Like most professionals, you’ve likely flirted with the idea of quitting your job and becoming an entrepreneur. The idea of owning your own work, being independent, working from home, and living life on your own terms is an exciting one.
You may doubt you have the technical skills, doubt you have the time, have no idea how much money it takes to start, or just question whether it really is possible or if 19-year-old tech wizards spending thousands of hours hunched over their keyboards are the only ones making a living online.
In writing this article, we hope to dispel the myths around making a living online, demystify the different types of online business models and assist you in orienting yourself towards a successful future as an online merchant, blogger, or service provider.
What skills do you need to build a successful online business?
Many successful online business people start their entrepreneurship journey with a positive attitude and nothing more. While it certainly helps to have a rudimentary understanding of business, finance, and computer skills, it is not mandatory.
What is mandatory is the ability to overcome obstacles, learn new skills, and the ability to “stick with it” even when the first, second and even the third attempt don’t work in your favor.
While you may think that you don’t have any skills that are applicable to your new career, chances are there are some things that you are overlooking. You can find a way to leverage your professional background and hobbies when building your new business.
Build your business around a hobby or passion
If you have a hobby that requires specialized equipment, this could be a great product category for you to build a business around.
Say you have golf as a hobby. You could look to create your own products that cater to golfers (golf shirts, socks, gloves, score card holders, etc) on Amazon. Or, you could get a sales tax exemption certificate (free in most states) and retail products from popular golf companies such as Calloway and Ping online through your own storefront. You can learn more about both of these business models in their dedicated sections below.
Build your business around your skillset
Building any type of online business will require focus, hard work, and persistence. Some will require you to understand product quality, some will require you to be a great writer, some will require you to become a great manager and others will require you to develop an understanding of how algorithms work.
Depending on the skills you have developed in your life so far, you may find some of these online business models to be more appealing than others. As we outline each business model we try to explain the various skill sets that are required to make it go.
Build your business based on an existing business model or build something new
There are a lot of misconceptions about starting a business online or in the technology sector. Some people think that you have to come up with a brand new concept that is going to compete with Facebook and Google, raise 50 million dollars from venture capital firms and hire a team of engineers.
While there is certainly merit in trying to topple the tech giants, the vast majority of people making their living online, do so in one of a handful of proven business models.
The proven business models that we will be discussing are ways that people can make a great living for themselves and their family, be their own boss and contribute to society by providing a product or service. You won’t find practitioners of these business models on the Forbes list, but many of the folks on the Forbes list started small, with a small business just like the ones we will be discussing here.
The business models we’ll be discussing are ways to profitably provide a product or service to the public. They are:
- Selling on Amazon
- Building an eCommerce website that sells products from US-based companies
- Building an affiliate marketing or lead generation business
- Build a web development or marketing agency
- Building a software as a service business (SaaS)
We hope that you find a business model that feels like a fit for you. Of course, you won’t know how to do it all day one, but with persistent effort, there’s no reason you can’t replace your current income and then some, all without investors, staff, a boss or an office.
1. Building An Ecommerce Business
One of the most popular online business models is building an e-commerce business. Ecommerce simply means selling products online. These products can be digital such as courses, templates, or images. Or, the more popular option of selling physical products.
While it is typical for e-commerce to encompass all online retail models including selling on third-party platforms such as Amazon.com, Walmart.com, and Etsy.com. For the purpose of this article, we will only be focused on e-commerce as selling through one’s own website. We will have a section later on in this article about selling on Amazon.
Skillset for Ecommerce
While it is not mandatory to have on day one, learning basic web development skills will need to be learned at some point before launching your e-commerce business. This likely sounds like a daunting task. However, this is nowhere near as complicated as most people believe. Ecommerce website building has been made much simpler with the help of companies such as Shopify. Shopify allows you to develop a professional website designed for eCommerce by simply dragging and dropping the content you want onto a screen and selecting images. In addition, there is a litany of free content and tutorials online about how to build a Shopify website.
If you already have web development skills, you can leverage them by using a content management system that takes a bit more configuration such as Drupal, Magento, or WordPress. You will have more flexibility to configure the website than you would with Shopify, but this is not a route that is advised for newcomers to web design.
