E204 | Let's Talk Passive Revenue

On episode 204 I wanted to summarize my thoughts on what the idea of 'passive income' really is.  Don't fall into the trap of passive revenue without work.  It simply does not exist.

Episode Transcription:

Hey, what's going on, guys? Doc Danny here with the PT Entrepreneur Podcast and I just got back from a trip I was in Chicago, which by the way, Chicago in the summer is fantastic. If you guys haven't been to Chicago in the summer, you have to go, man. It's just, and it's such a cool city. I've been in, I've been there quite a few times in different seasons.

And the summer is the time to go. The winter can be rough. The windy city is, it's how it gets. Got his nickname for sure. By being true. It's freezing. It can be super windy. But in the summer, man, it's beautiful. The Lake right there, it looks like, like the ocean. Or some serene beaches. There's some amazing, you know, parks and museums for the kids, which is a lot of what we did.

And it's just so cool to get a chance to, you know, take a trip like that. Shore kids, you know, this area in the US and we have some family up there that we get a chance to, to visit with,  as well, which is, which is fantastic. And, and being there for the 4th of July, I'll tell you what, being there for the 4th of July, Maybe one of my favorite experiences I've ever had. And here's, I'll kind of explain this to you, and then we'll get into what I want to talk about today. But this was, this was a super cool moment for me. My brother-in-law, they live in the Lake view area, just kind of North of downtown. And, they, they live in a, a condo.

And it's, I think it's maybe six stories, seven stories. Does that mean like that anyway, but on the top, they have a, they have a rooftop deck for the, for the building and everything else around there is the height of their building or a little bit, a little bit shorter. So we're able to see down to downtown and all the way, to all the surrounding suburbs as well.

And around like 8:30, 8:45, the sun started going down, and it got dark. All of a sudden, there were just. So many fireworks, like 360-degree fireworks everywhere. And it was crazy to see this went on for a man. We were up there for probably 30 40 minutes. I'm sitting there with our, with our kids and my brother in law and his wife, and Ashley, and it was just awesome.

And it sort of, I asked my son on the flight home, I said, Hey Jack, what was your favorite part of. Go on in Chicago, and he said, sitting at the rooftop deck, with us watching the Watson, the fireworks, and it was just super cool to see. Fireworks are fantastic regardless of whether you're a little kid or you're my age or whatever, and fireworks are cool.

But to see that many fireworks, I'm talking like so many, I've never seen so many fireworks in my life and for to go on for a straight 30 minute period that we were up there like nonstop there. Just go and go and go and go in. And it just, it's crazy to think a city that city is enormous, but just how many people are shooting off fireworks at the same time?

How many people are watching those fireworks? And to be able to have that opportunity to, you know, to be there with my son and my daughter and our family and. And be able to have a memory that I'm sure for them is going to be something that they remember, for a very long time. And, and, and that's the cool part of travel, in my opinion.

It's not like, and I don't know, you don't have to go to these amazing, I don't have to take my kids to Lake Como for them to, you know, be able to have this cool moment in their life. Like it could be as simple as a trip to Chicago to watch the fireworks or whatever it might be. But yeah. This brings me around to what I want to talk about today, which I'm excited to talk about, and also don't want to rant about this too much necessarily.

But it's just this idea of passive income. And I'm going to, and I'm going to talk about this for a second because, I get a lot of questions about this and, and I think that, I believe that the messaging that people typically get, on social media is this idea of the generation of passive income. It is incredibly important.

And I agree in, in, in one sense, it's super important to passive income. And let me put it in two buckets. There's an active income where you're actively working and getting paid for something that you've done. And then there's passive income where the money comes in, but you're not necessarily doing anything.

So. Historically, this has been things like real estate, investment, in real estate. So whether you're renting that stuff out or it's commercial, and you're, you're renting to tenants, or it could be the investments. So you're investing in some sort of stock or mutual fund that provides a dividend, and that dividend is paid to you.

And it's mostly a percentage of their earnings, and it's, it's paid to you, but you're not necessarily like working for that company. And it's passive. And would say the last form, and this is much rarer, is, to build a business and then be able to take a step entirely, fully away from that business, and it just runs on autopilot.

