Apr 25 2024 19 mins 3
What Mental Health Professionals Should Know About Passive Income
Hello and welcome to the Business of Psychology podcast. In this episode, I'm going to talk about the realities of passive and semi passive income for mental health professionals by dispelling some of the myths that you've probably heard.
Full show notes of this episode are available at The Business of Psychology
Links & References:
Episode 136: Dr Jo Mueller, The Guilty Parent Club
Episode 142: TikTok, Group Programmes and EMDR Intensive with Dr Claire Plumbly
Warren Larkin: warrenlarkinassociates.co.uk
Lauren Sawyers: serendipitypsychology.co.uk
Book a Coaching Discovery Call: https://psychologybusinessschool.com/1-to-1-coaching-for-mental-health-professionals/
Rosie on Instagram:
What Mental Health Professionals Should Know About Passive Income
I get a lot of rubbish in my inbox about online courses and how creating one is going to allow me to live a “laptop lifestyle” working from anywhere and having oodles of money and free time. It’s annoying because I think I've made a really successful job of passive and semi passive income over the last few years, but that still isn't anywhere near the lifestyle that I lead. Partly that is because I'm a mental health professional, so the passive and semi passive income that I've created reflects that. I haven't just decided to move into an industry which is particularly lucrative for this stuff, although my things have done well, I have made money from them, and I continue to do so. But I think maybe some of the gurus that are in our inboxes are selling a story which may have felt true to them, but perhaps it isn't the most self reflective story and perhaps doesn't reflect the circumstances in which they started their business, and certainly doesn't reflect the values and ethical considerations that I know everybody listening to this shares. So in this episode, I'm going to talk about the realities of passive and semi passive income for mental health professionals by dispelling some of the myths that you've probably heard.
Myth 1: You can make a lot of money with little or no investment.
For example, many of the people that land in my inbox talking about passive income had a lot of money to invest in their business at the beginning, or maybe they were in a position where they didn't need to take a salary from it for a long time because perhaps they'd left a very highly paid corporate job in order to pursue their dream, or maybe they had a very wealthy partner so they didn't have that pressure to bring an income in early.
This is really important because reaching profitability from an information product like an online course or a digital download, largely depends on scale. If you're selling a £47 course, and you managed to sell it to 10 people, that is a massive achievement. Those sales for a low cost product are really hard to make, especially when you're starting out, but you'll only have made £470 from that. If you have bought one of these courses that often lands in your inbox, and if you have invested in all the tech that they recommend and made a multi modular, all singing and all dancing experience, that isn't going to cover your costs, but reaching those 10 customers every month is a big ask when you're starting out. You're going to be doing a lot of marketing activity for that and it's going to really eat into the time that you have to see clients or do other aspects of your work, so that would actually be a very ambitious target. So the reality is something's got to be different there hasn't it? You know either you're going to have to spend money on advertising to reach that scale sooner or you're going to have to invest more time because you're not going to be able to afford to use all the tools and the tricks that make it all easier for you.
In my view, when you're selling a passive income product, you have to decide whether you're willing to invest time or money or a bit of both. A significant investment is always required. If you have some money to invest, then you'll still need to invest a lot of time in order to know how to use that money to best propel your project forward. It is so easy to sink a load of money into something like Facebook Ads and never actually make any progress from it if you don't understand the platform properly. Investing time is never optional. You will need to spend time researching, creating, networking, promoting, devising marketing strategy, creating content, providing customer service… The list just goes on and on and on.
If you do have money, you can outsource some of those tasks, but not until you really understand what is required and what good looks like. I really think it's disingenuous of people to claim that you can create passive income with very little investment because you are going to be making a big investment of your time, your passion, and if you have it, a little bit of money too.
Myth 2: Organic marketing is possible and preferable for a side hustle.
I know that what I'm going to say here is a bit controversial, but I honestly believe that in 2024 the amount of content that you would need to create to make a good income solely from organically marketing your information product just means that it's impossible for anyone that isn't a professional full time content creator. Of course, there will be exceptions. And if you're only aiming for a small income boost from your information product, you might be able to generate that, but it'll be a lot of work. In general, I don't think it is possible with the way social media platforms work in 2024. The people who really proudly boast that they haven't paid for advertising, but have made millions, usually grew their audience 10 years ago, when algorithms were more favourable and social media was less crowded.
Also, I don't really understand why they're proud of failing to invest in their business by exploring paid advertising, especially as a lot of them are teaching business strategy. And to be honest, it shows a real lack of business strategy to just proudly say you're never going to explore a paid advertising marketing strategy. One of the great things about paid advertising is that it's a lot more measurable. So if you're a professional marketer or really interested in marketing, paid advertising is a great way to go and can be really fascinating because you can see exactly what you get back for what you put in. Whereas with organic marketing, you're always doing a little bit of guesswork. Did somebody see my Instagram post and then see my blog post and then decide to buy the product? You can't actually see that journey, whereas you can track it much more directly from paid advertising. So to be honest, it does make me question somebody's credentials a bit if they're boasting a lot about not using any paid ads.
Myth 3: Information products are the best form of passive income.
So far in this episode I have assumed that we've been talking about information products like online courses, because this is what is most commonly associated with passive income in the online world. But there are actually many types of passive income available to you as a mental health professional, and a lot of them are not talked about widely online because they're not available to people that don't have that core professional background. So what you choose to do in order to generate passive or semi passive income, it needs to fit your objective for your business, your abilities and capabilities, and your values. Sometimes information products are great and they're the best way to add an additional income stream into your business, but at other times, other models fit better. Some of those models include associate practice, licensed training or franchise, training other professionals, and even things like property rental.
