Today, I have a guest post from Marcus Garrett. Enjoy
To understand what works, it’s helpful to know what fails. Here are some popular passive income streams recommended online that fail more often than they succeed. Let’s start with the first passive income tips that fail.
Popular Side Hustle Fail #1: Multi-Level Marketing (MLM)
Like the road to hell, most MLMs start with the best intentions. I once sold knives door-to-door for one popular MLM company. Please don’t question my authority on trying MLM schemes, scams, and sou sous. Be careful; as our financial struggles increase due to the pandemic, stock market, or economy, financial opportunists will arrive across the internet like a plague of locusts carried on a desert wind!
If you’re going to try one, which I do not advise, then make sure you’re not anywhere on the list besides #1. I’d continue to caution you against it, but I feel that trying (and failing) at an MLM is a right of passage for our first step into personal finances. If I continue to advise against it, I’ll indeed be called a “hater” by someone trying to sell us tummy tea, penny stock, or whatever the latest online gimmick is this week. MLMs know many names. But they only have one outcome: failure.
To be clear, MLMs work if you’re the first person in line. Statistically, MLMs leave only the first person wealthy. When it comes to MLMs, an easy mantra to remember is: the first one gets the bag. The last one gets left holding the bag.
Popular Side Hustle Fail #2: Blog Writer
Let me explain!
This guy is writing a blog about blog writing not working?! I can hear the collective keys of a thousand angry bloggers amassing around the web to aim for my blogger’s heart. In the words of brother Thanos, I would warn these writers, “You should have gone for the head.”
Anyone can start a blog. It only takes about 5 to 15 minutes. There are millions of bloggers making zero-point-zero dollars a year. People ignore all these money-losing blogs for the few exceptions that make money.
Who am I to talk?
I’ve been writing online since MySpace. For the young and uninitiated, MySpace was this strange online platform pre-dating TikTok. In this online wild wild west online, people judged the worthiness of their friends by classifying them as good enough or not worthy enough to be in their “Top 8.” In this genesis of the vapid social media we all collectively take for granted now, yours truly kicked, clawed, and climbed his way out.
Eventually, I emerged as the online writer you all (well, some of you) know and love today. All my life, I had to fight!
Eventually, I moved over to WordPress and started my illustrious blogging career. This is my confession. I’ve never made much money directly from blogging. Blogging has led to many lucrative online and offline opportunities. However, very rarely have I written a blog and immediately reaped wealth and riches as soon as I hit publish.
To be fair, I know bloggers that have made thousands, even millions of dollars. But just because I know people hit the lottery doesn’t mean I recommend it as your primary investment strategy.
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Do this instead: A lot of online blogging advice makes it seem like you set up a blog on Monday, and by Friday, you’re rich. In reality, money only comes before work in the dictionary.
You can make a lot of money blogging if you’ve answered these questions: why am I writing? How are you going to make money? Who is your target audience? Why should your target audience pay you (versus another expert)?
If you have not answered these questions first, you rarely make a lot of money just because you’re a nice person and people like reading what you write. You can see why this is a side hustle failure. The main question you must answer is, “Why should people give you money?” If you only focus on the writing, you’ll have a lot of readers, but you won’t have a lot of payers (not that there’s anything wrong with that).
Popular Side Hustle Fail #3: Instagram Influencer
Social capital is very important.
I’m on my second Instagram account. I’m closing in on a few thousand followers. To date, Instagram doesn’t directly make money. It has, however, led to money. I consider Instagram a lead magnet to money, not a money-maker itself. Allow me to explain the difference.
- Money-Maker: A few years ago, there was a viral story about a woman with 2 million Instagram followers that couldn’t meet a social campaign contract to sell 36 T-shirts. Social capital matters, but always remember you can’t pay your bills in Instagram followers.
Do not confuse a follower for a paying customer. Your paying customers may be within your followers. You need both, but you must differentiate between a follower and a payer to make money.
