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 It’s been replaced by the less-stable “gig” and “sharing” economies, where people are used for short-term engagements and there is little loyalty from employers.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:
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
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”
- Mastermind Groups
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)
- YouTube Videos
- Social Media
- Twitch Streaming
- Educational Courses
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?