Chapter 1: The 7 Most Common Types Of Online BusinessesMy guess is that you know you want to start an online business, but you're just not sure what the best one is for you? Or maybe you do? Either way, you can use this chapter to confirm which one is best for you and your personality type. By the way, I'm listing these in no particular order.
#1: Make Money Selling Online CoursesIf you have knowledge in a particular area and you know people are currently spending money on information, then this model may be a good fit for you.
Example Of An Online Course BusinessJonathan is a lawyer who passed the bar exam on the first try. He finds out that other people aren't as smart as him and are worried about failing the exam. Jonathan decides to create a course showing people how to pass the bar exam on their first try. Jonathan quits his job. Yay for Jonathan!
Pro's of Starting An Online Course BusinessNotice how I said, CAN be highly profitable because some niches are more profitable than others. For example, people are willing to pay someone to show them how to pass the bar exam because when they succeed, they will get a good job and start making money the investment back. Makes sense right? On the other hand, if you create a course on how to best groom your pug, no one is going to pay for it because:
- Grooming pugs isn't something people care that much about (aside from me)
- There are 136 free tutorials already on YouTube!
Con's of Starting An Online Course BusinessBy far the biggest issue with an online course business is the sales side of things. Because information is quickly becoming free, it takes a lot of convincing to get someone to pay you money for information.
Should YOU Start An Online Course Business?Here's how you know you should start an online course business: Content creation is by far the biggest hurdle. If you do like creating content not just for your courses, but free content that promotes your business then this might be a good fit for you. How to tell if you should NOT start an online course business: The people who fail with online courses, tend to want to over-perfect their creations out of a fear of judgement. If this sounds like you, then you should steer clear of this business model.
#2: Make Money As A FreelancerIf you have a skillset that people are willing to pay you to do, then you may be interested in becoming a freelancer.
Example Of An Online Service BusinessChadwick works as a copywriter for a major marketing firm. He decides to take his knowledge of copywriting and become a freelancer, so he can live out his dream of working from overseas. Good for you Chadwick!
Pro's of Becoming A FreelancerMost people flock to this way of making money online business it's the fastest way to replace your income.
Con's of Starting An Online Course BusinessThe biggest roadblock when it comes to being a freelancer is that you're still working time for money. Sure you can get up and running very quickly and work from anywhere, but eventually most freelancers eventually feel like they've replaced one job with another. I'm not knocking it, just voicing what I have heard from other people in the industry.
Should YOU Become A Freelancer?Here's how you know you could become a freelancer: Here's how you know you should NOT become a freelancer: Most freelancers enjoy the first couple of years in business, but eventually become tired after having to deal with so many different clients (AKA. bosses). On top of that, you still have to find the time to sell your services as you churn out clients. As far as future opportunities go, some freelancers evolve their business into a consultancy where they pay others to do the work for them. For me though, I feel as though that defeats the original purpose of having a freelancing business which was to increase your freedom and not take it away.
#3: Become A Coach/ConsultantWelcome to the business model that most people want…even if they lack the knowledge necessary to coach other people! Okay that was a little harsh. Truth be told, some people do have what it takes to become incredible coaches and so let's talk about that.
Example Of Someone Becoming A Coach/ConsultantJosephine used to work as a recruiter and decided to take her skills and become a hiring coach. She works with small business owners, helping them hire the right people so they can grow faster into the future. You rock Josephine!
Pro's of Becoming A Coach/ConsultantJust like online course creators, coaches need to ensure they're in a niche where people are paying money for advice.
Con's of Becoming A Coach/ConsultantA lot of people are attracted to this model because of all the hype around how easy it is to become a “7-figure coach”. The truth is, that making $1 million as a coach is NOT easy and the majority of coaches barely make a full time living after expenses.