In addition to learning web design, it is beneficial if you have skills at building relationships with companies in the industry you’d like to build your business in. You’ll likely need to leverage these relationship-building skills to manage customer inquiries by phone or email, recruit and negotiate terms with affiliate marketers to help market your products and get approved as a retailer with product suppliers which we’ll elaborate on here.
Should you sell your own products or sell other companies products?
When looking to build your e-commerce business, one of the first questions you’ll have to ask yourself is “will I be selling my own products, or will I be a retailer for other companies products.”
For the vast majority of small businesses, it is out of their reach to start off by selling their own product. It requires more money, skills in product evaluation, and marketing. While these may all be doable down the road, if you are just looking to start your e-commerce business, this is not how we recommend you start.
We recommend that you start building your e-commerce business by selling other companies’ products. They have already spent time and money creating products and branding them. They can likely fulfill orders for you out of their warehouse and can even handle customer inquiries for you in many cases. Of course this means that you need their permission to sell their products and get the products at a discount by being a retailer.
Picking an industry for your ecommerce business
If you have a hobby that requires certain products, that may be a good place to start. You also may want to look at common business items and household items that cost over $100. In 2020 and beyond, it is difficult to build an ecommerce business with products that cost less than $100 and many that have success will be selling products that cost $500 or more.
Another caveat that will help you select industries that could be a fit is to look for industries where there is not a tremendous amount of brand loyalty. For instance, if you are a runner and have decided to sell high-end running shoes from Nike, Adidas and New Balance. You may find problems getting approved with such large suppliers. These companies are all large enough that selling on a small website like yours really won’t move the needle for them in terms of revenue and it really just adds a liability for them to worry about.
While you may never be approved to be an authorized Nike retailer, there are thousands of small businesses out there that have great products and would love to get more sales by approving you as a retailer. For instance, if we were to examine a hobby such as crossbow shooting, we would quickly realize that there are several companies trying to get more exposure for their products and none of them are nearly as large as the running shoe brands that we examined earlier. Many companies like this would love to have you as a retail partner in order to get more sales. In addition, many of these crossbows and crossbow accessories sell for over $100 which meets our size criteria. We may have just found a great industry to build a business in.
Now that you have selected an industry with products over $100 and that has a number of successful brands that are not huge corporations, it is time to get approved to sell their products. This process is slightly different for each US state, but in general states offer “resale certificates” “sellers permits” or “sales tax exemption certificates” for little or no cost.
Get suppliers for your business
Once you have selected an industry, developed your website and received your sellers permit, it is time to reach out to these retailers to develop a professional relationship with them and get their approval to sell their products.
In general, the approval process is a quick one, you should give them a call to introduce yourself, discuss your intentions and tell them a bit about your company. Some of these companies may not be interested, but it is important to not get discouraged. Often times, all it takes is one or two great suppliers for you to build a great business.
Companies that are interested in working with you will oftentimes send you a dealer application to complete. This states how you will pay for the product, your name address and contact information.
Cost to setup an Ecommerce business
One of the most attractive traits of online businesses is that they do not cost a lot of money to start. Ecommerce businesses can be started with as little as $1,000. Here is a rough outline of what we believe the costs could amount to:
- Domain name, 1 yr. Shopify account and a couple apps from the Shopify App store. $450
- Marketing expenses to get you off the ground. $300
- Establish an LLC or Corporation. $100
- Obtain a seller’s permit or resale certificate. $20
Time commitment to build and manage an Ecommerce business
Depending on your skillset, prior business experience, and industry of focus there is a range on how long it will take you to get your business online and profitable. Here is an idea of the time frame that you should expect.
- Design and build website (1-5 weeks depending on skill level and platform)
- Establish LLC or Corporation (1-4 weeks depending on the state of formation)
- Obtain a seller’s permit (1 week)
- Establish a dealer account with 2-4 companies in your industry. (2-5 weeks depending on how prompt they are and your ability to follow-up)
- Other (setup Facebook business manager, Google Search Console, Analytics, Ads, Merchant center, and store feed). (1-4 weeks depending on your technical skills)
Now that you have invested some time in picking an industry, setting up a website, and getting approved with suppliers, it is now time to make some sales and ship your items. This second phase of your business should be less time-intensive than the original portion. You can market your products on Google, fulfill orders, and manage customer inquiries in under 10 hours per week. If you are looking to use Facebook and Instagram as an additional source of traffic, you should add an additional 3-8 hours per week.
