Two Lessons in Creating Passive Income – One Failure, One Success
So it’s been one year + one week since my last entry. I guess this shows that I am a horrible blogger.
I had originally planned to chronicle my journey into the creation of passive income, both successes and failures, as I experienced it, sharing lessons learned along the way. But, to be honest, I got so busy doing it that I didn’t have the time nor inclination to write about it. Yet I’ve become increasingly aware that I need an outlet to process my thoughts on what’s worked, what hasn’t, and what’s next so here I am, yet again!
I Was Drowning!
So what have I been doing for the past 372 days? A lot! After several years full of plenty of talk but little action, I can honestly say that I finally dove in to entrepreneurship with both feet. In fact, I dove in with both feet, both arms, and my torso, and was struggling to keep my head above water. I violated one of the cardinal rules I’ve heard numerous times since which is to “Focus on one thing at a time.” Instead, I began exploring a half-dozen different ventures which pulled me in too many directions and only let me dabble in each, rather than truly building one or two of them up. Here’s where I dabbled:
- Online Retail
- Premium Mobile Websites
- Web Design & Development
- Graphic Design & Marketing
- Chemistry Videos & Tutorials
I’ll write about each of these in more detail another time, but here are two lessons in creating passive income that I’ve learned.
Focus On One Thing
While most people think they’re great multi-taskers, most of us actually suck at it. Studies have repeatedly shown that your productivity, comprehension, understanding, etc. all decrease when you attempt to multi-task. Nowhere is this more true than in entrepreneurship. There aren’t enough hours in the day to devote to multiple projects, clients, employees, and ideas across multiple different businesses, especially when they’re in unrelated niches. It’s much more productive in the long run to take one idea, run with it, and see what you can make of it. Once you do this, you can then…
Focus On What Is Working
I’ve heard it said that it takes three years of full-time effort (The 1000 Day Rule) to really know if a business is going to take off. That may be true, but in my experience you can tell even sooner which ones have natural momentum and are producing results with little effort versus which ones are like pushing a boulder uphill yet producing little results. Once you’ve identified which one (or maybe two) are working it’s time to double down and cut out the others. While the first lesson was the one I was slowest to learn, this one was the hardest to learn.
It’s hard to “give up” on a business after you’ve invested hundreds of hours and thousands of dollars in it. You try to justify keeping it afloat based on the investment you’ve already made and perhaps the minor successes you’ve had, but eventually you have to decide if the results you’re getting justifies the work you’re putting in.
If it doesn’t, then move on. Better to figure it out now than spinning your wheels for months like I did…
I’ll give you two personal examples. One business I began, Central Cog Design, was primarily involved in the creation of premium mobile websites for local businesses. It only made sense to me that with a growing number of people using the internet on their smartphones and tablets that businesses need a mobile-friendly website. In fact, Google has reported that 82% of businesses do not have a mobile-friendly website and that 61% of customers who visit a non-mobile-friendly website on their smartphone or tablet leave and often head to a competitor. So I invested time researching the mobile website market and learning about mobile website development. I invested time and money hiring a full-time web developer with experience in mobile websites. I invested more time and money in creating sample websites for 40+ local businesses. I invested time and money in hiring two different people to sell mobile websites to local businesses. After untold hours and thousands of dollars I had a fantastic portfolio with dozens of examples, a company website with several functioning examples, and zero mobile-website customers. I began to try to figure out what the issues were. Was it a marketing issue? Was it a pricing issue? Was it a sales issue? I honestly think it was primarily the latter as I didn’t have experienced salespeople attempting the selling. But regardless of the reason, the fact remained that after serious hard work and thousands of dollars invested it was producing zip in the profit column.
Compare that to another business I started, GetChemistryHelp. As a chemistry professor by day, it only made sense to begin to parlay my experience in to something I already knew about – teaching chemistry. So in January 2013 I began producing short 10-15 minute video lessons on various high school and college chemistry topics and posting them on YouTube. Each is concise, clearly laid out, and includes worked-out examples. I invested a few hundred dollars in a high-quality USB microphone for recording my narration, a Wacom tablet for working out problems on the screen, and a website. I did zero marketing, other than announcing the videos in my own courses; I just produced quality content, put it on YouTube, and began to see results.
At first my visitors were mostly my own students, but as months passed I began to get comments from people I didn’t know who were thanking me for the videos and asking me to please produce more. Those hundreds of views turned in to thousands and then tens of thousands! And it wasn’t just Americans who were watching them, I’ve currently had viewers from 168 different countries! No marketing, big results. Yet despite my success with GetChemistryHelp, I continued to pour the majority of my energy and time in to other endeavors convinced that surely they would pick up. I just needed to give them more time or effort or change this or try that. But one night on my drive home as I listened to a(nother) podcast it finally sunk in that I needed to focus on what was working. Why continue hoeing the hard ground and scattering seeds, when’s there’s plenty of low-hanging fruit to be picked? Now granted, GetChemistryHelp is still going to take plenty of work before it’s really profitable (to date I’ve only made just over $200 through YouTube ad revenue), but the market is obviously there. And more importantly, it’s getting me results with little effort. As an example, over the last several months I’ve only created a half-dozen new videos, yet I continue to get thousands upon thousands of views, hundreds of new subscribers, and comments literally every day during the school year from students thanking me for my videos. Ding ding! Lesson learned.
A Tale of Two Horses
Perhaps I could have summed up everything above by simply saying: Stop banging your head against the wall and go for the open door. If you’ve got two horses and are trying to win a race, you have to focus on the one that gives you the best odds of success. Regardless of how much blood, sweat, and tears you’ve invested, at some point you have to pull the trigger on the lame horse and focus your time and energy on the one that’s thoroughbred material. Even if he’s not quite running like a thoroughbred yet, you still need to commit your limited resources to the one that’s doing more than just eating all your hay and leaving steaming piles to show for it!
How about you? Have an endeavor that you just need to put to rest, despite the countless hours and dollars invested? Or maybe you got a project that is just naturally taking off and deserves more attention? I’d love to hear about it in the comments section below!