I'd really encourage you not to get sucked into that tunnel vision that you've created, that is very present in the online space at the moment, where passive income equals online courses or other information products. It doesn't have to.
Myth 4: Passive income is pure profit
I have heard this said so many times and I really don't know how anybody who has any experience of a passive income product can say something which is just patently untrue. Creating a passive income information product costs time and it costs money, as we've seen. For example, it wouldn't be unusual for you to need to invest in some training, or some new software for email marketing, or maybe new landing page software and some editing software, and maybe some design software too. I am all for keeping it as lean as possible when you're starting out. I really don't believe in investing in loads of things in order to make your passive income product sparkly and shiny and multi modular. A passive income product can be a really simple recording of a live webinar that you've done, but you will need to host it somewhere, and usually that costs a few pounds a month. You're also going to need to collect email addresses and email people, so you are going to have to pay for email marketing software. And if you don't have a website that's easy to manipulate, you are probably going to pay for landing page software too. Often people want to invest in design software too, to make their handouts look nice. None of these are massive costs, but they do add up. Plus you really need to factor in the hours you spend creating this thing because you can't be with clients in that time, so you are losing money by investing your time in creating this product.
If your course takes you one day to create (which is very ambitious by the way, I've never successfully created even a complete webinar slide deck in just one day) and you normally charge your clients £120 per client hour, then that means that the minimum cost for creating that product for you is £600. On top of that, there's the time that you're going to invest each week on marketing and customer service, which could add up to at least £1,200 a month, which across the year is a whopping £14,400. Plus you've got your software expenses, which go up the more that you sell. So you might start off with just a couple of hundred pounds a month in software expenses, and that is going to be largely made up of your email marketing software that tends to be the most expensive bit. But even if you keep it pretty lean, you're still going to be looking at about £2000 for the year. If you then need to invest in some coaching or a course to help you get started, that's probably going to be another £1000, and if you invest in one of these courses that drop into my inbox all the time from one of the big american gurus It's more likely £3-4000 plus. So that means that even if you keep it really lean and you're very thoughtful about what you invest in, and you only invest in the right support, your product is still going to have cost you about £1,600 to create, and then about £16,000 to maintain. So to make profit in year one, you would have to make more than £17,000 from the product. In year two, that goes down a bit, and that's why passive income products do become more profitable the longer that you have them, because those set up expenses aren't there every year, but the maintenance expenses do go up. For example, when you get more people on your email list, your email marketing software will become more expensive. And if you start needing to host multiple videos, that's going to cost you more as well. So it is an absolute myth to say that passive income products are pure profit.
Just to work this through a little bit further for this example, let's assume that we've done all our calculations and you want to make a minimum of £18,000 in your first year to cover your time and financial investment and maybe give you a couple of hundred pounds of extra profit for the year. In that case, if you go for a low cost product, say £47 like the workshops that I run, then you need to make 383 sales to reach your target. That's a lot, isn't it? If you go for a mid range product, say £97, then you need to make about 186 sales across the year to reach your target. And if you go for a premium product, say £495, then you need to sell 37 across the year to make your target. So you can see from that, that passive and semi passive income can definitely be profitable, but it is not pure profit and you're going to work very, very hard to reach the profitability point. It's a different kind of work, it's not less work.
I don't mean to sound in any way negative about passive or semi passive income at all. I just want people to go in with the facts so that you're able to make the best decisions for your business and feel the amazing successes when they come. What gets to me the most about the stuff I see in my inbox from online course gurus is that it makes normal people feel like failures when actually they're massively successful. If you create and sell a passive income product that reaches profitability in year two, that is it. Bloody amazing. But if you thought it was going to be profitable in week one, it's not going to feel amazing, is it?
So I just want to reinforce before we go that there are real mental health professionals making a success of this, and I've linked a few of my coaching clients in the show notes who are doing wonderful work with passive and semi passive products. We've got Jo Mueller with the Guilty Parents Club; I interviewed her in the last series of this podcast, so do go back and listen to Jo's story. We've got Claire Plumley with her online courses and workshops for women experiencing burnout; I interviewed her last week. I've also linked there Warren Larkin, who provides training to organisations and has a Train the Trainer model, so that's another type of passive income that might be interesting to you. And Lauren Sayers at Serendipity who runs a really successful associate practice. These are all great examples of how a realistic strategy can help your passive or semi passive income flourish. And of course, I should probably mention me! So in the first quarter of this year, I've already made more in passive and semi passive revenue than I expect to make for the whole year from my therapy practice. It's taken four years to get to that point, but it's a large part of how I'm able to maintain my business and my therapy practice around the challenges that we have at home, which I've talked about a bit on the podcast. So I'm extremely grateful for my passive and semi passive income, and I'd encourage anyone to to build an income stream that can provide that flexibility.
I absolutely love the fact that I can reach different audiences with passive and semi passive products. I love the fact that I can work on them anytime that suits me, that it doesn't necessarily always need to be quiet and calm and serene when I'm working on them, and I can fit it into what is a very hectic schedule. So I fully, fully recommend it. I really endorse it. There are real people just like you out there doing it and doing it really well. I just don't want you to fall into any of the traps that we've talked about today and start to feel unsuccessful when actually you're doing a really good job. So I will step off my soapbox now, and if you do want any support creating a strategy for passive or semi passive income in your practice, I would love to support you with my coaching for growth package. You'll find the link to book a free discovery call with me when we can discuss your goals for coaching and come up with a plan together in the show notes.