Now that you’ve figured out what type of marketing works for your business and have it dialed in, the management of your business should be much more passive and you can ideally run your business on less than an hour per day. Of course, if you are having lost shipments, several customer inquiries or you are still working to get your marketing dialed in, your workload could still be 20 plus hours per week.
How much is your business Ecommerce business worth?
Maybe you want to hold the business forever, that’s great. However, you may want to sell it at some point and at the very least want to know what it’s worth. While there are too many variables to tell you what your business may be worth, we can tell you that e-commerce businesses making under $250K in net profit per year should sell for 2 – 3X net profit. Larger businesses could sell for upwards of 3X depending on a number of factors.
We put together an article on selling an ecommerce business that walks business owners through the valuation and sales process in hopes of providing some clarity into what can be a complex process.
2. Building an affiliate marketing business
If you have ever read a blog or even a news article that recommends a product to you and then gives you a convenient link to the website of the product, they weren’t just being helpful, they were making money off of your click or your purchase.
Affiliate marketing businesses make money by promoting other businesses’ products or services. They are typically paid a commission for every purchase made by someone who they referred to the website.
There are several variations of this business model, but the one we’ll be covering here is the popular model of ranking a website with SEO and promoting products sold on Amazon. Amazon then pays a commission for the referral, this is called the Amazon associates program.
Skills needed for successful affiliate marketing business
Successful affiliate marketing businesses get traffic by ranking in Google’s search results. Of course getting this traffic means you have to create content that Google finds worthy of ranking in their search results. This means that you need to learn to make great content, and, you need to learn how to create content that is optimized for Google’s algorithm.
Creating content that is optimized for Google (and other search engines) is called Search Engine Optimization, or “SEO” for short. If you are only going to learn one skill in order to make money with your affiliate marketing business, that skill should be SEO.
What exactly will you be building?
If you are going to promote other business products and get paid for it, you should first find a niche that you are interested in, has low enough competition that you can rank for it in Google, and sells for more than $50 on Amazon. If you sell cheaper products, the juice really isn’t worth the squeeze in most cases.
Once you have selected your niche, it is time to build a website. This means purchasing a domain and hosting.
You’ll also want to either hire a remote content writer or dedicate 10-15 hours per week to research and write articles for your website. Hiring a remote content writer can be done easily by using websites such as onlinejobs.ph or Upwork.
What does it cost to start an affiliate marketing business?
While there are almost no costs associated with starting an affiliate marketing site, the vast majority of the profit in this industry goes to seasoned SEO experts and large media companies that attract tens of millions of visitors per month.
While your new website may not become huge overnight or even in the first couple years, there are many cases of newbie SEOs starting off in small, uncompetitive niches that make a few hundred dollars per month and grow their skill set to the point where they have a portfolio of websites making them tens of thousands per month.
When starting one of these small websites, you can get to profitability by spending less than $500. You will only be incurring an expense for your domain, hosting, and any links that you may purchase. There are ways to strip these costs down even further so that you are spending less than $100 by not paying for links.
Who does this business model lend itself towards?
If you did well at math, engineering, and science in school, there is a good chance that you’ll be able to learn SEO and build a successful affiliate marketing website. If you don’t have any technical skills and do not have any desire to develop them, this is not the industry for you.
If you have more time than money, this is a great business model for you. As mentioned, these businesses can be successfully built under $1K, but it will take learning some new skills, writing content, and spending time to build your website.
What do valuations look like at the time of selling?
One of the many benefits of the affiliate site business model is that they are extremely passive once they have been built. This is gold for investors as it allows them to buy an asset that they don’t need to spend much time on. There are even investment companies that buy a portfolio full of affiliate marketing businesses.
One of the downsides of this business model is that it is entirely reliant on Google’s algorithm to get traffic. Some large affiliate businesses may have other traffic channels, but the majority of sites doing less than $500K/yr. in revenue do not have that luxury. This reliance on Google adds a degree of risk to the business and balances out the valuations.