You know, in perpetuity really, as long as, as long as the other people around within the company. And, you just basically take a step away, you still own it and you, you generate passive revenue, from, from that, or I guess the last part would be a pension. You know, there's, the army has a pension. Then, the group that my brother in law works for, which is a big consulting firm, has a pension.

Now that's a variation of passive income as well. So they're not necessarily working on getting that income. They're getting paid for it without having to go and do something. So here's where I bring this back. Like, while we're gone, you know, and on vacation, we're in Chicago for about four days. Was our business still running, right?

Our, our, our company's still open. We're again seeing patients are still revenue coming in. They're still. Revenue going out with, with us paying salaries and payroll and all those things as well. So our company is again running when we're not there, which is a massive step for us to be able to get to that point.

But we're still very actively involved in it and that, so I can't, that company is not a passive revenue entity. Now the other company that I own, which is a lot more digitally based, the same thing, it's, it's not passive. It's, it's just. Active, but I can be engaged in that company in several different places.

So meaning I could work forty hours a week, but I could do that while we're in Chicago visiting my brother in law. But it's not genuinely active. It's just a different, and it's a, it's not passive. It's a different form of operating revenue. Now, the questions I get, and I get this primarily. From students and younger PT students and PTs that are just like under 30, let's put it that way.

So, and, and, I guess I'm technically a millennial millennial. I'm like at the very front end of it, I think. So I, not just, not to pigeonhole the middle millennial population, but I believe that they have a different view of, of—the world. And I don't think it's a bad thing. I believe that you know, and, and I, and I, I see some of this myself.

I have some similar similarities. Like, you know, travel's essential to them. Experiences are vital to them. Freedom of time is necessary, as well. Some people view it as laziness, honestly. Like I have a lot of colleagues that are very, very frustrated with millennial employees, and they have a hard time motivating them.

They, they, they feel like. They will always want more, but don't want to be there, or do the work. And, and that I guess in some cases is true. And especially with like questions, I get, especially from students. I get this probably once a week. I get an email that'll say something to this respect.

Hey, Danny, I'm in school right now as a student. I'm trying to figure out a way where I can generate some passive revenue while I'm in school. What are your thoughts on what I can do? And I'm like, dude, that's a loaded question. First of all, you're in school. Like you graduate early. If you want to do something while you're in school, you probably need to work on something.

That is going to be active. Like you don't have any money. You don't have a business. You know, and you, you don't, I mean, I'm assuming own any real estate, and if you did, you probably didn't buy it. You were perhaps given it because you're in school and you don't have a lot of money. So. The idea of developing passive revenue while you're a student or very young, isn't, is incredibly rare.

And, and it would be tough to do. Active revenue is something that anybody can do. And it's, you know, putting work in to. Generate revenue and then taking that revenue and putting it into things that then generate your passive income. So this is what, this is what I want you to to understand is this, this idea of, Oh, I can just create this ebook and put it online and then people will buy it while I'm asleep.

That does happen in some cases, but it's scarce. And not only that, the person that's doing that as probably spent a long time building a reputation, social platform, potentially big email list. It doesn't happen overnight, and it's a lot of work. I can tell you, cause I've gone through it like. It's a ton of work.

It's harder, in my opinion, to build a digital business that then you could sell like a $49 ebook or something like that, or a $100 ebook. It's harder to do that than it is to, as a student, get a job. It is a personal trainer. You know, and learn some skills about one-on-one interactions, selling and coaching people that would then transfer well into something like a cash-based practice when you graduated.

Right? So like there's an excellent example of something you could do that's active, not necessarily passive in this, this whole idea of this sort of sexy laptop lifestyle. Listen, if you want to go that route, that's fine, but you're still actively working no matter where you go. Understand that you can't just like.

Unplug early on in a business and expect that there's going to be this constant stream of revenue coming in. Unless you've gotten good at digital ads, driving traffic, converting, and fulfilling on that, and you've built a team that's helping you do that, then you can take a step back. But that doesn't happen overnight.

