You say that you've automated most of the process of running the business: "I've gradually adapted the software over time to automate every process, and generally I only have to step in in rare instances of high-level disputes."
How much time do you spend working nowadays? And on what? What's your typical day look like?
However that's far from what I actually do :). It simply means I can free myself up to work on new features or increase revenue. So I'm still working about on average 5-8 hours per day, 6-7 days a week.
I like to travel a bit, and work while traveling. Since I have no employees, this makes it easier to have this lifestyle. Whenever I get a chance to sit down in a coffee shop I'll usually stay a few hours and do work.
Sounds like the term you are actually looking for is "lifestyle business"
Nothing wrong than that, and it's a more sensible (i.e. well defined) goal that passive income.
If you can walk away for say a year without touching it at all and the revenue remains basically steady, I'll agree it is passive.
Anyway, it doesn't really matter - it sounds like you are working at growing a business you enjoy and that's great.
If I stopped working for over a year, eventually there would be complaints, competitors, etc
But within a one year timeframe, there's very little I have to do. And I could get away with working a couple months of the year only + maybe three hours a week maintenance, and the business would grow, slowly.
But, I work consistently, adding new things, because I want it to grow faster. I also know that the environment changes and eventually the current model may stop working or need adaptation.
What do you call that? It's not 100% passive. But, it's not particularly active either.
Actually, having written all this, I remembered someone did come up with a better term: residual revenue.
Meaning that I did a bunch of work in the past that continues to pay off. It will eventually decay, but not very fast. So I can devote most of my energy to new growth, or leisure, over the short to medium run anyway.
Do you think residual revenue (or income) is a better term for this case?
If you need to [edit regularly] respond to SEO changes, or payment provider issues, or maintain your relationships somehow it just isn't passive. It's not a lot of work, hopefully, but it is not passive. You need to stay engaged enough to know how to do it.
Reacting to the environment changes and modeling absolutely is not passive, and I wish people would stop calling it that. I also suspect people underestimate the amount of time they actually spend on this stuff.
I'm not sure that's a terribly useful definition. Since any business must have some means of accepting revenues, and almost any means of accepting revenues is subject to dispute, by your argument there is probably no business in the world with a truly passive income. Likewise, in many places you are at minimum going to have to file some sort of annual statements and tax returns for any commercial business.
If a business is generating revenues that don't require anyone to do routine/regular work to keep the money coming in, it seems reasonable to call it passive, even if someone needs to step in under rare or exceptional circumstances.
What I'm getting at is: If I adjust SEO targets, mailing lists, app or interface code say monthly to keep things moving along, it really isn't passive.
I'm not thinking about annual taxes, or one time problems (DNS issues, certs, payment provider changed) etc.
But routine, regular work absolutely includes any regular updates to website code, transaction providers (add/remove vendors etc.), SEO techniques, etc. If you are tweaking the business weekly/or monthly it is just silly to call it passive.
The SEO and email system more or less runs itself. But, y'know, if I completely ignore it for two years something might change.
Mind you, I have some components that have run since 2013/2014 with no change at all. Most of my system is like that actually.
There are website updates required, but a contractor does that. I just monitor reports.
So there's somewhat more work than I think you're thinking of, but not much.
(It can be done, but it's more limiting and exhausting in general. Just back from three weeks in Europe with two kids under five.)
(Also, I cannot overemphasized how much I like Indiehackers. It's become my new must-read newsletter.)