Overall, affiliate marketing websites that generate less than $100K in profit per year will sell for ~2X annual net profit. As they get larger and older, the risk diminishes and the buyers are willing to pay a bit more. For affiliate businesses that do north of $500K in revenue a year, valuations are typically between 2.5 – 3X of the net profit.
For content sites that are monetized through display ads and affiliate links, we put together a short article on valuation that we hope will be helpful.
Affiliate sites are a great business model because they are relatively easy to start and grow, while still having huge potential upside. The business model is simple and by promoting other people’s products you don’t have to worry about holding stock, dealing with customer support or anything else related to product development.
A well built affiliate site can generate income fairly passively, once established. Buyers are willing to pay 32-40x multiples of monthly net profit too, meaning that you and I can have six-figure exits without too much difficulty. If you choose the right niche and the right products to promote, you can make a very nice income from just one affiliate site.
The key to making affiliate sites succeed comes down to quality. A well planned, well researched site with top notch content and a good link profile is a really solid business. A site that is built to last will almost always outperform a lower quality site in the long run.
While affiliate sites are great to make a living from, not owning the product or the offer will eventually limit your ceiling. This is why many affiliates choose to go on to become authority sites where they build a loyal following and start developing their own products to sell to their audience.
For those entrepreneurs who believe that building profitable affiliate marketing websites sounds like a business that is a fit for you, we highly recommend looking into the Authority Hacker course.
The Authority Hackers also have a great podcast for novices and experts alike that we discuss further on in this article.
3. Marketing or web development agency
Offering a service to another person or business is a very straightforward business model. It is popular for individuals and partnerships to develop skills at marketing and/or web design and offer these services to small businesses in a certain sector or in a certain geographical area.
While it may be a rewarding career to help other people build their business, it is not without its pitfalls. A couple of the roadblocks keeping people out of it is the fact that they need to be an expert in the skill that they are offering, they need to find clients to pay for this service and they need to manage the relationship with these clients ongoing.
Skills needed to build a successful web design or marketing agency
Running an agency can be a more hands-on business than others that we’re covering in this article. You’ll need to be the type of person who enjoys working with business owners, meeting deadlines, and answering questions. If you are the type of person who turns and runs from interaction, there are plenty of business models for you, but this isn’t one.
The most important skills you’ll need to get your service business off the ground are: getting to be a master at whatever service you are offering and selling that service. Once you can offer a valuable service and get to be a competent salesperson, then it is time to scale your business. You’ll get some referrals from your clients but should also build out a sales funnel to keep new clients coming in.
Once you have developed a sales funnel that works, and a replicable process for delivering your service, it is time to build a team. Your team will likely be virtual assistants overseas to start, but with time and effort, you’ll be able to grow to have an in-house team if you so choose.
What does it cost to build a successful web design or marketing agency?
Like the rest of the business models we outline in this article, you can build your service business on a shoestring budget as long as you are willing to build a skillset and work hard at your business.
You should count on building marketing material, a website, setting up a CRM system and social media, or having a freelancer build some of it for you. In total this can cost anywhere between $100 – $2,500.
You can get your first clients by going to business meetups, networking events, or going into small businesses in person to ask if people can use your services. This may be uncomfortable, but it is important to remember that this is how small businesses must get clients, nobody will know about your service unless you tell them about it.
How much time does it take to build a successful web design or marketing agency?
When you are first starting your business, you can expect to work 40 hour weeks on marketing, providing your service to your few clients, answering their questions, and building out your internal processes. The best agencies will quickly get processes and procedures built out so that they can hire some of the work out to employees or freelancers.
Many agency owners find that offering fewer services provides a much better work-life balance. If you just provide off-page SEO to 40 businesses, you should have your procedures created in a way that lends itself to being outsourced. If you do web design, social media marketing, SEO audits, and logo design, there will always be a new problem that needs solving or a new procedure that needs to be created.
Who should consider starting a marketing or web desgin agency?
Web designers typically have some sort of creative or artistic traits. In fact, it is a great way for artists to monetize their skills to make a good living. Social media marketers also will need to have an understanding of how to create attractive images and write copy that makes the product appealing. These are qualitative skills and maybe possessed by people who wouldn’t consider themselves “computer savvy.”