That takes years. And then you also haven't had to have the expertise to be able to then share with people to where they're willing to give you money for a result that you can hopefully get them. Now, what I see more than anything, probably drives this question in this conversation is if you're on social media, you can't help but be bombarded by all of these people that want nothing more than to sell you this fabricated idea that you can just be a, have passive revenue and go, you know, live.

I was don't know, in Aruba. And not have to do anything. And you wake up every morning, and there are another thousand dollars in your bank account, like the only people that are making money, in that fashion are the people that are selling you the same crap that doesn't work the way that they say that it does.

They're slick marketers that are selling you this idea of a passive lifestyle that doesn't exist. And I can tell you, having been involved in local brick and mortar masterminds, digital masterminds, just business groups in general with lots of people that I've had interactions with now, hundreds of entrepreneurs within brick and mortar and digital.

They bust their fucking ass and realize that like. They work hard, and they work a lot more hours than somebody that's employed, and they do it at odd times in many cases. Odd times. It's Sunday at eight 30 in the morning. My kids are watching ducktails, and I'm doing this podcast because I have to get one out before a Tuesday or Thursday, whichever one's just coming out this week, and I'm doing this.

This is technical, this technology works, right? I'm working. You're probably. Sleeping or running or doing something else that doesn't involve that. So this idea of passive revenue for no work is. Not true. It's irrational, and it's not something that is, it's not something you should try to get wrapped up and gets a waste of your time, and you're going to spend, you're going to spend a bunch of money trying to learn things that some savvy marketers would like, nothing more than you to buy.

They make money off of and don't care. What the hell happens to you. Don't care at all. Right? And what I'm telling you is I do care. I care that you're able to build the life that you want. You're ready to support your family, and then you're able to develop financial security throughout a period, especially as you get out of school.

It comes down to, you know, getting out of school, securing a position, taking the money from that to help build your, your emergency savings funds. Paying student loan debt down, buying a house, if you, if you so choose to do that, investing in a, you know, let's say a duplex, you live in one half, and you rent the other half out, and then we call that house hacking, and now you've decreased your monthly, expenditure.

You're taking that additional money, and you're putting it into other things that are investments, but you really, the path that you have that works is work. Take that money and put it into something that is going to work for you. Whether that. Whether that be real estate investing in different, you know, companies, mutual funds, whatever, variations of life insurance.

There's a lot of different things you can do to do a whole other podcast on investing in something that you can put your money in. Or maybe you shouldn't put your money in, but you can't get away from the fact that you have to do the damn work. Like I. Am not going to respond to another email telling somebody, Hey, you have to work.

I know that maybe you don't want to work and you just want to go to Bali because this is what you see. These people that are selling you this idea that, Hey, you can be live this laptop lifestyle, work four hours a week and, and never have to do anything that you know, that you don't like ever again.

That's just ridiculous. Like, seriously, think about that. If that was the case if that was honestly the case, why wouldn't everybody do that? Why wouldn't everybody work four hours a week, make $200,000 a year, and then just live wherever the hell they want and, and, and wake up whenever they want and be around whoever they wish to and the, that lifestyle, unless you have a trust fund, doesn't freaking exist.

And not only that, let's put this in perspective. If that were the case, you would be a sad, unhappy person. You would be miserable, challenging to be around. I don't know if you've ever been around somebody that has a shitload of money that didn't earn it. I've been around people that have trust funds, and they are miserable people to be around.

I can't stand it. The first CrossFit gym that I went here in Atlanta was owned by a guy who is like, and he's the heir to a company that's worth billions, billions now in millions, billions, and his mate, one of the. Most unhappy, oddest human beings I've ever been around in my life. He's never had to work for a single thing.

He's never had any struggle. He's never had any, any desire to achieve something higher than what he doesn't need to. He, he's got all the money he would ever need in the world. He can go anywhere he wants on their private jet. Like he doesn't, he doesn't earn any of that. And because of that, he has this no feeling of, you know, having achieved something.

There's no satisfaction there, you know? And for us, with our company, I'm not worth billions by any means. Like this guy, I'll never, I'll never have the financial security that his family has, but I'll tell you this much. I'm a lot happier because I've found something that I enjoy working on.

I look forward to working on it.

