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What Kinds of Business Makes Money Online?

Starting a business to make money online has never been more possible, accessible, approachable, and confusing in history. More and more, aspiring entrepreneurs and people looking to create income streams beyond their 9-5 job.

It’s time to wake up to the reality that the world of working at a single company for 30 years and retiring with a gold watch and a pension is gone. It’s been replaced by the less-stable “gig” and “sharing” economies, where people are used for short-term engagements and there is little loyalty from employers.

Congratulations if you’re part of the growing number who is looking to take your income into your own hands and start an online business!

But how do you even start? What do you do? In this post, I’m going to explore the different types of online businesses and provide examples of each type to start you thinking about what you’d like to do.

The 3 Types of Businesses to Make Money Online

There are 3 main types of online businesses you can choose from:
Product, Service, or Information.

There can even be some overlap between the 3 categories. A product business may upsell access to a platform for using their product, which could turn it into a “product-service” business. An information business may have a marketplace-as-a-service to help leverage their information and would then be an “information-service” business. Think of it like this:

Product Business

A product business sells and fulfills goods, mainly physical, but also digital. This can be anything, from razor blades to diapers, tech gadgets to raw materials, but can also include audio files or website “themes”.

If you’re looking to start a product business, your main focus will be on keeping your cost of goods under control. If a product costs you $5 to buy and $3 to ship, you’ll need to sell it for more than $8 to earn anything. The markup (how much more you sell the item for) is the main limiting factor on how much you earn.

Because digital products can be copied virtually instantly and sent for “free”, the cost to produce and ship 1 or 100 or 1000 is the same. In this way, digital products can be very lucrative with very high margins.

Here are some product businesses you can start to make money online:

  • Sell your own invention
  • Reselling on ebay
  • Reselling on Amazon
  • Drop shipping
  • Making art / crafts and selling on Etsy

Service Business

A service business can sell either labor (I will do ___ for you), access (I will let you use my tool to do _____) or other means of providing work on behalf of clients.

Service businesses focus on the cost of labor, rather than cost of goods. You can either be leveraged, where your service is able to allow customers to work on their own or doesn’t require direct input from you, or unleveraged, which requires direct work from you or an employee.

An example of an unleveraged service business is the first one below – doing taxes for others. You have to do the work, put the information in. But TurboTax, which is a leveraged service business, created a platform where customers can fill out their own information – completely removing the cost of labor except to maintain their service!

Some examples of service businesses you can start to make money online include:

  • Doing people’s taxes
  • Specialized software for your industry or niche
  • Lead Generation / “Cold Calling”
  • Freelancing
  • Mastermind Groups

Information Business

An information business can sell either a “product” or a “service”, but the distinction is that it’s not usually tied to sending something physically or doing any work on behalf of someone, it is tied to transmitting some kind of specialized knowledge or instruction.

Like a “digital product business”, information businesses allow you to make money online for almost 0 cost. You just need to have the knowledge and be able to relay it to people effectively.

In information businesses, one of your largest focuses will be the cost of customer acquisition. That means how much you have to spend on Ads to get a new customer. If you can spend $50 to get a customer that will spend $100, you can do that infinitely to make serious cash.

For this reason information businesses are where many people choose to start making money online. With your existing skills and knowledge, you can invest time to help others learn what you already know!

Types of information businesses include:

  • Affiliate Marketing (like on Amazon)
  • eBooks
  • Entertainment
    • YouTube Videos
    • Social Media
    • Twitch Streaming
    • Patreon
  • Educational Courses

Wrapping up

There are so many ways to make money online, this article could never hope to capture them all. But this is a taste of what’s possible, and hopefully your brain is swimming with ideas for your new business, after reading this

My goal is to help people just like you make real money online by passing along this and so much more. Won’t you join me?

Be Early

I’m grateful that my father instilled in me the ‘need’ to be early.

You’ve probably heard that being late “shows you don’t value the time of others”.

But that’s not why I’m early.

I’m early because I value my own time. It shows that I took the care and thought to plan my actions, that I’m not just wandering through life aimlessly.

It garners respect, or, possibly, prevents you from losing respect. We all know those people who are always running behind. As we roll our eyes at them, we know that a) this is not a serious person and b) this is not a person who can be relied upon.

Don’t be that person.

It also doesn’t hurt to be the only person in the office when the CEO or client walks in.

Does this “Personal Finance Flowchart” work?

Reddit’s personal finance subreddit with over 14 million members promotes the flowchart as the recommended way to handle money. It includes budgeting and asset allocation tips for “proper” personal financial planning.

But for more and more Americans the American Dream is slipping away entirely. According to the BLS, the monthly take-home salary is about $2500 for almost 70% of working Americans.

A table showing the average monthly salary by sector, from highest to lowest, for 147 million working Americans, many of whom are struggling with personal finance concerns.
70% of Americans Earn less than the Median Wage of $53,400, and the average take-home pay is just $2500 a month

That’s not much to squeak by on, let alone save for retirement. Yet millions of police, farmers, salespeople, healthcare technicians, office workers, and countless others, do! Look at the sectors we’re talking about above; transportation, security, foot service, office, sales – most of the country!

Costs are increasing

Managing personal finances is getting expensive. The average rent for a 2-bedroom in the US is about $1300 a month. Adding in utilities, groceries, a car with insurance, a cheap phone plan, and internet – not to mention kids! Before you know it a 3-person family with 1 working adult is barely able to put any money away.

If you have any debt, just paying the minimum is enough to make it impossible to get ahead. It’s no wonder that almost 80% of people are living paycheck to paycheck!

And with inflation, costs only go up! Most things get 3%-5% more expensive every year – or more!

Personal Finance is mostly not about Saving

Can we budget and penny pinch our way out of this personal finance nightmare? I highly doubt it.

Don’t get me wrong – saving is great. Cut your cable bill, move to a cheaper phone plan. Buy generic groceries.

But saving $15 on your phone bill, or $100 a month couponing, quickly approaches diminishing returns and can require constant participation to maintain. Technically, you can scrimp your way to half a million dollars by saving $100 a month for 55 years, but I don’t want to hate my life like that.

Because your expenses have a floor, you will only ever be able to save so much. Even if you take home $2500 a month, and you somehow miraculously are able to spend only $1500 a month on all your expenses, you’ll still only ever be able to save $1000 a month on your best months.

Increasing your income to $3500 a month has the same net effect as saving $1000 but it allows you to do more – you are spending $2500 a month on living and saving $1000 vs spending $1500 a month on living and saving $1000. Increasing your income to $4500 a month would allow you to save $2,000 a month while maintaining spending at $2500. As you see, there is no ceiling to how much you can earn – only a floor on how much you can spend.

Income is King

Unless you plan on re-training to become a doctor, lawyer, scientist, engineer, programmer, or CEO… if you want to get rich your best bet is to focus on increasing your income through whatever means you are able.

For some, that will mean continuing their career and developing “professionally”. Others will choose to develop other valuable skills and knowledge and leverage that as entrepreneurs. Some may be great at playing the stock or currency markets. In fact, the ways to increase your income are just about infinite and limited only by you. I hope to make that apparent over time.

Join me on this quest to unlock income-generating methods and opportunities. I want to show that anyone can increase their income and get rich eventually, with the right personal finance plan.

Check out my resources page for the best tools to help you increase your income and take control of your finances.