Pros and Cons of Passive Income

Passive Income Decision

With a bit of planning and work, anyone can set up passive income streams online.

There are many business models you can use.

Before you get started choosing one that’s right for you, here are the pros and cons of passive income.


Pro: You can earn money while you sleep.

The whole idea of passive income is that you set it up once, and then you keep earning into the months and maybe even years ahead. You don’t have to work for each penny you earn.

Con: It takes time to set up.

To set up a passive income stream, you’ll have to do some unpaid work upfront. But the time and effort you put in at first will result in a return on investment later, when you don’t have to spend time earning.


Pro: There’s no upper limit to your earnings.

Usually, your first passive income stream doesn’t earn a great deal of money. You might start with a few hundred dollars a month. But with your next stream you’ll earn more, and the next more, and so on.

Con: Don’t quit your day job.

Since it takes time to build your income stream and your audience, this is not an option if you need money now or want to quit your day job tomorrow. Think of it as a long-term strategy.


Pro: You can use passive income for savings, retirement, or supplementing your existing income.

You don’t have to build multiple passive income streams you can live on. This is a great strategy for creating supplemental income since it takes little maintenance to keep going. It can also provide a buffer against economic uncertainty or career changes.

Con: There’s a great deal to learn.

There are many ideas available for earning this way. You’ll have to choose an idea that works for you, as well as learn about your target market, the products and services you’ll sell, and your topic area. However, anyone can learn everything you need to do if you’re willing.


Pro: There’s very low overhead.

Unlike setting up a regular business, there’s very little overhead in this business model. Typically, you just need web hosting, some software, and internet access. You can sell digital products so there’s no warehousing and shipping, and advertising can be done for free or low cost.

Con: You can’t just set it and forget it.

Most passive income business models require some regular maintenance. You might create an information product to sell to your market, and then promote it on social media. This will require spending a little time regularly on social media posting content and interacting with your audience.


Pro: You can work where you want and how you want according to your own rules.

Passive income business models allow you to work at home for yourself. It’s a great option for people who thrive on their own and desire freedom.

Of course, this also means you have to be disciplined and motivate yourself. But if you want to pursue passive income, it’s well worth the work you put in.

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Written by 

Co-Founder & CEO of Link Management Group. An Investor & Coach to Small Business Owners, for the past 30 years I have helped startup and early-stage businesses to enter new markets and achieve sustainable growth of both revenue and profits. I have experience across a diverse range of sectors including central government, information services, software, health insurance, pet products, couture fashion, entertainment and aviation.  How can I help your organisation accelerate growth and achieve its full potential? 

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