Just for fun I did a Google search for “passive income” and “creating passive income” today.  Boy, did I get a bunch of results back!  Seems like there are a lot of people who want to sell me a way to create passive income from home.  Generally the passive income ideas seem to center around an MLM opportunity, real estate investing (yes, there are people selling real estate programs) and Internet marketing.

I believe in all three of those as ways to create passive income, in the right time, with the right business plan and focussed and adaptable implementation.

The confusion, though, comes when you start looking at the terms.

“Passive” doesn’t mean no work.  In fact, there can be a lot of time involved in the beginning growth phase as you learn, adapt and focus your business model.  Then once you’ve got the project on auto-pilot, it’s not build it and forget it, you still have maintenance work to do.

Generally, passive income works because you have leveraged time or money.  

“Leveraged” time means that you are using other people’s time to create a result.  You can also have “Leveraged Active Time” which is getting the most bang for your personal time.  For example, when I meet with a client one on one for a tax strategy, I’ve got very low leverage.  That’s why the fee is the highest for that.

When I create a new program to learn how to read the story of financial statements and design a brand new way to look at your business’s report card in a glance, I’ve still got time involved in the research, design and creation.  But once it’s done, it’s done  I’ve leveraged my time to create a passive income stream.

When I do a seminar to go step by step how to use a layered business structure system to create Business Structures for 2009 & Beyond, I’ve leveraged my “Active Time”.  I’m there real time, but it’s not one on one.  So, the price per hour for the participants will be less than the individual one on one, but it’s still going to be more than it would be a for a packaged course.

Passive, Leverage and Active Leverage:  Understanding the terms can help define what you want.