While designers may take to the aesthetic part of the business, there is room for the analytical business person coming from an engineering background. SEO and PPC marketing are best done by someone who understand numbers, conversions, split testing, and data. This being said, all agencies will have to sell and deal with clients when getting started, so having “people skills” is paramount to getting your agency off the ground.
What can you expect to sell your agency for when the time comes?
The market for buying agencies is robust and agencies are often purchased by competitors. Because the competitors already have their own processes in place and a staff to carry them out, they are often able to profit greatly by adding the clients of another agency into their business. This allows them to add significant additional revenue without adding much in the way of costs.
While it may be easy to find interested buyers for agencies, finding buyers that are willing to pay 100% cash is difficult. Because they are essentially buying a relationship with your clients and these relationships can be fragile, it is unlikely that they will be willing to pay with cash upfront. Buyers giving sellers a revenue share for 2-3 years following transactions with a 50% down payment is the typical deal structure that you can expect to see with a small – mid-sized agency and they will likely sell for 2 – 2.5X net profit.
Agencies that do $5mm+ in revenue and have a management team in place can expect to go for larger valuation multiples (3-4X net profit) and get more cash at close (75%+). These larger businesses will have a smaller buyer pool which also sometimes means that the business will stay on the market for a longer period of time before selling.
If you are interested in learning more about the valuation and sales process as it pertains to marketing agencies, we put together an article just for you. Selling a marketing agency.
4. Amazon FBA business (selling products on Amazon)
Not only is Amazon one of the most recognizable and largest companies in the world, but it is also the fastest-growing retailer. Unlike many of its competitors, the majority of the products being sold on Amazon are being sold by small business owners who act as third-party merchants on Amazon’s massive platform.
Amazon FBA stands for Fulfillment By Amazon. This is the most popular way to sell on Amazon and simply means that Amazon is responsible for the order fulfillment.
Why start a business selling on Amazon
Amazon has removed a large part of the friction in running a retail business. You no longer need to worry about how you’ll ship products to your customers, how you’ll be able to handle returns, how to find a payment processor that works for you, or how to get your product in front of millions of potential buyers. Amazon handles all of this.
Of course, Amazon doesn’t do this for free. They charge 15% per sale for most categories, along with charging for returns, packaging, and shipping. In addition, the marketplace has gotten competitive in the past couple of years, so you may need to pay for marketing on Amazon (Amazon PPC) to get more hungry shoppers to purchase your products.
How much time and money does it take to start selling on Amazon?
While finding suppliers to manufacture your products, seeing what sells on Amazon and getting the product to Amazon’s warehouse seems like a time-intensive task. Once you have discovered a couple of products that work for you, there is very little management that is needed from you ongoing. There are Amazon businesses that sell several hundred thousand dollars worth of product per month and only spend 1-2 hrs./week running the business.
Testing products to see what sells can be a bit of a process. Software tools like Helium 10 and Jungle Scout have made the process easier for sellers as they can now find what people are searching for on Amazon that isn’t currently being offered. Even once you find a product category to sell in, you still need to buy the product wholesale, have it private labeled with your brand (optional), have it delivered to Amazon’s warehouse, and offer it at an attractive price as it has no reviews yet. We would recommend having at least $10k and a good consultant or course if you are looking to start selling on Amazon.
Who should start an Amazon FBA business?
If you value your time and are willing to invest $10k and a few hundred hours upfront in order to build a successful business, Amazon FBA could be for you. The passive nature of these businesses and the fact that you don’t have to deal with employees or customers makes them very appealing to people that don’t want to have much interaction.
Amazon businesses are often slow to start. You will lose money before you make it and even products that you think will be a home run, could turn out to fall short of that. Therefore, you should only look to start an Amazon FBA business if you are okay with pushing through failures and learning from your mistakes. Like all other business models that we are discussing, this will not be an overnight success.
What will your Amazon FBA business be worth?
Once you have a sustainable, profitable business selling on Amazon, it is something that investors may find interesting. There are always career changers looking for a passive way to replace their income and investment companies that do nothing but buy and grow Amazon businesses.
