So you want passive income? Don’t start a community.

Starting a community membership will not magically create a passive income stream for your business.

I know it is tempting to think that all you need is to build the community, get members in and boom, passive recurring revenue every month.

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Right?

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Wrong.

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Quick definitions

Passive income: Money that keeps coming in with little to no ongoing effort after setup.
Active income: Money that comes in only when you keep showing up with your time, effort or team.

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The illusion of a community membership being an “easy passive revenue” source

I recently worked with a client who thought creating a community membership would be a simple way of getting recurring revenue for their business which wasn’t doing well financially. They didn’t fully understand how demanding a community membership can be in terms of time, energy and people required to run it.

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From the outside, it is easy to look at thriving communities and assume they run themselves or require minimal effort. But if you have ever been behind the scenes, you know how much strategy, attention and care it takes to make a community membership work.

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People often come in expecting community memberships to be passive, only to realize that running a community is an active, ongoing process that requires consistent care and effort.

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Why community memberships aren’t passive income streams

I created my first community in 2020 during the pandemic and I learned quickly that there is nothing passive about it.

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I wanted members to feel supported and connected which meant that I was constantly checking my notifications, answering questions and making sure no one felt left behind.

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I designed the weekly programming to create rhythm.
I onboarded new members and offboarded others.
And I thought about that community almost every waking moment.

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Don’t get me wrong. You can have templates, automations and SOPs to help with operations and remove you from doing mundane repetitive community tasks but the heart of a community membership is people, both the members and the creators of the community. Therefore, no matter how many optimization strategies you create to remove yourself from the daily tasks, you (or your team) will still need to have a presence in the community for it to work, hence not a passive income stream. 

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And when the people part isn’t nurtured, engagement and perceived value of the community fades fast.

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A community without intentional care and human support eventually turns into a content library. And while that’s fine if your goal is to create a content membership, right now with AI making information easy to find, content alone won’t retain members for long.

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Can AI make community memberships passive?

Let me say upfront that I’m not against AI. I use it quite frequently.

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Community platforms like Circle now have AI chatbots that members can ask questions and get answers to FAQs and also get post summaries. People who own memberships can train AI with their knowledge so that they don’t have to be actively present to answer questions from the community members.  Helpful? Yes. A replacement for human involvement in community building and management? No.

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People join communities to connect to the creator of the community membership and/or other members in the community.

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If they only wanted fast answers or automated replies, they wouldn’t join your community, they’d use ChatGPT or Google.

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Therefore, even with AI becoming advanced in getting answers from the history of community chats and content from the creator of the community, there is still a need for human touch making running community memberships an active income stream.

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So what now?

If you are looking for passive or semi-passive income, there are better options like investments, digital products and SaaS. Community memberships though? They always always require some active effort to run well. 

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Community memberships can be powerful, profitable and deeply rewarding.
But they’re not passive income. You can’t just create them and expect them to thrive on their own without putting in some work.

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So before you start a community membership, ask yourself “Are you really willing to put in the work and care required to build and manage a community membership or are you chasing the illusion of easy recurring revenue?”

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P.S. I offer membership experience audits to help entrepreneurs and founders design thriving memberships. If you’d like an audit, you can reach out to me using this link.

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