55% of small business owners have less than $50K saved. Here's the five-criteria filter practice owners should use before pursuing any passive income stream.
You built your practice to create something. Somewhere along the way, though, the business started running you instead of the other way around.
Brandon Seigel puts it plainly: you didn't build a practice to be broke. But the Federal Reserve data backs up just how close to that edge many practice owners are sitting. Fifty-five percent of small business owners have less than $50,000 saved outside of their business. That's not a rainy-day fund. That's not financial freedom. That's barely a buffer.
Passive income sounds like the fix. And it can be. But only if you approach it with the same rigor you'd apply to hiring a key team member or renegotiating a payer contract.
Brandon describes a scenario that comes up constantly: a practice owner decides to hire ten therapists, sit back, and collect a million dollars a year while traveling. The math doesn't work. Seventy percent of your revenue is going to staff, facility, and people costs in some form. Every employee generates cents on the dollar for the owner's personal take-home.
That's not pessimism. That's the actual business algorithm, and ignoring it is how practice owners end up building high-paying jobs for everyone except themselves.
Passive income, defined here as anything that doesn't require you to be the driving action day in and day out, has to be built with a different framework entirely. That starts with what Brandon calls the opportunity filter.
The opportunity filter is a written set of non-negotiable criteria that any investment, business, or income stream must clear before you spend a single hour researching it. It's not a spreadsheet. It's an index card. Post it where you make financial decisions.
The five criteria to define for yourself:
That last one carries the most weight. According to Inc.'s leadership coverage, the most costly strategic mistakes business owners make are consistently tied to moving fast on things they don't fully understand. That pattern holds whether you're hiring, acquiring, or investing.
Most practice owners dramatically undervalue their time, and that miscalculation makes bad opportunities look appealing.
Here's the exercise Brandon walks through: take what you currently earn and divide it by the hours you actually put in. That's your true hourly rate today. Then ask yourself what you want to earn and how many hours you're willing to work to get there. That second number is your target hourly rate.
He used his own Airbnb evaluation as a live example. On paper, the idea was interesting. In practice, once he calculated the time required to market, manage, maintain, and fill the property, his effective hourly rate dropped by more than fifty percent compared to what his time generates in his core business. The opportunity didn't fail his return threshold. It failed his time threshold.
That's the filter doing its job.
Even owners who want to build passive income often stall because they're working with incomplete information in three specific areas.
Tax strategy gap. Most owners overpay taxes because they haven't structured their entities, retirement accounts, or real estate holdings to take advantage of what's available. S-corp elections, qualified business income deductions, backdoor Roth IRAs, cost segregation on real estate — these aren't exotic strategies. They're fundamentals most owners don't know to ask about.
Asset class gap. The majority of practice owners know two investment vehicles: a savings account and the stock market. They're not wrong investments, but they're not a complete picture. Real estate investment trusts, index funds with dividend components, practice-adjacent business models — there's a wider range of options worth understanding before you default to what's familiar.
Risk management gap. Overhead insurance, proper entity structuring, and the right protection layers are often underfunded or absent entirely. Without them, a single bad quarter or legal exposure can undo years of savings.
Filling these gaps doesn't require becoming a financial expert. It requires working with a fee-only fiduciary advisor, asking the right questions, and being honest about where your blind spots are.
Passive income isn't built in one move. Brandon's framework breaks it into a sequence that most practice owners can actually execute without blowing up their cash flow.
Phase one is stabilization. Max out retirement accounts. Build a six-month emergency fund. Eliminate high-interest debt. Nothing else gets serious attention until this foundation is in place.
Phase two is initial investment. Begin deploying into a single passive income stream. One. Not three. The goal is to learn while the stakes are manageable.
Phase three is multiplication. Add streams. Diversify across three to five different vehicles. Real estate, index funds, a practice-adjacent digital product, a well-structured 401k with profit sharing. Each one becomes a separate engine.
Your practice can be one wealth-building engine. A strong one. But building financial freedom means it can't be the only one.
The connection between passive income strategy and how you run your practice day-to-day is more direct than it looks. Owners who are financially stretched take worse decisions under pressure. They hold on to underperforming staff too long. They avoid renegotiating payer contracts because they can't stomach any disruption to cash flow. They underpay themselves because they're afraid the business can't support it.
Getting your revenue cycle dialed in — knowing what's actually collected versus what's being left on the table — is part of what creates the margin to even think about investing. If you're not sure where your practice stands on that front, a coding compliance audit is often the fastest way to find out.
For practice owners who are scaling and need the back-office infrastructure to support that growth, medical billing services that function as an extension of your team — not a vendor relationship — free up the leadership bandwidth to focus on exactly this kind of long-term planning.
And for the team side of the equation, fractional HR support means you're not the one handling every performance conversation and policy question while also trying to evaluate real estate investments.
Passive income is a journey, not an event. The owners who build it successfully are the ones who treat it with the same accountability and structure they bring to running their practice. Start with the filter. Everything else follows from there.
