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Writer's pictureJustin Hubbard

HH #39: Stop Chasing Passive Income — Build a Business That Works for You

Updated: Nov 21


 

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Welcome to our newsletter! There’s a lot of noise out there, especially in the “bro-preneur” circles, about the idea of “passive income.”

 

Let me try to be as clear as possible here... there’s no such thing as passive income in businessat least not in the way most people think. A business, especially in the home service industry, is a living, breathing thing that demands time, effort, and constant attention. If you’re hands-off, you’re heading for trouble.

 

The idea of passive business income is a myth (unless you’re just a silent investor with no involvement). What you should aim for instead is a high-leverage business model. It’s just like raising a kid. You can’t be a passive parent and expect your child to thrive in this insane world of ours. Similarly, you can’t be a passive owner and expect your business to grow and sustain itself.

 

And just like with kids, what you do early on in your business will have long-lasting impacts. If you build the right systems and create leverage, you won’t waste time fantasizing about passive income. You’ll have a business that can grow, and become more valuable over time.

 

Nobody likes hearing that their “baby” is ugly, but I’ve seen a lot of ugly business models out there.

 

Take a business like a restaurant, for example. It checks almost all the boxes for a bad business model. You make a meal, get paid once. Different customers have different requests, so scaling is difficult. The costs of running it are huge, and even if you fill every seat, your profits are razor-thin. A 10% profit margin in a restaurant is hitting it out of the park—most sit around 3-5%, and plenty lose money, and plenty more go completely belly-up.

 

It’s business on hard mode.

 

Now, how does someone in that situation escape? They shift the model. Look at what McDonald’s and Subway have done. They don’t just sell food. They sell a system—a franchise model. It’s the system and the brand that hold the real value, not the burgers or sandwiches.

 

In our industry, there’s always an opportunity to shift your business model. This could mean adding a subscription service for regular clients, systemizing processes so your crews work more independently, or even licensing the unique methods and tools that have made your business successful.

 

In my experience, some of the biggest business successes come from small changes in the business model. You don’t have to make big changes all at once—gradual adjustments can create huge results.

 

This approach builds leverage, allowing you to grow a business that works for you, instead of chasing the unrealistic idea of “passive” income. ✌️

Justin Hubbard

Justin Hubbard


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