Business Secrets Podcast Episode 10: Active Income Versus Passive Income

This is a transcript from the Business Secrets Podcast With Robert Kanaat. Click here to view and subscribe on iTunes

Hello and welcome to another episode of Business Secrets. My name is Robert Kanaat, the founder of, the premier online destination for self-development inspiration and habits.

Today I want to talk to you guys about something pretty important. It’s something that has allowed me to live a life that I think that a lot of other people would dream about. That is passive income. So what’s the difference between active income and passive income? If you don’t know about passive income, passive income is money that comes on autopilot. No it is not some hallucination, it is real. In fact the richest people in the world have multiple streams of passive income.

Now I don’t want this to sound cheesy or coached or kind of cliche-ick, but the whole money making online thing is real, okay? But I came from another side of the world. So a lot of the internet marketers that I meet today, they came directly from the marketing side. I came from the other side. I came from the kind of long term strategic positioning, traditional authoring style approach to passive income. Whereas a lot of other internet marketers who are super savvy, super gifted – I’m talking about 7 and 8 figure earners. They came straight through from the marketing, internet marketing side to generate their active and passive incomes.

But I know a thing or two about passive income, and I wanted to kind of convey that to you. First I want to tell you the difference between active income and passive income. So if you don’t know what the difference is – active income is when you directly exchange your time for money. So this is most of the world. So most of the people living on this planet are exchanging their time for money. So that just means that you go out there, and you work for an hourly set rate. Or you are salaried. So you pretty much have to just work as much as you can in order to advance. In exchange for your time, you receive money.

So for example, a part time person who’s working, and is working at $10 an hour, who works 40 hours. You can do the math, they receive $400 for that time. So the problem with active income is that you can only earn so much. So even if you are making $100 an hour, and that means that 40 hours a week is $4000. Now that probably might seem like a lot of money to you, but you are restricted by the amount of time that you have. Time is one of the most important resources on this planet. We cannot recreate it. We cannot make more of it. Once it’s spent, it’s gone.

So for me, I have– I wanted to get off that incessant roller coaster. So back in 2001, when everything failed and came crashing down around me, and I was relying on an active income – even though that income was high, I was stuck, right? So when your business evaporates, when your business is gone – and if you’ve gone through this, then you know the exact feeling. How this feels when your business is gone, when your business is decimated, destroyed, crashed to the ground, burnt asunder in a million little pieces all around you – and you can’t create an income, like what do you do, right? So that’s active income. That’s relying on an active income.

So in the wake of that failure, it really got me thinking a lot. That was kind of around the time when I really started studying SEO and learning everything that there is about SEO. Because I knew, kind of one of the pathways to passive income was the ability to rank certain things and to drive the right amount of traffic. Which is something that I’ve obsessed over for years and years and years. I’ve written some of the most popular SEO books, audio books, courses out there right now. So I know a thing or two about that.

To me, SEO was the gateway to passive income. But I didn’t start really with passive income in that direction. This was before I started building niche websites targeted to specific keywords and stuff like that. Now don’t sit there and tell me that niche websites don’t work. I assure you that they work, as long as there is real value in the content that you build.

I wanted to tell you kind of about the types of passive income that you can have. Because if you are relying on an active income, I mean that’s great and all – if you have a very high income, your business is producing a lot of money, that’s terrific. But what happens if things change? The economy changes, the economic mood of your niche audience changes, or – and a competitor comes in and destroys your business, or whatever the case might be. Then what, right?

Yes, you can reinvent yourself. I know that. But why not create some fail-safe’s? So some safeguards to protect you, right? So to me, that’s what passive income is. Passive income is the ability to earn money on autopilot. So today I have multiple streams of passive income, and I am absolutely grateful for them. But this is not very difficult to do. I know that it sounds difficult. It’s kind of the whole thing like when you’re looking at something, the enormity of a goal. It’s like so huge, it’s so enormous for me. It was like, man I had no choice. I’m going to do this because I don’t want to be in this situation again.

So thankfully, the crazy thing is – if I hadn’t done that, right? When I was building the travel company in 2014, when I started building that – around the same time that I launched Wanderlust Worker. After that whole thing went south with my business partner, and pretty much the business was taken from me – at least I had passive income. If I didn’t have passive income, I would’ve been so screwed, blued and tattooed. It would’ve just been a really bad situation for me.

So thankfully I’ve had that, and you should have that too kind of in your back pocket. Even if you do a little bit every single day now. This is just managing your time. If you spend an hour a day on passive income, man it’s so good. Use the 15 minute rule, and start doing something towards passive income, because it’s so powerful, right? So one of the biggest secrets of the most successful entrepreneurs in the world, are multiple streams of passive income.