Should YOU Become A Coach/Consultant?Here's how you know you could become a coach/consultant: Here's how you know you should NOT become a coach/consultant: The coaching model is a good one for someone who loves being the center of attention or if you love giving people advice. Also if you're just looking to get into coaching to make money and you don't know much about the subject, please don't do it. It won't work anyway because eventually people will figure out you know very little and your business will die a slow death.
#4: Grow A Membership CommunityWelcome to the business model that everyone would love to have, but are not actually aware of what goes into it. We have extensive experience in this revenue model because we've run a membership community for over 3 years. So yeah we kinda know what we're talking about!
Example Of Someone Who Grows A Membership CommunityFrancis is a dog trainer. He decides to start an online brand teaching people how to train their dogs without paying for a trainer. Eventually he builds a significant free community and decides to open a paid membership version for $29/month where he offers:
- An online community
- Monthly coaching calls
- Online courses
- More access to him via a Facebook group
Pro's of Growing A Membership CommunityBy far the biggest appeal for a membership community is the recurring revenue. A lot of online course creators switch to this model because they're looking for more stability in their business.
Con's of Growing A Membership CommunityThe allure of recurring revenue brings a lot of people into this game and they think it will be “easier” to manage. It doesn't take long for people to realize that managing a paid community isn't as freeing as they expected. It takes capital to free up your time as you need to hire a community manager and customer support to deal with the many ongoing issues that members inevitably will have.
Should YOU Start A Membership Community?Here's how you know you could start a membership: Here's how you know you should NOT start a membership: Look, I get the appeal of a membership community and recurring revenue. The problem is most people aren't aware of what it takes to foster a community and ensure their members treat each other with the respect they deserve. I can't tell you how many times we've had to put out fires because someone said something offensive in our community. With that being said, it can also be incredibly fulfilling watching your long term members grow and prosper before your very eyes like a proud parent.
#5: Start A SAAS BusinessSAAS or software as a service isn't something Jill and I have gone in together, however one of my first businesses was in SAAS. My former business partner and I built out a subscription tool that allowed people to rapidly install and manage multiple WordPress sites all under the same platform. Sounds rudimentary now, but it was groundbreaking back in 2010. We even incorporated in the use of a private blog network before anyone started using this strategy for SEO reasons. There were many positives to this model, however for us who had little knowledge in software development, the negatives definitely outweighed the positives.
Pro's of Starting A SAAS BusinessThe allure of a SAAS business comes in the form of saleability. Out of any revenue model this one is the most attractive to outside investors, giving you an opportunity to exit in the end if you like.
Con's of Starting A SAAS Business
Should YOU Start A SAAS Business?Here's how you know you could start a SAAS business: Here's how you know you should NOT start a SAAS business: In the end with the software we developed back in 2010, we were spending close to $20,000 a month with ongoing development costs. On top of that we found our customers had an insatiable desire for more features and threatened to leave us if we didn't deliver. Talk about needy! Still, the main thing was that this model just didn't fit my or my business partners personality.