To get the highest valuation for your Amazon business, you should have products that are not seasonal, your business should be growing steadily, you should have well-reviewed products and not more than 50 SKUs. Of businesses that check all of these boxes, smaller businesses (make less than $200k in annual profit) will sell for 2 – 2.5X net profit. Businesses doing over $1mm in annual profit will go for closer to 3.5X annual profit. This of course is a guideline and there are many factors that go into valuing Amazon businesses.
For more information on selling a business and valuation, we put together a brief business on selling your Amazon FBA business.
5. Starting and running a SaaS business (software as a service)
While creating a SaaS business is not seen as the first step along the digital entrepreneur journey, it is definitely one that has upside. Successful SaaS businesses are coveted by investors due to their low ongoing costs, residual revenues, ability to scale, ease of management, and high margins.
What a successful SaaS business is made up of
A successful SaaS business is one that solves or provides value for the consumer at a reasonable price, is able to support its customers with a reasonable amount of effort and is able to get customers at a reasonable acquisitions cost.
What skills are needed to start a SaaS business
SaaS founders don’t all come from software development backgrounds. In fact, many successful SaaS founders don’t write code at all. They may just have a great idea for a SaaS product, they hire a developer to build it for them.
While it is not a prerequisite to be a software developer, hiring a developer can be pricey and you’ll still have to make sure the software works. Once the SaaS has been created, you’ll need to build out a support system to assist your customers. This could again be outsourced to a third party for a cost.
Once your SaaS is built and you have a support system and FAQs in place, it is time to market your business. Depending on the industry and price point for your SaaS, you may have to build an expansive funnel with support videos and free trials. Many SaaS businesses have found that they need over 10 quality touches on a prospect before they become a paying client. This means you’ll need to have a budget and timeline to build out this marketing funnel. If you are new to digital marketing, this is really not a business model that should make your shortlist.
What does it cost to build a successful SaaS business?
As outlined above, there are several skill sets that are needed in order to build a profitable SaaS business.
It is possible that a small team of 2 or 3 entrepreneurs can get together to each provide a service and be able to successfully bootstrap a SaaS business with under $1,000. If you are looking to go at it alone however, you may need to hire a couple of people to fill in around you. This means budgeting $10,000 for development, $5,000/ mo. for marketing and $2,000/ mo for customer support. If your business grows according to plan, you’ll have all the pieces you need in place to have a great business. However, if you misjudge the market and struggle to get customers or if your developer was unable to meet your specifications, you’ll be out $25k +.
While SaaS businesses certainly have their place and aspiring entrepreneurs find their mouths watering at the valuations some SaaS businesses get, you should know what you’re getting yourself into and that this is not an area where newbie entrepreneurs are likely to find immediate success.
What do successful SaaS businesses sell for?
There are more variables when it comes to valuing a SaaS business than there is with any other online business. We often speak to sellers who figure they should be able to sell their business for 10 X or even 15 X revenue because they read an article where a larger software company sold for that. Unfortunately, these cases are few and far between. The majority of SaaS businesses sell for a multiple of their annual net profit.
While you may not be selling the next Instagram, The valuation multiples on SaaS businesses are typically higher than the multiple on the rest of the business models that we’ve outlined.
Investors like to see a SaaS business that they believe they can scale, one that has low monthly fixed costs, a team that can be transferred easily, one that has great reviews and perhaps most importantly…one that has recurring revenue. If you have to continually attract new clients to pay you a one-time fee, that is not nearly as exciting to an acquirer as a business that automatically bills their subscribers every month.
If a SaaS business has a remote development team, great reviews, is growing, has few competitors, and 90% residual clients, you could expect to receive a valuation from 4 – 6 X annual net income.
If the business has a high customer churn rate, stagnant growth, and just decent reviews, not only will it be much more difficult to sell, when it sells it may be for only 2 – 3 X net income.
While valuations north of 6 X do exist, they are few and far between. These businesses have typically built a name for themselves and a reputation of being the “go-to solution” in that industry. In addition, it will almost always be a strategic buyer or buyer from within the industry paying over 6 X income for the business. Financially motivated investors such as private equity groups and family offices are unlikely to see these investments as suitable.
For those interested in learning more about the valuation and sales process, we put together an article all about selling a saas business.
