My working years started at fourteen and nine months – pretty much to the day. 

I was frothing to get a job. 

Luckily, my high school made it easy. 

Two of the new business chains that had opened just around the corner were invited to our school to interview those interested in their first after school job. 

One day after assembly, everyone keen on a job was told to line up behind a little interview table for their employer of choice. 

The line for Rip Curl was out the door. Living on the Gold Coast in the surfing heartland of Burleigh Heads, everyone wanted to work there. 

With my red hair, freckles and total lack of fashion sense, I figured I didn’t stand a chance. 

So, I joined the tiny line at Bunnings.

It wasn’t sexy, and I didn’t have a clue about hardware. 

But, two interviews later, I had a fresh new khaki green apron, cash register training and a gig as their newest garden department checkout chick. 

Three afternoons a week and on Saturday mornings, my Dad would drop me at work and I would collect $14 an hour. 

What I lacked in hardware know-how, I made up for in work ethic.

For three years I never missed a shift. 

Here’s the thing, though. 

I lived at home. 

I didn’t spend money on clothes like the other girls my age. 

And so, my money started pooling. 

“You need a savings account” – my Dad told me. 

I set one up.

5% interest, it said. 

With that interest coming in every month, for the first time I watched my money grow without any additional work. 

I kept working. 

It kept pooling. 

“I have an idea” – my Dad said, when he saw it growing and growing. 

“If you can get to $13,000”, he told me, “you and your brother could pool your money together and afford a house deposit”. 

Me? I thought.

A HOUSE?!

It gave me purpose. 

I increased my hours.

I worked Sunday, for double time and a half. 

I spent every waking hour either working, or studying. 

And a few years later, we did it. 

It wasn’t pretty, but it WAS a house. 

I wasn’t even 18, and I’d worked my butt off to become a homeowner. 

That was 25 years ago.

Over the years, I watched that investment grow.

I continued to work. 

But on the side? That investment earned too – with far less work, and effort. 

It taught me something early, and it might be the most valuable early lesson I ever learnt.

It was this: 

Active income is never passive. 

Work is work.

But the income from your work can be funneled into assets that CAN be passive – and that, ultimately, is the game. 

These days, I am passionate about sharing that message with others. 

Even moreso in this online business world, where we have the capacity to build high profit margin businesses.

And, where a little know how on what to DO with that income is life-changing. 

And so, in today’s piece, I am sharing with you the six steps for building a business that will one day allow you to make work optional and to enjoy true passive income. 

So let me lift the lid on how I do it, and what’s working right now.

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Step One: Build A Leveraged Business Model 

Here’s the truth: 

In a business, passive income doesn’t exist. 

Sure, people sell it as the dream – especially when it comes to things like online courses. 

The truth is, though? 

That it’s a pipe dream. 

Passive income in a business doesn’t exist. 

What DOES exist, however, is leveraged income. 

Leverage is the strategic use of tools, resources, or the efforts of others to multiply one’s output without corresponding increases in input (source: Naval Ravikant). 

It can be achieved in a number of ways – with code (building software), people (hiring team), capital (investing).. or intellectual property (creating courses, books, group programs etc). 

My favourite combination? 

An active business where leverage is achieved through intellectual property.

And then, funneling some of the income from that business into investments where leverage is achieved through compounding capital. 

Understanding that it’s not the BUSINESS that gives you passive income is powerful. 

It means that you won’t give up when you are doing the upfront work in build a leveraged business.

When you are creating the assets. 

Building the sales machine. 

Driving traffic.

You’ll instead know that you are building a leveraged business (with increasing time and profit over time without increasing output), which you can then leverage to build passive income OUTSIDE of the business. 

Step Two: Understand the Game

Once you understand the game, you can play it to get what you want. 

My favourite quote of all time is this one: 

“The only true sign of intelligence is if you get what you want out of life” 

– Naval Ravikant (do you sense a pattern emerging? I highly recommend reading The Almanac of Naval Ravikant). 

So, the clarifying question is: 

What do you want? 

Here’s some clarifying questions: 

What do you value? 

What’s on your bucket list, and for when? 

How many hours a week do you want to work? 

What does a good lifestyle now look like? 

How much does that cost? 

Once you know what you want, you will be much better equipped to build a business to give you more of it.

(… Without endlessly chasing more, and ending up with a version of success that wasn’t even yours to begin with).

It will also help you reverse engineer into the right business endgame. 

Ultimately, there are two types of businesses: 

Lifestyle Business: A lifestyle business is created by the owner for the specific purpose of providing cashflow to pursue interests and wealth outside of the business. 

