It is obvious that there is money to be made online. People you know personally are doing it.
Online sales are up. Offline sales are down.
Online commerce is the present and the future.
So how do you claim your stake?
Strategy + Niche
- You get started by choosing an approach that is right for you. The approach is the method, the strategy that you are going to use.
- Second, you choose a niche. The niche is the sector, the category, the focus or passion.
This article will outline the most important strategies for making money online. As you read through the list some of these will resonate more than others. When you land on one that sounds best for your personality, skills or interest, the next step will be choosing a niche and digging in.
This is the most obvious and overlooked approach. Sign up on freelancer websites like UpWork and Freelancer to perform projects for a fixed or hourly fee. It trades your time for money and is distinctly non-passive income. However, it is a quick and certain way to earn a few dollars online. It is an opportunity to learn from those you are working for. And it can open up partnership opportunities with people who already own successful websites and online businesses.
Some of my very first online earnings came from freelancing by doing things I had experience in: Wrote a business plan for a small tech company and created a simple application for a Dr. in Microsoft Access.
- Startup cost: None
- Startup effort: Limited
- Skills required: There is a Freelancer project for almost everyone. If you can read, search the internet or write, chances are there is someone who needs your help and will hire you.
- Earnings opportunity: Limited by the hours you can work, the rate you can charge, your skills and ability to sell your capability
- Ongoing effort: You’ll have to work for every dollar. The higher the quality of your work, the better customer reviews you’ll receive, the easier it will be to win new work and the more repeat business you will get.
- Pros: Easy to get started and almost no risk. Hone your skills on other people’s projects. Learn from those who hire you. Form partnerships or at the very least, relationships with people who are doing what you would like to do.
- Cons: Your earnings are capped because your time is limited. You are working for someone else so they make the rules and define the priorities. This is not a good long term strategy for a passive income source.
- Key success factors: Thoroughly understanding what the employers want, presenting yourself better than everyone competing for the job, delivering high quality service and work products.
- How: Sign up for accounts at UpWork.com, Freelancer.com, ProBlogger.com or others. Create a compelling profile. Apply for jobs. Target short assignments and offer a very low price the first couple of jobs to get your foot in the door and get some positive, initial customer reviews.
Sell other people’s products and make a commission on those sales. The advantage of affiliate sales is not having to create your own products, manage fulfillment of the products or provide customer service to the buyers of the products. All you have to do is convince customers to go check out the product, and some of them will become buyers.
I do this in a variety of ways. I sell digital informational products that I believe in like Jon Dykstra’s Niche Tycoon course. I have review websites that link to Amazon.com. I invite people to live events.
- Startup cost: Varies from almost nothing to a significant amount that can include the cost of building an audience and process for customer acquisition.
- Startup effort: Varies but almost always includes setting up a website and/or social network account that serves as the intermediary between prospective customers and the seller’s sales page.
- Skills required: Depends on the approach. Always includes marketing. May include skills in creating Facebook pages, Pinterest boards, Youtube accounts, posting and content creation. May include skills to develop a website with informational content, pseudo-sales content, conversion optimization. Probably includes some knowledge of how to attract traffic to a website page or social channel.
- Earnings opportunity: Limited only by the number of eyeballs you can get on your content.
- Ongoing effort: Some strategies may require limited ongoing work. If the traffic is organic and passive, the income may be more passive over time. If the strategy includes buying traffic and managing media campaigns, or writing fresh emails, constantly introducing additional products, deals or coupons, then there can be significant ongoing effort.
- Pros: Can make almost unlimited income. Very limited barriers to entry. Can tack this strategy onto a variety of websites or businesses that you already have. Can use this as an additional revenue stream. Don’t have to create and update products. Don’t have to deliver products. Don’t have to service customers during the transaction or post sale. Don’t have to manage affiliates.
- Cons: Lots of competition. Takes some effort to get started. Depending on the approach can take considerable effort on an ongoing basis.
- Key success factors: Attracting visitors to your content. Creating content that prompts visitors to investigate the products you are promoting (Conversion Rate Optimization).
- How: Depends on approach. Here are a couple of examples but there are many ways to skin this cat:
- Create a product review site: signup as affiliate for desired products, create website or social account with content about related products, develop traffic acquisition plan (email list, SEO, paid, social), test, enhance, repeat
- Create a YouTube channel: signup as affiliate for desired products, create a YouTube channel, create videos about products you are promoting, optimize video content production and process to grow subscriber base and video rankings
This is providing a service to individuals or businesses that has an online component. It can be high customer touch or low-touch. We’ll look at SaaS (Software as a Service) in the next section. Services that are automated can be very passive income sources, depending on the customer acquisition process. Other services may be strictly time for money. But if you are hiring out the work, then you are trading someone else’s time for money.