 

And when you actually can match up a thing that you enjoy. And try to get better at every single day with the job that provides a lifestyle for you and your family and, and, you know, allows you to pay your mortgage and put your kids into a school and food and, and, and fresh experiences with them and whatever else it is that you're interested in, and you can match those things up.

It's amazing. And it's, it's my favorite part of entrepreneurship, but this idea of passive revenue without work is utter bullshit. And if you believe it, you're going to get suckered into buying some stupid course that teaches you stuff that doesn't work. And I'm sorry to tell you that, but that's the truth.

If you think that you don't need to work and you can just generate money that comes in, you're mistaken and I, and you're going to learn it either by hearing me say it, or you're going to learn it the hard way. By investing your money into something that doesn't pan out for you, and you're going to get frustrated, you know?

And, and I know I, I. I understand. I've gone down the same route thinking, Oh yeah, this is all I have to do, and generate passive revenue and passive revenue, passive income, passive revenue. How many times does he fucking passive revenue on social media over and over and over and over again? If you want passive revenue, work your ass off.

Take that money and put it into investments that have been shown to generate passive revenue. And then once your passive income meets your monthly expenses, you're financially free. Now that might take a long time. Here. Here's, let's go back to this idea of pensions. So here, here's what I want you to think about.

Do you think I joined the army, and after a couple of years, they just gave me a pension? No, that's not how it works. You need to be in the army or any military branch for 20 years to get a premium, and that's 50% of your base salary. After 20 years it is what you get. Right. So my dad retired, tired at, I think 24 years in 25 years the, in the army, he has a pension.

Now that pension technically is passive revenue, but for 25 years, he was in the army moving all over the world. You know, I lived in nine different places before I was in high school. I mean, college. We ran a ton. He was away from us a lot because of training, and it's not a comfortable lifestyle. You earn it.

My brother in law works for a big consulting firm. If you make partner, you have a pension. Now to make a partner is very rare. It's also something that requires a ton of work. So here's what I want you to think about with my brother in law, who is trying to make partner, he's on a track to try to make partner, and it's not even guaranteed.

He travels every single week. He gets on a plane, usually Monday morning. Or Sunday night, depending on where they're going, but let's say Monday morning, the at right now, he's on a project in Seattle, so he flies from Chicago to Seattle. Monday morning, he gets there. He drives two hours to the area where he's working with the company that he's gotten on a project with over that day through Thursday.

So in four days, he has to bill 45 hours of work, 45 hours of work on-site. That doesn't include meetings that they're doing off-site. That doesn't include travel time. To the job site or away or away from it. And on Fridays, they have meetings that take up a majority of the day to make sure they're on the same page for the next coming week.

And it's very reasonable for him to be working quite a bit on the weekends. Now he's done this for years, so when we calculate it out, I mean, you're talking probably a solid 60 to 70 hours a week that he's working right now. 60 to 70 hours per week is what he's working. Now. You do that for man, 15 years.

Maybe you make a partner, and maybe, perhaps you don't. Maybe you get to a certain level, and they say, look, I just don't think you're partner material. Now you can hang with us if you want, and you can stay in this role, but you're never going to progress past that. So this, this elusive pension and passive revenue, never get achieved by many people that are employed at these big consulting firms.

And he bought, he works his ass off. I've got a lot of respect for him and what he's doing right now and what he's trying to accomplish. And you know, it's a time burden. He doesn't see his family that, as much as he would like to. But he's working towards this big goal that he has and achievement. But it's work.

It's not just passive. It's a shit load of work. So when I get students that come out or new PTs, there's like, well, I don't want to work this many hours, or you just want to generate passive revenue, or like, do, what the fuck are you even talking about? Spend one week with my brother-in-law, spend one week with me and see if you can keep up if you want to go that route.

Put the time in, and let's see if you can handle it. Let's see if you can do it and if you work hard, but you can do all kinds of cool stuff, but you can't work and then expect to make passive revenue in any capacity. It's silly, and it's a crazy thing to think about is the fact that we answer these questions.