#6: Make Money Selling Physical ProductsNext up, let's talk about selling physical products online. The way I see it right now is you basically have 2 options:
- Sell products on Amazon (Amazon FBA business)
- Sell products in your own store
Amazon FBA (Fulfilment by Amazon)It's important to note that we have NOT sold anything on Amazon so everything I'm about to say comes from other people I have spoke to who run FBA businesses. They say this:
- It's easy to get started
- You normally start making money quickly
- Cash flow and inventory can become a problem
- Profit margins are very small
- It's a build to sell model
- You sign up as an Amazon Seller
- You create your store
- You find a product that's a good fit (there's a whole learning process you have to go through for this)
- You find a manufacturer or wholesale who can sell you this product
- You buy XYZ of the product and ship to your Amazon fulfilment warehouse
- You list the product on Amazon and hopefully start making money
Your Own StoreThe other option is to sell products in your own store. In other words, you build a store using something like Shopify on your own website and you sell products either through:
- Buying your own inventory
- You find a distributor who dropships
- You list their products on your website
- Someone buys a product for say $100 from your store and you handle their payment
- You then send the customers information to the dropshipper who ships out the product
- You pay for the product at the wholesale price of say $80
- You profit $20 from the transaction
Pro's of Selling Physical Products Online
Con's of Selling Physical Products Online
Should YOU Start A Physical Product Business?Here's who should start a physical product business: Here's who should NOT start a physical product business: The experience I have is in dropshipping where I found a niche that seemed suitable for the model. What was the niche you ask? Dance poles. Yep. I went there. Turns out, there's a thing called pole fitness which is quite popular and many people buy dance poles for $300-$500 a pop to put in their homes. I found a manufacturer who let me dropship their products and in the first month I generated $1,200 in sales…and $180 in profit. The next month I had someone make a purchase order of 6 dance poles at $400 each ($2,400). I went to my dropshipper and excitedly told them! They got back to me and said they only had 3 available and that the customer would have to wait 3 months for the other 3. Total downer. Apparently they were really bad at managing inventory. Topple that with the amount of customer support and the fact I was only profiting 15% per sale, I realized that I could make more money with less hassle using affiliate marketing instead. And that leads us into the final business model.
#7: Make Money Through Affiliate MarketingI purposely left this model to last because it's the one that appeals to us the most. Affiliate marketing is just you acting as the middle man for the customer and the merchant where you take a commission for anyone you refer.
Example Of Someone Who Makes Money As An AffiliateConstantine has a popular website where he blogs about all things model trains. He's also a really cool guy…obviously. He's always recommending products on his blog that his readers ultimately end up purchasing. One day Constantine finds out that his favorite online model train store has this thing called an affiliate program. This means that he will get a commission of 20% for anyone he refers to the store. Constantine signs up for the affiliate program and creates his own unique affiliate links. These work by tracking the sale for anyone who clicks on them. Now whenever he recommends a product to his readers, he uses his affiliate links and earns commissions for anyone he refer to the online model train store. Nice work Constantine!
Pro's of Affiliate Marketing
Con's of Affiliate Marketing
Should YOU Start An Affiliate Marketing Business?Here's who could start an affiliate marketing business: Here's who should NOT start an affiliate marketing business: Affiliate marketing was the first business we ever started and after trying every business model out there, for us it's clearly the best fit for our personalities. We like building online brands and in real life Jill and myself are both great connectors (especially Jill). So much so that we're doubling down on this revenue model not just for The Screw but for new brands we're starting like nootrohacker.com and strippedskincare.com. We see a huge opportunity to build and sell online brands using brokers like Empire Flippers or FE International.
Tell us in the comments below. Which model best suits your personality & goals?
Chapter 2: How To Validate Your Online Business IdeaTell me if this sounds familiar? You had an idea for a business that really excited you and so you quickly snatch up the domain name because THIS will be the business that makes you successful. You know where I'm going right? Back to reality: you now have 27 domains (AKA. dead dreams) which you have done nothing with because it turns out…none of them were actually a good idea in the first place! I'm not judging you because I struggle with this as well. Entrepreneurs naturally gravitate to new ideas. It's what makes us different from most people, which is a good thing. What we really need is a flawless way to check and make sure our ideas are valid and not a waste of time. Wouldn't that be helpful? Well, it turns out I have a way of validating your ideas quickly and easily. There are only 3 steps:
- How much money is there in the market?
- What is the size of the online market?
- Does this line up with my goals and personality (we've already talked about this)?
Step 1: Will It Make Money & If So How Much?This should be the first thing you check and it's quite simple. It comes down to knowing what industries have the most money. Pretty simple right? Once you know how profitable or unprofitable your idea is going to be, it makes it easier to pull the trigger. There are 3 questions you can ask to determine this:
- How much money does the standard customer have?
- How much does the average product sell for and what are the profit margins?
- What does a customer get in return for purchasing a product in this industry?
