you are getting your new leveraged product off the ground.
If you decide not to sell anything else you can end up in a cash flow crisis.
So what’s the key message here?
Passive income is difficult to achieve from the get go, but if you have the audience, the sales skills or the cash to make it happen you can start with it.
I still believe the best path to start your business is with one on one and to move up the Leverage Ladder keeping at least a few products available all the time as you move up. Don’t rely on one product.
What do you think?
Are you looking to create passive income?
Have you done it before? How did it go for you?