Starting an online business is often considered by many people stuck in their jobs as the path to riches and financial freedom, yet a surprisingly vast majority of them fail to make a single cent and end up in despair and often left wondering what they did wrong. So, what leads to this failure? In reality (and somewhat surprisingly) the answer isn’t in lack of motivation or action, it is something a lot simpler.
As with anything new (buying a new car, buying a new house, or simply buying a new gadget), there is a “wow” factor at the start but as time goes by something new inadvertently comes along and you tend to lose interest and the last “new” thing suddenly becomes old and useless.
This analogy can be perfectly applied to the online business world, also known as the “shiny object” syndrome. There is no doubt that the internet offers a vast and very real opportunity to make some serious money using a number of different strategies but all of them require some degree of planning and execution to achieve successful results.
Majority of new “intreprenuers” often find themselves overwhelmed with this world of opportunity that they end up trying every possible strategy believing that they can succeed at everything quickly. Soon, the realization hits that it’s not as easy as they thought and that is where the downward spiral to failure starts, hopping from one thing to the next hoping that something will just click and make them the mega bucks they were promised.
So, is this all just a fad? and what exactly is the real secret to achieving online success? To answer the first question, NO far from it. Besides the so called “gurus” there are many real world testimonials of everyday people who have built real, successful online businesses and now make a very decent income most people would only dream of making in their day jobs.
The secret to their success? Quite simple. Choosing one business model and following a plan from start to finish.
As is the case with a traditional business, all online business models offer varied levels of income streams have their own set of pros, cons and risks. You will probably need to understand this quite early in your journey and really device an action plan based on how much time and effort you are willing to invest in order to succeed and accomplish your goals.
In this post, I will offer some insights into some of the major benefits and pitfalls commonly associated with some of the most common online business models and to help you pick the right model and hopefully set you on your path to success.
This business model is the simplest of all online business models and can be executed in many different ways. Affiliate marketing often revolves around a product or an offer from a vendor. Your goal as an affiliate marketer is to drive traffic to the vendor’s product/offer website (or a webpage) and if your prospect makes a purchase, you earn a commission which in some cases can be as much as 100% of the sale. Many vendors also offer recurring commissions, meaning that
you can make the sale once and earn commissions over and over again (often monthly) for as long as your customer stays with the vendor. Quite lucrative don’t you think?
To generate traffic you can either build a content based website, often closely related to your affiliate product and geared towards organic search traffic, or an email list which will enable you to direct visitors to your affiliate offer. Given the fact that on an average less than 15% of visitors will make a purchase both of these strategies require a significant amount of time and effort to enable you to generate enough traffic that is likely to earn you a decent income.
– Simplest form of online business
– Easy to find and promote readymade products from popular marketplaces like Clickbank
– Requires minimum startup investment
– Sustainable over a long period especially if you have a large pool of email subscribers
– Generating targeted traffic or building an email list can be frustrating and time consuming
– Significant risks associated with loosing organic search traffic in case of an algorithm update
– Poor conversions
This business model is quite similar to affiliate marketing but follows a slightly different approach which revolves around keywords research, content marketing (websites) and content monetization. Essentially, it involves finding a single low competition keyword with decent search volume and building a website around it – typically using a 600-800 word article and 4-5 secondary articles targeting supporting keywords.
The benefit of this approach is that you have a number of monetization methods at your disposal, one of them being Google’s high lucrative ad display network (AdSense) which allows you to get paid on a per click basis without having to rely on your visitors actually making a purchase. You easily can find a number of successful examples of such websites around the internet that have done incredibly well for their owners.
Besides AdSense you can also use a number of other revenue sharing ad display networks or affiliate banners to monetize your content and traffic.
Money making niche websites can also be sold for a decent profit on marketplaces like Flippa. In fact, a website making as little as a $1 a day can be sold for as much as $600, and websites making hundreds of dollars a month can easily command a healthy $10-20K. Considering the fact, that a simple micro niche website can be built for $30-$50 (including hosting and setup), selling websites can offer a significant return on your investment. I have covered the process of successfully selling a website on Flippa in detail in this post.
– Very little startup cost, using the right strategies a money making website can be built for as little as $50
– Can effectively start generating small revenues in as little as 30 days with proper keyword research, domain selection, and SEO strategies.
– Process can be easily replicated and automated.
– Extremely prone to traffic loss from search engine updates
– Needs to be scaled up significantly to make a decent income
In recent years blogging has become somewhat of an internet phenomenon. You can find a blog for just about any topic imaginable just like the one you are reading right now. Blogging as an online business model can offer the most sustainable long term income source but requires the most time and effort in order to grow and nurture it. Many aspiring bloggers aiming for the stars give up sometime between the first 3-6 months due to this very reason.
In order to build a successful blog you need to pick a popular topic or a niche which has a diverse interest, can attract a large audience ,and have well-planned monetization strategy. Many bloggers often make the mistake of picking a topic that simply does not have enough of an audience to enable them to generate a decent income. If you are thinking of starting a blog, remember that you will need lots and lots of traffic to be able to quit your day job!
Having said all this, many ordinary people with persistent effort have been able to achieve six-seven figure incomes from mega successful blogs and remember you only need one! Just ask Darren Rowse (problogger.net), Brian Clarke (copyblogger.com) or Yaro Starak (entrepreneurs-journey.com)
– Offers a real, long term and permanent source of income
– A Successful blog can establish you as an expert in your chosen niche and add additional sources of income
– Extremely profitable if you can build up a large and loyal audience
– Low startup cost
– Highly competitive
– Slow, extremely time consuming and requires persistent effort over a long period of time
e-Commerce and eBay
E-commerce is the last of my online business models which probably comes closest to a traditional business. You buy a product at a wholesale price and sell it at retail price with a markup and profit. The only difference is that you do not necessarily need an expensive shop front to start selling your products.
If you intend to sell on eBay, then your customers will most likely come looking for you as long as you have the right product. There is a common misconception, that eBay no longer offers a sustainable income source and there is too much competition. I am testament to the fact that with the right product range, smart pricing and great service, it is very much possible to build a thriving and profitable business on eBay. One of the most useful tools to help you find the right product to sell on eBay is Terapeak, which allows you research hot products on the fly and takes out the guesswork from selling on eBay.
If you wish to sell your products through your own website, then you can opt for a number of “out of the box” ecommerce platforms like Bigcommerce, Volusion and Shopify for a nominal monthly fee. If you wish to avoid a fee, then you can use an open source shopping cart like Magento and Prestashop.
Remember, many of the multi-billion dollar pioneers of e-commerce (think Amazon.com) were once mom & pop operations in someone’s spare garage!
– Also offers a real, long term and permanent source of income
– Virtually unlimited growth potential
– High startup cost
– Sourcing products can be difficult
– Ongoing inventory and working capital costs
Of course, the internet offers numerous other opportunities that are not covered in this post, but once again, they all require a solid, actionable plan in order to achieve results.
So, next time you pull out your credit card to buy the next “guru” product sit down and think about what is it that you are really trying to achieve.