I have and still do sell services online. I coach and consult. I have provided writing services. I occasionally function as a broker of websites. I do website purchase evaluations. I have performed website services for clients like software creation/modification and content creation. I outsourced these activities to people who had those skills.
You can provide services yourself or hire them out.
- Startup cost: Cost to create the service delivery website and platform. Cost to create the customer acquisition process. Potential costs to acquire the service delivery resources.
- Startup effort: Usually significant even if you are outsourcing the development of the platform and processes. You still have to invest time in the strategy, design and implementation of the business. However, many services require less time to launch than product oriented businesses because certain kinds of products have a long development lifecycle. If you are the service provider there is less startup effort involved in the platform, but still work in developing a customer base.
- Skills required: Online/offline marketing, website/platform development, skills in the service being provided, customer service skills no matter the service.
- Earnings opportunity: Limited only by the size of the market for the service.
- Ongoing effort: Usually high. Even when services are outsourced there is usually ongoing customer interaction required.
- Pros: Nice profit opportunity as the middleman collecting the profit margin on medium to high priced services performed by lower cost resources. Some services are subscription based, recurring revenue.
- Cons: Ongoing customer engagement, management of service delivery resources
- Key success factors: Quality service, quality customer service pre, during, post sale, profitable lead generation, effective referral process, effective repeat business process.
- How: create website as sales platform, create customer acquisition process (email list, social media, SEO, direct outreach to customers, content marketing), sell hard to prospects, deliver on sales
Selling Your Own Products
This is the corollary to the Affiliate Marketing approach. Create (or buy) and sell your own digital or physical products. The value of being in control of your own products and brand is that you keep more of the profit, you establish the pricing and the marketing plan and you have more direct ownership of the end customers. The downside is that you have to do all those things.
I have sold and do sell my own products. I create and sell digital courses. I have owned websites where I inventoried and sold physical products, some shipping from my own home and others where shipping was provided by Amazon. I have written and published a book with a traditional publisher and sold through physical stores. I have sold software that I’ve created myself or had people create for me or that I had purchased and had the right to sell.
- Startup cost: Sometimes the creation of products is free like making a video course you record yourself. Other times there are costs to acquire or create products to be sold. There are costs in developing the website/platform for the sale of your products. There is costs for developing the customer acquisition process for the business.
- Startup effort: There is usually more effort in this approach than most of the other approaches because you are doing both the product sourcing/creation and the selling.
- Skills required: All the skills required to market a product as well as the skills to create or source the product. Like other approaches, many of these tasks can be outsourced but you still need to have the skills to define and execute the strategy of the business.
- Earnings opportunity: Limited only by the size of the market and your ability to take share for yourself.
- Ongoing effort: Varies based on the kind of product and sales approach.
- Pros: You keep the maximum amount of possible profit for a sale (in contrast to affiliate sales). You are in control of the product strategy from design all the way through marketing, delivery and post-sale support.
- Cons: effort to create products, service customers, maintain and upgrade products, source products, etc. in addition to all the other marketing aspects of the business
- Key success factors: choosing products that have a ready market, compelling offers, product quality, customer service quality.
- How: varies based on approach, and there are many possibilities. Here are two examples:
- Create a digital product (ebook, video course, graphical/image oriented, etc.), create a website/social platform to sell the product, create a customer acquisition process (email, social network, SEO, affiliate), create a delivery process, customer service process, product maintenance process
- Source a product to sell on Amazon, create an Amazon storefront, create a pricing/listing management strategy, manage inventory, customer reviews, product sourcing ongoing
Content Monetized with Advertising
This approach involves creating useful content and earning money from advertising. The content can be on a website or social media channel. Examples include news, information, entertainment, forums, communities, online services and just about any other useful content you can imagine.
Content sites can deliver passive income. After the content is created, revenue from advertising sources can be easy to manage. Traffic sources may be free like Google or Facebook or paid via campaigns on Twitter, Outbrain, Google or many more. Free traffic is not necessarily effortless. SEO work, social account posting, content marketing or any number of other activities may be required to attract and retain the traffic.
I have made and continue to make a nice income from content websites. Over the years I’ve had news sites, informational sites, educational sites, entertainment sites, arbitrage sites and a couple of other categories.
- Startup cost: content creation cost varies based on how much you do you yourself, costs for a customer acquisition process.
- Startup effort: Research, strategy, content creation, web/social platform development, initial customer acquisition.
- Skills required: research, administrative, content creation if you are doing it yourself, marketing to get visitors to the site or social channel.
- Earnings opportunity: limited to the market for your content.
- Ongoing effort: Can be less than some of the other strategies if you have a good traffic stream to your existing content. Most businesses have an ongoing content creation strategy once they prove an ROI on their initial content.