- Lead Magnet: Common Interest grows like Compound Interest. Your reputation as a leader or expert grows as your online influence grows (usually measured by engagement or number of followers). Affiliates, partners, and people generally like to see that you have an online presence.
The mistake too many people assume is a large following equals a large bank account. You can be social media-rich and bank account broke, especially with the mirage many “influencers.”
Do this instead: Use the numbers and behind-the-scenes data to your favor. Facebook/Instagram has a lot of great metrics that most people ignore. If you want to make money online, you (or someone you hire) need to use the data to drive your business- and money-making strategy.
For example, until my Instagram reaches 10,000 followers, I don’t plan to monetize. I don’t even worry about it. For now, our strategy is simply to focus on growth. Why? Because that’s what the data told our team.
We know that the view-to-buy rate and natural dropoff gets us down to only 4-10 percent. That’s a lot of real effort only to reach 4 percent of our audience. For instance, for every 1,000 followers, the industry math typically looks something like this:
- 30% open/view (300)
- 10% click your product/link (30)
- 4-10% pay/buy (1 – 3)
If you’ve spent hundreds or thousands of dollars/hours on a social campaign to reach 1 to 3 potential buyers, your product better cost hundreds or thousands of dollars to justify the return on investment. Lesson learned? Use data, not emotions, to drive your online business decisions.
The Passive Income and Side Hustles that Work
When I was in my 20s, two different bosses gave me two pieces of great advice that I immediately ignored:
- “It’s always easy for the person that doesn’t have to do the work.”
- “You have to work hard to get to a place where it looks like you hardly work.”
The only side hustle that worked? A combination of all of the above. As you can see, any of these paths can lead to money. By that same theory, if you don’t know where you’re going, each path will get you lost. All you’ll have to show for it is lost money and time.
It took me too many decades on Earth to realize that no one online strategy always works. The landscape is always changing. It is littered with both successes and failures. Most annoyingly, what got you here might get you to a different level of growth. For example, I can’t exactly start up another MySpace page to launch a following for my new 2020 blog.
What you can do is use the lessons learned and best practices from each failure to expedite your growth on your next venture or social media platform. That is the only proven system that has worked.
They say time is wasted on the young. Maybe it’s true. I wish I knew what I know now when I was younger. I learned what works only through hindsight and many painful failures. Because of many shortcomings, I can scale faster and faster to succeed.
Specifically, the failed blog writing refined my lucrative freelance writing. As a bonus, all those years of writing helped define a unique speaking voice and social solid following. Some readers have been supporting my writing for a decade now.
Each year, I learn a little bit more about what works and what fails. I drop what fails and keep what works. For instance, all those MLM scams that took my money in my youth taught me the value of pitching and product placement when I finally developed a legitimate program.
In addition, I also know that not everyone is going to click the buy button, and that’s ok. I’m not the answer to everyone’s problem, nor do I need to be in order to operate still a successful entrepreneurship and revenue-generating company of my own. In other words, it is actually by niching down that finally allowed me to scale up.
I’m grateful for all the failures. They taught me how to succeed. So, the next time you read an “easy way to get rich” post, ask yourself: is this meant for me or the masses? Your roadmap to wealth might look a little different than the viral articles you find online. Be confident that your life lessons are just as relevant. Behind the scenes, success feels a lot like work, but online, it always looks easy to the person who doesn’t have to do the job.
Marcus Garrett is the author of the Amazon Kindle bestselling book D.E.B.T. Free or Die Trying: How I Buried Myself $30,000 in Debt and Dug My Way Out, creator of “Your Roadmap to Wealth: Life After Debt,” and a recovering auditor. FAQ: How much debt can you afford on a 30, 50, or $100,000 salary? Find out for yourself at TheMarcusGarrett.com/salary, or follow him on Instagram at TheMarcusGarrett and YouTube: TheMarcusGarrett.
Jason Butler is the owner of My Money Chronicles, a website where he discusses personal finance, side hustles, travel, and more. Jason is from Atlanta, Georgia. He graduated from Savannah State University with his BA in Marketing. Jason has been featured in Forbes, Discover, and Investopedia.