5 Myths About Passive Income and Online Business

5 Myths About Passive Income and Online Business post image

Blog based businesses are not the majority of online business opportunities. It’s worth reminding yourself that blog-based conversations about entrepreneurship will always overrepresent ideas about blogging.

As someone who is currently earning passive income off businesses that don’t have an important blogging element, I wanted to weigh in with some alternatives to commonly held opinions in the business blogosphere.

Myth #1. Truly passive income is not possible.

Reality: It’s possible.

I hear this a lot. I’m not sure why. It’s 100% possible and I know a bunch of people, including me and my business partner who are walking proof. People have been earning passive income for milleniums. If you find yourself arguing about this point, I’d have to ask to what end? Passive income as a category is useful and it ought to be used to refer to any type of income you receive that requires minimal effort to upkeep.

As a fun blogosphere aside– anyone who has mistook the 4 Hour Work Week to advocate working for only four hours a week is due for a re-read. Those who have suggested that it is not possible nor agreeable to focus less than 4 hour per week on income generating projects or jobs that you find unpleasant needs to check their temperature.

Myth #2. Having employees is a pain in the butt, and makes it harder to run an automated business.

Reality: it’s the exact opposite.

In my experience having team members has a wide range of benefits:

  1. They make working more fun.
  2. You can help contribute to the success of others.
  3. They can run your business for you.
  4. You open yourself and your business up to more opportunities.

People might call me crazy, but I spend less than 2 hours a week on the portion of our business that generates over 90% of our income. I’m able to do it because of the great people on our team.

Myth #3. Businesses that are formulated from the beginning to be “passive income” businesses are more likely to create it.

Reality: The likelihood that an owner will be able to make passive income off of her business has more to do with the attitude and mindset, than with the structure of the business, or the processes that have put in place.

I think that the E-Myth Revisited is okay. In my view it’s the most overrated book in the business blogosphere. If you haven’t yet read it, it’s not bad, but I can sum it up for you in a sentence or two:

The E-Myth Revisited (Twice!) by Dan Andrews: “Most small business owners build a business around what they know how to do well, and since they aren’t good at the art of entrepreneurship (finding profitable streams of cash flow and scaling processes around it), they build themselves in to their businesses…. Don’t do that.”

Examples? The expert baker who can’t let go of cooking the cupcakes. The blogger who starts a blog in order to blog to make money. The architect who starts a firm and finds herself working 70 hour weeks designing homes.

Consider that the E-Myth is strongly focused on technical people or otherwise experts who endeavor to start a small business. As the barrier to entry to entrepreneurship continue to go down, a lot of people (like myself) entering the conversation stated out with no particular overwhelming expertise or technical skill. We just liked the idea of owning a business.

Value, not structure, will ultimately drive your ability to reap passive income from your businesses. If you own something valuable, and you can communicate your vision for the company to your team members, you can hit the road jack. I promise. It works.

Myth #4. A blog based business is one of the better ways to build a passive income business.

Reality: Blogs are a difficult way to grow a passive income business. Just anecdotally, I’ve met a bunch of people in the last 3 years who make passive income off of online-based businesses. I’d say off the top of my head, easily less than 10% of it is blog based.

Not only is blogging expensive, perishable, time consuming, and risky (in terms of opportunity cost) but blog based businesses depend on new, quality content. New content on great blogs is expensive to create, and if you want to keep your blog based business thriving, you’ll need to create it or find somebody who is as good as you to do so. Not impossible, but difficult.

Myth #5. Your blog is not your business.

Reality: It totally could be your business.

In general, it’s not the best idea unless you’ve got hyper niche expertise like Simon or Timothy. If your intention is to blog your way to expertise, as if often suggested you do in the blosophere, I’d take a hot second to ensure your heading somewhere valuable.

Speaking of passive income, if you really want to know about passive income, you should be checking out Pat Flynn’s blog…. In fact, Pat’s blog was the #1 most suggested blog in TMBA applications. It’s great because he shows you directly how to make money on the interwebs.