- The SaaS (software-as-a-service) business model is an online, usually cloud hosted, software that is sold on a subscription basis.The benefits of this model are the fact that you have access to track and understand your customers through data past the initial purchase. If data is tracked and analyzed properly, the SaaS model gives clear insight into how to better cater to your customers and build a product that best solves their problems. In order to define and track the metrics that matter most and make data-driven growth decisions, start by working through the SaaS Actionable Metrics Framework.A negative of the SaaS model goes hand in hand with the benefits. Since there is this extra level of transparency there also are many more dynamics and customer touch points to get right in order to be successful. These can include user onboarding, customer success (proactive customer service), knowledge-bases, pricing strategies around upgrades, renewals and expansion revenue and ongoing product feature updates just to name a few.
Things every online business should have
By now you’ve read up on the different types of online business models. Hopefully you’ve shortlisted a few that stick out to you so that you can research them further and take your first steps on your entrepreneurial journey. A journey that will have ups and downs but will ultimately reward you with a fulfilling career, financial freedom, and complete ownership of your life.
However, there is more to running an online business that just selling your product or service. Here are a few other items you’ll likely need to address either as you start your business or once you start turning a profit.
Bookkeeping and taxes
If you’re new to running a small business, chances are you’re new to all of the tax requirements that come with the territory. In addition, if you are only used to tracking your personal finances, keeping track of your business expenses can be a bit of an adjustment. There are free downloadable Excel templates that “do it yourselfers” can use. Alternatively, you can hire a small business accountant and bookkeeper to make sure the books are kept properly and your taxes filed on time.
Legal standing and incorporating
If you are new to running a small business and entrepreneurship, you likely have never formed a corporation before. What used to be a daunting process that required an expensive legal council is now just a couple of documents filed online for most states.
Depending on the state or country that you are creating your corporate entity in, the forms, fees, process, and timeline will be different. We recommend educating yourself on the pros and cons of various legal structures before creating one. If you are still unsure about the process, it would be wise to get in contact with a CPA or attorney to get their advice.
Here are a couple of great resources to learn about the pros and cons of different corporate entities in the US:
There may be some additional legal requirements that you must meet depending on the type of business that you are looking to build. For instance, if you are looking to create an eCommerce business, you’ll want to get a sellers permit, also called a sales tax exemption certificate in some states.
How to outsource repetitive tasks
One thing every bootstrapped entrepreneur will learn is the value of their time. When starting a business there are a million and one things to do. It is no doubt challenging and will require all of your persistence. However, once you reach proficiency in some of the repetitive business tasks, you can outsource them to overseas workers for an attractive price.
Websites like Upwork and OnlineJobs are great resources to find talented contractors that can help you take a load off of your business.
Outsourcing to skilled workers
While most entrepreneurs will find contractors to carry out the mundane tasks, finding software developers, marketing experts, and other talented engineers can be a bit more challenging. If you are looking to hire for a task that you yourself are not proficient at, it is a wise decision to interview a handful of potential candidates before hiring anybody. It also may be a great decision to ask for referrals from other business people and entrepreneurs in your network.
Recommended podcasts, communities and conferences
There is no limit to the amount of information at your disposal by looking through blogs, YouTube channels, and other guides. However, you may find it easier to separate the wheat from the chaff if you hear from some people who have already built successful online businesses.
Recommended digital entrepreneurship podcasts
There are a litany of podcasts available from digital marketers, business consultants, and entrepreneurs. A short search could reveal a couple that may be a fit for your business aspirations. A few podcasts that we enjoy and recommend are.
The Ecommerce Lifestyle Podcast. Anton Kraly has been putting out free content on how to go about starting an Ecommerce business. From building a website, to researching products to sell, to advertising your business, this podcast covers it all. Many of the episodes also feature walkthroughs and “over the shoulder” tutorials on YouTube.
Whichever business model you decide to pursue, you’ll no doubt be able to find a community where you will be able to meet people who are also trying to build a business or who have already walked the path. A quick search for Facebook groups will yield dozens of online communities that you can join and a search on Meetup.com should give you some groups of colleagues in your community.
The Tropical MBA community is a group of online entrepreneurs who are largely location independent. They limit membership and conference attendance to entrepreneurs that have already built successful online businesses, so if you are just starting, this isn’t a community you can be a part of just yet. However, they have a great free podcast that anyone can get value from.