Scale Business: When you start and operate a ‘scale’ business, you’re ultimately

angling for an exit to give you a nice fat pay check to bankroll the rest of your days. 

Both can generate considerable wealth, but in different ways. 

With a scale business, you sacrifice profit margins to fuel your growth, you

need to entirely remove your personal brand from the picture, and you need a

big team, considerable scale and a view to jump well past $1-2 million in revenue to get there.

With a lifestyle business however, the game is different. 

Your goal is to generate business cash flow, and to invest that cashflow into assets outside of the business. 

By doing so, those assets can compound (the money will grow itself) and can one day pay you a salary passively. 

Problems occur when founders build lifestyle businesses, but don’t understand the game. 

They enjoy the strong cash flow, but they don’t proactively invest it to one day make work optional. 

Step Three: Define Your Enough Number

Once you understand the game, you can build a beautiful lifestyle business you enjoy running now.

It can give you cashflow, time leverage and fulfillment without needing to build a big beast to sell.

And, it can set you up for a “work optional” future at the same time. 

The way to make it all happen? 

To define, and then to reverse engineer into an enough number. 

Your enough number is the specific revenue number that your business needs to make to: 

1) Cover all operating expenses; 

2) Cover all personal current lifestyle expenses; and

3) Cover investing at a rate that is going to make work optional in the timeline you specify. 

Once you know that number, you can engineer an offer suite and sales strategy to generate the required volume of sales to achieve that number. 

Side note? We have a course called Dream and Design where we teach you how to clarify your endgame, define your enough number. It’s included in Lifestyle Business School here. 

Step Four: Set Up Your Investments

A key part of this whole strategy is to make sure that you are setting aside cashflow to invest. 

The power of investing often and early is that your money will grow more money. 

Of course, you will need to research what to invest in. 

This is where I recommend reading podcasts, listening to podcasts and speaking to professionals. 

As a business owner, there are also options available to you that aren’t available to everyone. 

My approach is to keep it simple. 

Personally, my investments at this point are mostly in managed funds, where I can reduce risk with a diversified portfolio. 

It’s set up as an early retirement account that will one day pay me a truly passive salary. 

The more I contribute to it, the bigger my salary will one day be.*

Of course, I don’t draw down on this nestegg, which means that it grows itself. 

Practically, the way I contribute to my managed funds is that I have a dedicated profit account. 

Each month, I review my revenue and divide it into buckets based on percentages.

I have a tax bucket, a profit bucket, an operating expenses bucket, a marketing bucket and a team/salary bucket. 

I transfer my profit percentage into my profit bucket, and each quarter that is transferred into managed funds. 

(Side note – we have a course called Operational Elegance, where we teach you our bucket strategy and share all of our financial spreadsheets and systems with you. Sign up for our newsletter here to get notified when it’s next available).

For some great Australian focused books to get you started with deciding what is best for you here, I recommend the “She’s on the Money” book series. 

Step Five: Let Compounding Work For You 

The best part about investing? 

That, over time, your money can grow more money. 

And the earlier you invest it, the more time it has to grow and compound (which is why all of the experts recommend starting early with what you have). 

Over time, the interest you earn from the investments grow and grow. 

Here’s an example of what that can look like (using sample numbers) over time: 

And again, over a 20 year horizon. 

See? Compounding truly is the eighth wonder of the world. 

Each dollar you invest will grow over time. 

Step Six: Work Optional 

Eventually, the profits from the business plus the compounded interest will have built up enough assets that the founder is able to live off the investments (and not work at all, or just do it for fun).

That is truly passive income. 

And THAT – as a lifestyle business owner – is the game. 

Now, here’s the clincher: 

If you do it right, along the way you will have built a leveraged business that you enjoy running.

You will have chosen a subject matter that fulfills  you and gives you purpose, you will have time leveraged baked in, and you will have high profit margins. 

So, even though you’re building to make work optional, you PROBABLY won’t even want to retire anyway.

In Lifestyle Business School, that’s the type of business we teach you how to build. 

We start by helping you build a leveraged business model that aligns with you as the founder. 

Then, to define your enough number. 

Then, to build the FULL business machine to get there – including everything from offer design, to sales systems, to automated funnel and traffic. 

And finally, to refine using data to achieve your endgame. 

It’s simple, but not easy. 

And with six courses in one plus a supportive community, Lifestyle Business School equips you with everything you need to get there. 

You can check it out here.

Related Podcast Episodes: 

• ❤️‍🔥😍 Sexy Budgeting, Finances and PROFIT for Online Business Owners

Come and join us in Lifestyle Business School.

Keep Listening!

Listen On: Apple Podcasts | Spotify