It just goes to show you the level of which marketers can manipulate people via social media. It's, it's, it's exciting. You can do it both positively and negatively. I hope the things that we talk about are positive. You know, I teach people how to develop cash-based practices. You know, is there an element of, digital, to that?

Sure. We use digital marketing for content. You know, putting that out there, lead generation, following up with people, becoming a, a presence in the community. You know, and, and authority in, in the city. But don't get me wrong, like you want to do this, it's going to be a lot of work. And there are some inherent risks too.

Like you just, it is what it is. If, if there wasn't risk, why wouldn't everybody do it? Do you know? Or maybe people just don't want to do it. They want to just kind of work part-time and find themselves in the world. I don't know what the hell you're trying to do, but like, you're going just to be broke.

And if you want to develop passive revenue, you have to work your butt off, make a good living, invest that stuff into things that create passive income. Historically. And then build it to a point in which you, you have your passive revenue meeting, your monthly expenses, and then you have financial freedom.

And then from there, what are you going to do? Let's, let's actually, let's, let's put this in play for a second. What, what are you going to do if you have financial freedom for me. It would be the same damn thing I'm doing right now. That's it. It's a, and it's a win. Awesome. I hit the fricking lottery. I get to do the thing that I like to do anyway with no matter how much money I had.

It wouldn't matter to me. I would still do the same thing. Now, what would you do? What'd you just travel a whole bunch? Well, eventually, you're going to get tired of that. Oh, it's fantastic for some time. Right. And then everybody, I'd assume, gets like this. You're on vacation for a couple of weeks, you know?

And you're like, man, I'm just looking forward to getting back in my routine. You know, looking forward to cooking my food. I'm looking forward to sleep in my bed.

I'm looking forward to training in my gym, you know, and or the gym that I'm a part of. And I'm looking forward to getting back to that.

 

And also meaningful work that I get to do day in and day out. I get to do every single week helping people, seeing people achieve transformations in their life. That's what we get a chance to do. Why would you want sh why would you want to run away from that? Why would you wish not to be able to do that with people?

Now I get that we want to work-life balance. I'm all for that. But if you think that just traveling around the world endlessly while passive revenue comes in is what's going to fulfill you. I think you're wrong. I think you're wrong, especially whenever you have kids. When you have kids, things are different.

I get excited about playgrounds now. I got so excited about this playground in Chicago. It's called Maggie Daley park. I'm telling you if you have kids, it's worth a trip to Chicago just to see this park. It's amazing. Now I'm a 34-year-old man telling you how excited I am about a kid's playground, not for me because I get to watch my kids have a fantastic time at this super cool park in a city that I enjoy visiting as my priorities have changed.

After having kids after starting a business after doing lots of things. And if you do not find fulfillment in what you're doing, you're going to be inherently unhappy. You know, and work is not a bad thing. Work is a good thing, you know, working towards something that you believe in—working with people that you're excited to get up in the morning and help.

Like, we're so fortunate, we're so lucky that we have a career that allows us to have an impact on people, see that direction and be a part of bettering their life. And if you want to sit on a computer and you know, just type some, some random shit into a funnel and then only hope that it's going to.

Generate you a bunch of money, and then that's going to make you happy because then you can do these other things you want to do. No, you should just do these other things that you want to do and figure out how to support yourself doing that if that's really what you think makes you happy. But if you want a school to get a doctorate for seven years and then you know you want to be a river guide, like.

Okay. That's cool, man. It's a massive waste of your time and time and money. But if that's what you like, do it, but it's still fricking work. It's still working. It's, you can't get away from it. So this whole idea of passive income, I want you guys to reframe it. And look at less active income. Let me put it that way.

Like, can you do things that don't require you directly in personal people? For sure. There are lots of things you can do like that, you know, whether it be marketing or it is social media, or it's programming for people, or you know, maybe it's telehealth. You work in a variation like that that allows you to have some flexibility from where you work

.

I'm all for that. I think that's a. The, the direction our profession is going and needs to go to fulfill this—this need not necessarily be in the office every single day. And I'm, I'm all for that. But that still works is still just less operating revenue versus straight passive. And understand and remember that actual passive income is either a pension, which you busted your ass to get.