- Pros: Passive income opportunity. Limited or no direct interaction with visitors. Comparatively simple startup process.
- Cons: Difficult to develop traffic, lots of competition because there are no barriers to entry.
- Key success factors: Great content, proven process for visitor acquisition, effective monetization with ads or affiliate products.
- How: research target niche, create website, create content, execute on visitor acquisition process, optimize
Software as a Service (SaaS)
SaaS is delivering services as an automated online offering. These are apps like paypal and quickbooks, only probably on a smaller scale. SaaS is appealing because you can be paid for subscriptions on an ongoing basis for as long as you can convince customers to stick around. Many SaaS apps make it hard for customers to migrate away once they have committed to the service. SaaS can deliver a lot of profit because the startup cost of creating the product initially can be spread over many customers. Incremental profit from new customers can be very high.
Saas businesses can be very expensive to build both because of the cost to develop the service and costs to create brand awareness and acquire customers.
- Startup cost:
- Startup effort:
- Skills required: Technical to develop and design the service, marketing to get it running and operational to keep it going.
- Earnings opportunity: Can be very profitable once established.
- Ongoing effort: Depending on the sophistication of the service and the niche, can require a great deal of effort or minimal effort to maintain the applications and service customers.
- Pros: Recurring, stable revenue. Profitability. Can be relatively low maintenance after it is established.
- Cons: Difficult to build and start. Can have high maintenance and customer service requirements ongoing depending on niche and product.
- Key success factors: marketable service offering, quality product, ongoing customer engagement, low churn rate
- How: market research, service creation, website/platform creation, customer acquisition campaign, ongoing operational management and customer engagement
Investing in Existing Online Businesses
Buying an existing online business is a way to speed up the process. You can buy any of the types of businesses discussed in this article so it does not limit you as to strategy or niche. The downside to buying a business is that you have to have some amount of capital to make the purchase.
However, there are lot of upsides:
- It is a lot faster than starting from scratch
- It is less risky in that you are buying websites that already have traffic and net income, so the concepts are already proven and operational
- It requires fewer / different skills. You don’t have to be a designer, marketer, product creator, product sourcer, website developer, etc. to get started because all of that is already built
If you know anything about me, you know that I have bought a lot of websites. That is the main reason that I have been able to have my fingers in so many different money making strategies. I have bought into every strategy on this page at one time or another. I have also built from scratch. In almost every case I have built from scratch only after I’ve first purchased a site employing a particular approach/strategy. I’ve learned from the site I’ve bought and then built additional sites using the same principles that I learned from the purchased site. There are some cases where I’ve started completely from scratch but that is less typical for me.
- Startup cost: Usually two to three times the annual earnings of the website or business. Sometimes much less if you buy something more risky.
- Startup effort: The time to find the deals, evaluate them. The time to take over ownership and make initial improvements to the properties.
- Skills required: Finding and evaluating purchase opportunities. Other skills that vary based on what you buy and specifically what areas of the website that need attention after you buy in.
- Earnings opportunity: ROI on purchased websites can be 30 to 80% annually. There is also the risk that the site will lose all its value or decline in value if you pick the wrong ones.
- Ongoing effort: Depends on the site.
- Pros: Faster, easier, less risky than starting from scratch. Can produce a very good ROI. Learning from the seller of the business. Learning from owning a business that is actually working as opposed to learning from theory.
- Cons: Initial capital investment. Risk of losing the investment on a bad buy. Not gaining the experience of having built the business yourself.
- Key success factors: Choosing the right purchase. Understanding how to make growth and profit improvements. Finding stable, lower-risk sites to buy.
- How: Research listings at marketplaces and brokerages, evaluating deals, executing the transaction, transitioning the business to your ownership, working to improve the website, putting controls around the management of the site ongoing
There are a number of approaches for making money online that I didn’t delve into in detail. We didn’t cover membership sites with drip content, or subscription boxes, or coupon sites, or being an instructor on Udemy, or dozens of others. Many online businesses are combinations of several of the above.
I also regret that I could only scratch the surface of each approach, even in a very lengthy article.
The key thing is to understand the options and start thinking about which approach makes sense for achieving your goals and purpose.
You probably want to know which one I recommend? I’ve know people who are killing it in every one of those categories. You need to choose based on your own gut instincts after understanding the key differentiators of each method.
How do you ensure success? That’s easy:
- Get a coach to reduce your mistakes and accelerate your pace
- Learn everything you can about the method you choose
- Get started quickly
- Be an extreme copycat of the websites that are successful in the category you choose
- If you can afford it, outsource elements of the site creation that require the most time or expertise
- If you can afford it, consider buying a site, either to grow it, or to learn the business model, or both
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