Step 2: Is There A Market Online?Here's what I mean. Imagine you have 2 restaurants that sell the exact same food. One is located in downtown Manhattan, NYC and the other is in located off the main street in Davis City, Iowa. Which one has the bigger market? Fun Fact: If you don't know the answer to this then you probably shouldn't be starting a business! Here's how we determine an if there is a market online:
- Are people searching for information related to the niche?
- Is there a significant following on social media?
- Are there online publications talking about it?
Are People Searching For Information?This one is pretty straight forward. We use a tool to see if people are searching for keywords related to the niche. There are two options:
Step 1: Search for nootropics
Step 2: Check the Phrase Match to see how many keywords there areIn this case you can see there are over 10,000 keywords and so it's obvious that a lot of people are searching for information around nootropics.
Is There A Significant Following On Social Media?The next step is to check each of the available social media related platforms to see if there are profiles related to the niche. For example, you could run a search on:
Are There Online Publications Talking About It?The final step is to see if there are independent websites talking about the niche your idea is in. For example with nootropics, I want to see if there are any bloggers focusing in on this subject.
Step #1: Search On Google
Step #2: Are There Big Bloggers Talking About It?If after doing all 3 of these checks you can see that you have an online audience to access, then you can move forward with your idea.
Step #3: Does This Line Up With My Goals & Personality?The final step is nice and easy, which is to take a look at the 7 types of online businesses you can start and see if this idea lines up with the one that fits you best. For example, in the nootropics space there are many different products that have affiliate programs. You can tell by running a simple search on Google like this… If on the other hand I knew that selling online courses was what I wanted to do, then this niche is probably NOT a good fit for me. So just to recap the 3 steps to validating your business idea:
- How much money is there in the market?
- What is the size of the market?
- Does this line up with my goals and personality type?
Using the criteria mentioned in the first step, out of the following choose which one you think is the MOST profitable online industry and the LEAST profitable and if you have a business idea you want to run by us, send that through as well? NOTE. I purposely left out things like pornography and online gambling because they are classified as addictive industries.
- Arts, crafts and collectables
- Business, investing and personal finance
- Clothing and accessories
- Beauty and skin care
- Health, fitness & nutrition
- Home and garden
- Hobbies and sports
- Technology and consumer electronics
Chapter 3: The 3 MUST HAVE Tools To Start And Run An Online BusinessStarting and running an online business should NOT be expensive. I'm not saying you shouldn't invest any money because that doesn't make any sense. What I am saying is that in order to be successful, there are only a few select tools you'll need to get the ball rolling. These include:
- A hosting provider & domain name
- A website builder
- An email marketing provider
Tool 1: Website HostThe first necessary item is a hosting account and domain name. Most hosts will give you 1 free domain name, otherwise you can register one over at namecheap.com. Whether you decide to go with my suggestions or something else, I'm just here to teach you the criteria so you can make the best decision possible. By the way, if you already have a hosting provider and you're not happy with what you're getting, you shouldn't be afraid to make a change. It's easy to do and is worth the time it takes if it means improving your website performance. Here's the criteria to keep in mind when choosing a web host: Keeping these 5 things in mind, I'm going to offer you suggestions for both a cheap hosting provider and a higher end solution.
Cheap Website HostingIf you want to stay on the cheaper side of things and spend less than $10 a month on hosting, then the most you're going is get is a shared hosting account. Like anything in life, you get what you pay for and so you shouldn't expect much from this type of account. Still, there are some decent options available all of which we have tested in the past.
Bluehost Shared HostingPrice: $3.95/month Performance: 4/10 Customer Support: 6/10 Down Time: 7/10 Tools & Resources: 6/10 Summary: Bluehost is the most used website host in the world, but certainly not the best. We have a reseller account that hosts a few of our websites and to be honest with you, the performance isn't great and we are planning to move everything over to WP Engine or Siteground (mentioned below). If you're not sure how your website is performing, you can use a free tool like this one to find out.