It's real estate, which you've had to. Either save up to buy and then renovate, or maybe you time the market. Right. That's speculation. And it increases. Right? And, but you're getting cash flow each month, which is the excess between rent. And what your expenses are. So your mortgage and the actual management fees of the, of the property, if you have them, the difference there is cashflow, right?

So if you have that cash flow each month, that's mostly passive revenue sort of until, you know, you have to answer a call in the morning cause the air conditioner went out, and you know, and maybe you have a management team that. It takes, you know, care of all that stuff, but they're getting a percentage of what you make each month. You have to have X amount of rental houses or multifamily units or whatever it might be to get to a point whenever you can take that cash flow from the real estate that you have, and it replaces your monthly income.

Or you could just have meager monthly expenses, and that will happen much, much faster. And then the last way would be to build a business, take a step. Entirely away from that business or sell that business and make that money that you've gotten from selling and, or taking action back and then reinvested in things that develop more passive income on top of that.

So that's the option that you have to develop both time and financial freedom truly. And none of them happen quickly—none of them. And the challenge in many ways is, is the ability to be patient and think like, dude, and you're, you're 25 years old. You got along freaking time, 25 years old, you know, get good at something first.

Like, become an excellent clinician first. You just do that. Commit to being an excellent clinician. A lot of really amazing things will happen to you. You know, a lot of opportunities will come your way. You know, a lot of ways to better yourself. And, and a lot of opportunities outside of just the clinic will start to present themselves.

So focus on something that you can inherently control. Don't get caught up in the digital marketing, you know, slick, ads that are, that are out there that are, you know. I make $300,000 a month while I'm, while I'm lying in bed like, okay, cool man. Maybe you do do that. But you do that by teaching people how to do things.

They don't work and, and you're, you know, you're just sleazy. And it's something that, I hate to say it, but there's just a lot of that out there. So just be aware of it. If it looks too good to be true, it's probably too good to be true—so hard work and working towards getting better at something.

I guess it's not the coolest thing in the world. But it's if it satisfies you if you like what you do, I mean, it's just, it is a meaningful existence, a useful life. It's a significant thing that you get to do that we're very fortunate to be able to do and get paid for. So keep that in mind—passive revenue.

If you send me a passive revenue email and you ask me how to make passive revenue, I'm going just to send you the link to this podcast because Forget it. You know, like, forget this idea of I'm six months out of school. I need passive revenue. Dude. You've got to do it the ways that work. So listen to the podcast again, if you need to.

If you, if you've been suckered into some of this stuff that's out there about, you know, developing online businesses that generate all this money for you, and you don't have to work a whole lot. Let's just, dude, I'm sorry. It sucks, but it happens. You got duped by somebody and now you know, it's just not true.

So this is my rant on passive revenue. You've got to work. Don't be fucking lazy. You've got to work. It's that simple. Everybody. Everybody works. It's just a matter of can you find that thing that matches up what you love doing with the work that you're doing? And then it doesn't feel like work. It feels like a hobby.

It feels amazing. It's, it's, it's fun. It's fun. And that's what we have to chase. Not a story. Passive revenue. And if you do it right, you'll have passive income, but it will take some time to develop. So, guys, that's it. Thanks for the questions. If you liked this one, share it. You know, if you know somebody that you feel like is getting suckered into the same trap of like trying to figure out how to sell their $29 ebook on, you know, whatever for a while while they're sleeping and it's just not working, and they're getting frustrated.

Having listened to this and got some real advice from somebody that's actually in it, that's done it, that's doing it right now, and I'm telling you, it's just less active forms of revenue then than passive income is a better way. To look at it. You share it with a friend. Tag me on Instagram stories. If you like this one, take a picture of it, tag me in it, I'll repost it.

I appreciate you guys doing that, and as always, guys have fun. We'll talk to you next time.

Do you want more cash, PT, biz help? If so, get a copy of my book. Fuck insurance. It's your playbook—so successful performance, PT practice, and never having to deal with insurance again. You can get a free copy at Finsurancebook.com that's Finsurancebook.com. Inside this book, you'll learn the direct techniques that we've used to become one of the fastest 100% cash PT practices in the country.

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