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What is the best business model for online entrepreneurs? As of this writing, there are four business models that stand out. In a minute, you’ll see why. None of these business models require a large financial investment. None of them require buying stock or merchandise. That alone adds greatly to their appeal!
There are negative elements that go with each model as well. Once you understand how these work, you can mix or combine them to create something that’s a better fit for your business.
Before we get started, I want to explain my personal definition of business modeling. In my opinion, the model is the skeleton that makes everything we see on the surface work properly.
It’s the two plus two equalling four. It's the basic principles behind how and why something works.
Most people approach modeling as trying to duplicate what they see on the surface. Processes are duplicatable. Business and entrepreneurial personalities aren’t. You’re the captain of your own ship. Your journey, your experiences will be unique.
If that doesn’t make you happy, you need to snap out of it.
What Would the Best Version of You Look Like?
The best you (minus your bad habits, hang-ups, and insecurities) has the potential to get a lot of good accomplished. But it won’t happen walking someone else’s walk. So, stop being entranced by what other people are doing and get on with it.
Keep what I’ve just said in mind as we look at these different business models. Whether you focus on one or a combination of them, they will all produce something that will be unique to you.
Learn the principles. The math. Then insert the real you, the best you, into the process. That’s your pep talk for now.
Starting a Digital, Online Business
I build websites for clients. I also have a hosting service and help my clients with marketing and publicity. I started out doing one thing. Then, I added another service… and then another.
The key word here is SERVICE.
You perform a service and get paid for it. Web development, ghostwriting, copywriting, graphic design, video editing, virtual assistance – these are all examples of a service-based business model.
Some people frown upon this approach to online business. In their view, this business model is a bit too much like having a job. In other words, you’re trading time for money… and if you don’t work, you don’t get paid.
While I understand where they’re coming from, consider the time issue in more depth. We’re always trading time for something when you get right down to it. Aren’t we?
It Takes Time to Market
Marketing is a good example of this. Marketing – getting your name out there, takes time. Building connections with people takes time. Being present on social media takes time. Even if you’re selling something made by another company, you’re still “trading time” to ultimately “get money.”
Sure, it’s not exactly a job-type of a situation in some ways. You choose the “when and where” more or less, but you still have to show up to get things done.
You have to show up and do what you do.
If you stop showing up, if you stop participating, someone else fills the gap.
Now, let me say this – your business does not have to be designed so you’re “trading” 40-hours of your time every week. That’s the beauty of the online world. There are plenty of talented people out there who are available to help you. If you want, you can sell the job and others can perform it.
All of this sounds fairly simple on paper. That’s because, on paper, it is. In the real world, we all know things go wrong. We all know there are headaches and challenges.
So, maybe providing a service is a better fit for you if it’s just one part of your business and not the whole business?
In other words, you don’t have to build a business that’s 100% service oriented.
Remember, we’re talking about what’s the best business model for an online entrepreneur. When we get right down to it, the real question is, what’s the best business model for YOU? I initially focused on offering services and then experimented with the other models.
As we look into these, you can weigh the pros and cons of each model for yourself.
What About the Affiliate Business Model?
The Affiliate model is an easy way to make some extra money – especially if you’re just getting started online. You don’t have to worry about product creation, product fulfillment, customer service or anything like that.
You sign up for the affiliate program and get a unique tracking link to add to your site, blog, etc. Whenever someone buys the product through your link, you get paid a percentage of the sale. Most of the programs I’ve belonged to offer a 50% commission.
I once promoted a course that sold for $1,000! With a 50% commission, I made more from that program than all the other little programs I belonged to combined.
I almost passed on being an affiliate initially because I thought, “Who would pay $1,000 for an information product?” What I was really wondering was, who in world would buy it from me?!
As it turned out, people did!
The lesson with all of this was, you can’t sell what you don’t offer. At worse, no one buys your high-priced offer. At best, you can make a nice chunk of cash.
Eventually, I realized I was doing more to build the product creator’s business than my own with this model. I wanted my own products, my own assets and more control over the future direction of my business.
Some of my friends have turned affiliate marketing into a real science. They add bonuses and other special incentives that separate them from others selling the same product.
If you’re just getting started or you’re looking to reinvent your current business, this is still a viable option in 2018.
Information products have changed dramatically over the last 25 years. I sold my first information product back in the 1990s. It was a paper and ink booklet. Later, I wrote, published and marketed PDF courses.
Needless to say, a lot has changed since the 1990s!
Today, courses have replaced the “old-fashioned” information product for the most part. Yes, people still buy and read books. Audio and video, however, add another dimension to the learning process that some people prefer.
You may be thinking, “I’d love to make successful courses, have hundreds or thousands of students, and make a full-time income that way!”
I remember thinking this way when I went down the info-product path back in the early 2000s. As the business grew, I found myself struggling to come up with new ideas for new courses. I straddled the fence between teaching what I knew and wanting to teach what the market was really hungry for.
While in the process of creating these courses, I remember thinking, “Please God, this has to sell!”
Success Can Alter Reality (Temporarily)
My initial success was intoxicating. Then came my follow-up efforts.
I think it’s similar to how actors feel when an award-winning performance is followed by a box office bomb. And then another.
Marketing the courses was critical to my success. Yes, I had a list. But, once the list starts to feel or believe you’re just another chump selling one thing after another (regardless of who owns the product), you become just another voice in the crowd, hollering for attention.
I’m not saying any of this to discourage you from making courses (Imagine if I was!). I'm just pointing out a few things that are not always obvious to beginners.
- You must market every course you create. Nothing sells itself.
- Some courses won’t sell well, even when you put your heart and soul into making them. It’s just like any other creative endeavor.
- If you’re too aggressive with sales, the “goodwill” you’ve spent time building will get depleted faster than you might imagine.
- Know all of this going in and be prepared instead of getting blindsided.
Setbacks are temporary. That’s how I see them. Success, however, can also be temporary… which was something I never gave much thought to in the beginning. After you ride the way of success all the way into the shore, you have to do the same thing all over again with another product.
Honestly, most course builders burn out quickly these days. I’m talking about those who follow this model for 100% of their income. I know, the positive thinkers out there are frowning at that statement. But hey, many grocery stores sell books and magazines without becoming bookstores… so, you could use a similar approach with courses and see how it works out for you?
The Coaching, Consulting & Mentoring Model
Perhaps nothing has been more fulfilling in my entrepreneurial career than the time I’ve spent mentoring and guiding others.
I started this phase of my business doing one-on-one work. Was it time-consuming? Absolutely. Did I mind? No. Not for a few years, anyway.
You can only work with so many people at a time… so I found group coaching to be a better fit as far as time goes.
At one point I was running the website design business, working with local clients, and mentoring people changing careers from around the world.
It was a lot to fit on one plate, but I made it work for a season.
I found the work to be very meaningful and fulfilling.
Just like the other business models, there are processes you can have in place that can help you be more efficient and effective.
After much experimentation, I adopted a “less moving parts approach” to everything I was doing.
Let’s Talk About Money. How Much Do You Need?
So, let’s get down to where the rubber meets the road and discuss money. How much do you need to make? Can you make an extra $25,000 a year with ANY of these models? Yes. It’s within your reach.
How about $50,000? Again, yes you can make 50k a year with any of these models.
The truth is, what’s realistic to some people is completely unrealistic to others.
If you sell a $100 product… how many sales would it take to reach $100,000/year?
It would take three sales a day. One sale a day would bring you $36,500 per year. That’s with a $100 product. To make that a reality in your own business you need a few things. You need a good offer and you need to send traffic to that offer.
Don’t Let the Math Intimidate You
The math intimidates people. Maybe intimidating is the wrong word? If someone suggests that you can double or triple your income when you’ve already poured your heart and soul into acquiring the little bit you have, it feels unrealistic.
If you person says it standing in front of you, you may very well nod your head and tell the person to get lost.
Getting from here to there (wherever you “there” is) may seem like a dream at times.
However, let’s factor in your current reality. If you’re already in business and you’re already making money, you’re not starting from the ground up. If you have an income of any kind, you’re not starting from ground zero.
However improbable the math may seem to you, it’s anything but impossible.
One of my friends sells PLR (Private Label Rights) products. At around $200 per package, he makes over $100,000 a year with about 10 sales per week.
There are people getting to six figures a year offering a combination of everything I’ve talked about so far in this article. I’m using $100,000 as an example. I’m sure most people would be very happy with another 30-50k added to their bottom line.
Why These Models Don’t Work for Most People
Despite the simplicity (on paper) of these business models, the fact remains – most don’t succeed. Before getting bummed out and subconsciously including yourself in the group of those most likely to NOT succeed, let’s take a hard look at the underlying facts.
First, you need a good offer. Without a good offer, it doesn’t matter if 30,000 people a month visit your site or landing page.
Instead of a handful of people passing on your offer, thousands would.
If you’ve done your best to create a good offer and it doesn’t work, then what? Most people quit. They give up. They tell themselves the business isn’t for them. They can’t handle the letdown.
I’ve done this myself… only to come back for more several months down the line.
Some people walk away for good, though.
Trying to Do Too Much Yourself
Another reason why people fail in this space is that they’re doing tasks they’re really not very good at. If you’re trying to design a sales page or any other kind of page, maybe the final result isn’t very good?
Many people say to themselves, “I have to get better at design!” The answer may not be in taking a course in design. Why not hire a specialist instead? We’re talking about making money.
Don’t waste money on software… use that same money to outsource tasks to experts. When you think about the number of hours required (learning and practicing how to do it yourself) what really costs more at the end of the day?
Think about how many people go down this road? I was on it myself at one point. Every time I hit a wall, I looked for new software to fix the problem. Consider the expense in software, systems, coaches, scanning endless reviews, etc., only to get a sub-par to average result in the end.
You can see why so many people give up.
Instead of investing in hours of learning and buying expensive software and training, why not use that same money and hire an expert to do it for you?
I’ll tell you why - you're afraid you’ll lose money. You’re afraid you’ll hire the wrong person. You’re worried you won’t get a return on the investment. Maybe you just like to do things yourself because it feels better to be in control?
I understand. But honestly, consider your personal history up to this point with that approach? That’s all I’m saying.
Maybe you’re intimidated by the whole outsourcing concept? To get it right, take your time and don’t let anyone hurry you as you go through the interviewing process.
Freelancers are available in all different shapes, sizes and experience levels. Give yourself a whole month, if you need to, to ask around. Sign up with services like www.upwork.com, www.guru.com, www.peopleperhour.com, etc.
Ask to see examples or samples of past work. Don’t be mesmerized by anyone’s sales copy. Look at their past work with your own eyes to determine if they’re a good fit. While you don’t have to break the bank with your purchase, don’t be cheap either. Be willing to pay a little extra for experienced freelancers.
The key here is communication. Tell them exactly what you’re looking for. Give multiple examples. Tell them what you don’t want. Share your concerns. They’re people, and just like you, they want a positive outcome! Personally, I like to create videos that do all the above. Clear communication is the key.
Wrapping it Up.
Let me leave you with some additional words of encouragement. As long as the math works, build what works for you. Take a step of faith and put on foot in front of the other.
Do you want to offer services and market an affiliate product or two? Then that’s what you do. If you’re as poor as a church mouse after ten months, you have the math all wrong. Can you sell 30 $100 products a month? No? How about 15 $200 products? That’s what I mean by the math.
What if you had 400 people paying you $20/month? That’s 8k a month. Considering how many people there are out there, 400 isn’t exactly a breathtaking number is it?
It all depends on how you frame it. If you can get 20 people, you can double it… and then double that.
Paid ads can get you there. Having your own affiliate program can do the same.
We can come up with a laundry list of reasons why this won’t work for you. Or, you can come up with a plan that will get you a little bit closer than you are today.
You can work that plan and all things being equal, eventually, crawl your way to success inch by bloody inch.
However you look at it, one fact remains – whatever we do today will have an impact on what we experience tomorrow.
*If you liked this article, you may enjoy reading "What's Holding You Back?"