So what are some examples of passive income? For example, books, right? Books can sell on auto-pilot. For me, it was just – I went on Amazon, I went on Kindle Direct Publishing. So it’s I created an account, and I started writing like there was like no tomorrow. I wrote like the wind. I can’t even tell you, it just came out of me.

So all you have to do is create a topic, research kind of who the competitors are. If you want to learn more about this, I’m sure I’ll dive into further discussions about kind of how you can do the passive income stuff really, really well. But take it from me, because I’ve done it. I’ve written 39 books now under the pen name R.L .Adams. Not exactly 39 books, some of those were actually translations. So roughly 3 dozen books. So I know what it takes to write a book and put it out there.

The cool thing about Amazon is that they do everything for you. This is totally different from the world that I’m coming from now, which is the whole free plus shipping offer, and learning that whole side of things. Where you have more control over your audience. When you sell through Amazon, you don’t really have that control. So it’s not the same thing, but you are tapping into a massive, massive audience.

If you absolutely hate marketing and don’t want to do anything about marketing, then Amazon is a great place to put a book. Because people will just find it, and they will buy it. Now the eBook industry is not the same as it was before. Before, like years and years ago when I started, it was a super hot market. People were buying eBooks like crazy. You could write any book on a topic and really get it to launch like crazy. Now you really have to adhere to Amazon’s algorithms, has to have a lot of purchases and reviews in a short period after publication. So there are some new kinda twists to that whole thing.

But passive income – even if you’re looking for a few hundred dollars a month, writing an eBook and publishing it on is terrific. Then you can take that audio book– Then you can take that book and turn it into an audio book on – which is the publishing arm for Amazon, and they publish directly to Audible. So Audible is pretty much the biggest audio book platform on the earth. Amazon owns it. So that’s what I did. I just published the books and subsequently the audio books, I found producers. It was super, super easy to do.

Basically if you don’t have the money, you can split the royalties with them. Or if you have the money, you could pay them outright. Which I think is a good thing to do, because then you get – instead of splitting the royalties, you get that money yourself. But it depends on kind of where you’re at, obviously. If you don’t have a few hundred dollars or a thousand dollars or more or whatever it is to pay for that audio book production – depending on the length of the audio book, then you might want to split the royalties. But then again, finding somebody really good who is going to take on your audio book project for just royalties – also very difficult in the very beginning, but with persistence you can find that person.

So I think that books and audio books are an incredible way to make passive income. Another way is to publish courses on Udemy. Now I definitely recommend the whole ClickFunnels webinar membership continuity thing to people for real passive income these days. But again – if you don’t want to do any marketing, drop it on, and you can publish and you can create a course that will generate some passive income for you.

So, again there are tons of different sources for passive income. Real estate, you can do – you can even do peer to peer lending. This is if you have a little bit of money of course. Peer to peer lending is kind of like those micro loans and stuff like that, and there are other lending platforms out there. If you just Google like “peer to peer lending,” you can find lending platforms with great algorithms that will assess the risk of a business or a person that you can give loans to.

There are different ways to earn passive income, but the whole point is– Of course, blogging is a massive way to earn passive income. Affiliate marketing, network marketing. Those are all terrific. Obviously you should jump on board with legit people. For example, my buddy David Sharpe has a great company called Legendary Marketer. That is an absolute fantastic way to earn some passive income, while also kind of learning and giving yourself an education about the online marketing industry.

So to me, passive income is the most important thing that you can do as an entrepreneur. Just to set yourself up for the future. Put an hour, or even 15 minutes in a day. Start with that 15 minutes, and then it will balloon and spiral into higher and higher numbers. Start a blog. Starting a blog is an amazing way to generate passive income, because you’re a sounding board. You have to be careful with how you drop links into a blog, because the FTC is very particular about that. You have to ensure that you tell people that you’re making certain commissions by giving an affiliate disclosure and stuff like that.

But again, it is a terrific way – if you can build a big audience. My audience, my blog has ballooned into the millions. If you can build an audience like that, I mean fantastic. You can earn an insane amount of money by doing that and doing it the right way. So hopefully this gives you some insight into active versus passive income.

Again, please subscribe to this podcast. Like, share, comment on it. Please tell me like what you like about it, or what you don’t like about it. I will read every single comment, I assure you. It will help me to make this podcast even better and to deliver more value to you guys. So this is Robert Kanaat again, with Business Secrets. Until next time, I’ll talk to you guys soon.