It’s odd to say that he’s the exception in this regard.

Reality: Being an exception is good.


I gotta go get on a plane to Manila. I’ll be there for a few weeks, look me up! :)



@TropicalMBA <—- I like to tweet a lot.


Published on 03.08.11
  • 100% rockin article, man.


  • perfect. Earlier this week I decided to ditch the blog on my website for those very reasons: it’s expensive, perishable, time consuming, and risky.

  • I agree to your views. Blogging and revenue generation are difficult, i suggest we should rather mantain a healthy blog, be connected to our tribe and use it as a launch vehicle for our biz…

  • Myth 2 is the big one for me … I could not imagine trying to grow a business on my own, it would be boring and bloody hard. I have tried it in the past and lost focus very quickly (I have entrepreneur A.D.D) Like you said Dan they make it more fun, but also provide that motivation that someone lazy like myself sometimes needs. It always helps having people around me that are smarter than me … most of my stupid ideas get filtered out ;)

    Not to mention the fact that it feels bloody cool to be having a positive input in their lives.

    I have heard many people say keep expenses, stress / hassles, etc low by going it alone. I just don’t get that.

  • Hey Dan,

    Thanks for the tips, I’m a big fan of your work. I kicked off a blog a little while back because I wanted to learn what it takes to get online. Unfortunately my business brain hasn’t kicked in yet and I still don’t have a great idea to run with… I’m hoping something will crystalise eventually, but in the meantime it’s nice to be inspired by people like yourself.

    P.S. Gotta agree that Pat Flynn is a legend!

  • Ahoy there Dan,

    Would you say that Pat’s SPI blog is a big success because he had his other blog on how to pass ‘that’ exam? (I’ve forgot what it’s called exactly)

    He leverages of his first non-blog success a fair bit, not taking anything away from Pat, I think he’s kicking arse, but it seems he had a non-blog first (real value)


    Did I miss something?

    #BallaBalla #WhenDidYouGoMainstrem?

  • Dan

    Yeah that and a bunch of other income streams like his iPhone apps and eHow articles… he actually shows people how he does it consistently, and clearly, and I can’t say I know anyone else who is doing that…. I think that exceptional quality is what makes him so successful. Yeah, and also he’s awesome. That helps.

  • Dan

    Thanks Shaun. I’m not good at coming up with business ideas really, I just like to work with people that’s how most of my opportunities come up.

  • Dan

    Totally agreed. Even y-combinator looks harshly at a business that only has one founder, and I think for good reason.

  • Dan

    Word. I like “launch vehicle.” Way cooler than “blog.” :)

  • Dan


  • Dan

    thank you sir!

  • You’re 100% right about blogging! I have created sites that within 7 months are making $350+ a month consistently. EOD is going on 9 months old and I have made a little, but it’s not consistent at all.

    Blogging is for the long haul and I really like your comment about the opportunity cost of it because it is risky in terms of the “hidden” costs.

  • Dan


  • Dan

    hahaa I ain’t got shaz goin’ just a joke.

  • Just discovered your blog now and added in my reader. I’m myself a tropical entrepreneur :-) based in Jakarta at the moment. I’ll be in Manila for one day around April 20. It would be cool to meet up, if you’re up for it. Let me know!

  • Dan

    Hey fantastic thanks for reading the blog. Very small chance I’ll be in Manila at that time due to having to run over to Bali, but check in just in case. !! Would be interested to meet up and learn more about your business.

  • I’m at mid hundreds in passive income right now; not yet a job replacer yet, the money helps. :)

  • Dan

    Yeah buddy. ANY passive income is good income. :)

  • passive income

    Great job explaining, Passive income is beginning to be an internet craze. Sometimes people define it pretty loosely (like when I suggest that a blog can generate passive income). This often leads to some confusion about what is passive income.

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