SiteGround Shared HostingPrice: $3.95/month Performance: 6/10 Customer Support: 6/10 Down Time: 7/10 Tools & Resources: 6/10 Summary: We have a GoGeek account at Siteground and so far the performance has been better than Bluehost, but not by far. If you're looking to get started with a good affordable hosting provider, then Siteground may be for you. Visit Siteground
High Performance Website HostingIf you care about your websites performance and you know you want to use WordPress to build your website, then WP-Engine may be your best bet. It's what we're using right now for The Screw.
WP EnginePrice: Starting at $35/month Performance: 9/10 Customer Support: 9/10 Down Time: 8/10 Tools & Resources: 8/10 Summary: After making the switch over to WP Engine which I talked about here, we tripled our website performance. On top of that, their customer support is much more knowledgeable about WordPress than I am, which is really important! Most of the time, I just ask them to do the work for me and they normally oblige. Whether you decide to go with these guys or someone else, just keep the following in mind. A better website host will:
- Improve performance (page load time)
- Keep people on your website for longer
- Help you rank higher on Google
Tool 2: Website PlatformThinking you'll have to pay a web designer a thousand dollars to build your site for you? Think again! Not only are you going to build your website yourself, but you're going to spend barely anything in the process. Here are your 3 main options:
WordPressTHIS website is built on WordPress along with all of my websites and about 30% of the internet! It was originally created as a blogging platform, but has evolved into much more than that. Today if you want to start an online business, you do it on WordPress and you do it for free. That's right, it's free! While Squarespace costs money, WordPress is free and open source. I don't want to talk too much about WordPress because you can read all about it on their website over at WordPress.org
WordPress ThemesAfter you install WordPress it comes preconfigured with a free theme which you can change at any time. This is where I recommend you invest some money into buying a good them for your business. I could spend all day long reviewing the thousands of themes out there, but instead I'm going to give you the criteria to follow when choosing one for you:
- It should look nice (obviously)
- It should have high performance
- It should contain the right amount of features for YOU
SummaryI just want to reiterate the importance of the following set of criteria when it comes to choosing a website builder or theme: For me though the most important thing is website performance. Right now as I'm writing this guide, WordPress just released their new page editor Gutenberg. I'm not going to say much about it right now, but it's clear it's about to get even easier to customize. Therefore, now has never been a better time to switch if you're unnecessarily paying for something like Squarespace of Wix.
Tool 3: Email Marketing ProviderThe third and final must have tool to run an online business is an email marketing provider. The purpose of this tool is to: Now there are many different email marketing tools out there and so here is the criteria you should follow when making a decision:
- It should be affordable (start with something that's less than $30 a month)
- It should be easy to use (some tools are more complicated than others)
- It should have great customer support (you will more than likely be contacting them often in the future)
Email Marketing Providers Vs Full CRM (customer relationship management)It used to be that all you needed from an email marketing tool was the ability to send emails. Nowadays most providers come with some CRM capabilities, while others don't Some well known examples of CRMs include:
Let's RecapThe 3 must have tools you need to run an online business:
- Website host
- Website platform
- Email marketing provider
How Much Will It Cost?If you were to go with my recommendations, you're looking at:
- Startup costs: $162.90 – $193.95
- Ongoing monthly expenses: $32.95 – $64
How To Keep Your Costs Low When Buying Other ToolsWhat I see a lot of people do is they don't set a budget when they start their business and then end up with 20 different tools that aren't doing anything to increase revenue. Here's what you should do. Set a budget of say $150 a month for the first 3 months. That will give you enough wiggle room to test out some other tools (most come with free trials by the way). Then if you want to try a new tool and you're already over budget, find the room in your expenses by canceling an existing tool you're using. Truth be told, if you can't break even in 3 months, then you're doing something wrong and no tool or online course is going to save you. No offence!
Question: How much are you currently spending with online tools and out of the ones you use, which could you NOT go without?