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What Does Semi-Passive Really Mean?

What a semi-passive or semi-absentee business means, in my opinion, is that you don’t necessarily need to be present during normal business hours.  You are essentially an active investor.  The business is designed to be able to put a manager or managers in place to run the day-to-day and for you to manage those managers. 

However, a semi-passive business is not to be confused with a mutual fund or a stock where unless you are employed at the company you have zero responsibility.  It does not mean that the business will run itself or that you will be automatically successful.

The managers you hire, your management style, the culture that you build within the company and the decisions you make will have a huge impact on the business.

You may hear a franchisee say that they have 5 stores of XYZ franchise and they only work 5 hours per week.  That sounds pretty amazing right?  That may be true today, but it’s typically not true when they opened their first store and is certainly unrealistic for you to expect that especially if it’s the first time you have opened a franchise.

You will need to schedule some time to meet with your manager one-on-one to review the business and goals on a weekly basis.  Early on, you will need to be prepared to visit and spend time at the business on weekends, before work, after work or during lunch time to ensure that your manager is doing a good job.  

The reality is, if you never go into the business, how would you know if the manager is running the business correctly? It’s a lot easier to make a management change than to wait 6 months and put yourself in a deep financial hole because you thought you hired the right person but weren’t around to verify it.

A semi-passive or semi-absentee business can be a fantastic situation for an active investor who needs to keep their income, benefits and security of their day job either for the long-term or until the business can support their lifestyle.  However, you have to make sure that the business you choose can be run semi-absentee and actually has other owners who started out that way and are successful.

You also have to be realistic and realize that it’s your business and you still will have to put time and energy into it to make it successful.  To learn more about if semi-passive is an option for you, schedule a call below: