Which business model will be the most suitable for your desired lifestyle? When I say “business model” I mean the type of business you can start online, not a specific business idea. I have created a simplified business framework with model business types, to describe the advantages and disadvantages of each kind of business.
Based on my experience I have assigned different scores to each model type to help you understand the difference.
YOUR OWN ONLINE STORE:
Planning is essential, especially, when physical products are involved. To make high profits you need to buy a lot of products (and I mean A LOT of them) from one supplier. In the beginning, buying stock was challenging for me, but as I started developing relationships with my suppliers, placing smaller orders became easier. The online store business model is an obvious choice for many online entrepreneurs. The main benefit of opening your own online store is that you are not dependent on any specific sales platform.
However, IT knowledge, market research and really good marketing skills are required, in order to be successful. I had a few online stores, one of which I successfully managed to sell 6 years ago. Here are some main points to consider when thinking about opening your own store:
- Your products will make or break your business. They should be competitive and unique enough, to stand out from everything else that is available. At the same time, they should be popular enough to encourage a high volume of sales. Sourcing high quality items for a reasonable price is not easy and profitability of your online store depends on it.
- From a technical perspective you will need to organise everything yourself: This includes domain redirect, websites, https, PCI compliance, website, theme, coding etc. If you don’t have the necessary technical skills or you cannot find someone who can help, I suggest choosing an online shopping cart hosting business for a monthly fee. It’s not ideal, but will get you started.
- While stock is the biggest cost in owning online store, advertising and marketing will also require a lot of cash. Plan for it.
Handmade products are appreciated by millions of people. And judging by the number of people selling items made by hand, this market has a low entry barrier making it lucrative for any creative entrepreneur. With your imagination and talent you can create your own unique items and sell them on well known handmade platforms such as Etsy, Bonanza, Dawanda etc. Consider the following points about starting a handmade business:
- To have a competitive advantage from the beginning you need to find a unique angle to your handmade product range. Identify a gap in the market first, then work around it by trying to come up with the best suitable product you can offer (taking into account your talents and creative skills).
- Understanding of handmade product platforms, their potential and target audience, will make a big difference to your business sales. Make sure you have proper pricing strategy and great pictures of your items. One of the most popular online handmade communities is Etsy. You might need to invest in some marketing and promote your Etsy store outside the platform. Be sure to review Etsy pricing and fee structure before you start selling.
- Think of other ways to sell your handmade goods. For example, contact online retailers, do some home parties, create a catalogue or sell at craft fairs and exhibitions. Opportunities are endless, so make sure you plan properly.
SELLING ON EBAY AND AMAZON:
Selling on eBay or Amazon at the beginning won’t be easy. Be prepared to spend a lot of time on research, market analysis and your business plan.An online store on eBay or Amazon is considered to be one of the most popular options for any online entrepreneur. Both platforms have huge traffic and a lot of potential customers.
Unfortunately, one of the main disadvantages of these platforms is high competition, other sellers who are not shy to copy your product listings or ideas. Research, experience and time are needed to succeed selling on eBay and Amazon. You will have to pay fees for each sale you make, plus perhaps some listing fees. Here are a few points for you to consider before you decide to open eBay or Amazon store:
- You might find yourself selling an item for too little and gaining no profit, just to remain competitive. Because of the enormous number of sellers on these platforms, prices are the main competitive issue and make it hard to have high margins. Both platforms are well known to have an audience that is sensitive to prices.
- It’s crucial to understand platform features and review the system. You will need to comply with all the rules Amazon and eBay lay out.
- One big advantage of both platforms, is their traffic. You don’t need to spend your own dollars and you don’t need to have marketing skills to promote your own store.
Blogging will become profitable after a while of writing and submitting articles. Content is king and SEO plays an important part in its success.Everyone is familiar with the concept of blogging: which means utilising content to earn money online. Blogging is very heavy on writing and marketing. Other skills necessary to succeed include: affiliate marketing, social networking and web marketing. Compared to other businesses, starting a blog requires minimal investment (no need to purchase physical products!). Consider the points below before you decide to create a blog:
- You need to find your own point of difference and start developing your expertise online, demonstrating your knowledge on the blog.
- Blog monetization should be considered at the early stage. A blog niche needs to be suitable, in order to make money online. Creating multiple revenue streams is a way to be successful in blogging.
- Easy to start and not cash heavy, ideal for talented writers. You can always just purchase a domain, set up website and you are ready to go!
Freelancing is a very popular way to make money online. You might not consider freelancing as a business but more and more companies are hiring freelancers to decrease their staff costs and get access to unique talent. Depending on your skills, you can work for multiple companies as a solopreneur, or register your own company for potential future hiring. You can start making money the second you score your first client.
Points to consider before you decide to sell your services are:
- In order to remain true to your desired lifestyle, be strict when you negotiate your deal with a new client. Avoid specific day/time allocation to the client and make it flexible.
- Before starting any freelance job you might need to spend some time on developing your portfolio.
- Freelancing is an ideal business model for someone who used to work full-time and has professional skills to sell.
- Your business plan should focus on generating business leads, in order to get new clients.
My comparison table below includes all business models discussed above; my allocated scores are based on my own and my friends experiences.
Which business model are you going to adapt for yourself? Share your ideas in the comments section below.