Why You Should Build An Online Business

Why you should build an online business

By now you are aware of the many benefits of having multiple income streams. From property or share investments through to online businesses, building passive income streams should be one of your main financial goals. We’ve talked about building an investment portfolio here, however let’s go into more detail on the topic of why you should build an online business.

Why you should build an online business

An ideal passive income stream is one that provides enough income to cover all your lifestyle expenses with little to no day to day input. Now there is the option to purchase an income stream (or streams) that would replace your lifestyle expenses however this would involve a substantial capital outlay which rules out most people.

So what’s the alternative? Build one (or several) yourself that will eventually fund your lifestyle expenses. This could be a bricks and mortar store, a share portfolio that you build up through regular and smart investing or our favourite, build an online business. .

There are many positives about build an online business, below we’ll go into more details of some of the benefits of building an online business:

An online business cost’s very little to start

Aside from the great potential financial upside with online businesses and benefit is they cost very little to set up. For example if you create a blog or an affiliate website the only capital investment you need upfront is the domain name purchase and the website hosting (and possibly a premium WordPress theme), that’s it. Now a fair bit of time will need to be invested in this above example but you get the point that an online business can be set up with little money invested.

Now having more money for your online business means you can purchase an existing online business or website, scale your new venture much quicker or spend money on building your online education and skills however not having much initial capital isn’t (and shouldn’t) be a setback in building an online business. . 

Limited education and knowledge is needed to build an online business

From the early days of building a website write HTML code or using programs such as Adobe Dreamweaver, website building has come a long way. Nowadays website building is so much easier even if you have no experience in coding or building websites.

If you choose to use a WordPress as the content management system to build your website on a) there are so many educational videos/tools to help you build your site and b) the quality and ease of use of WordPress themes or editors (such as Gutenberg) are quite simple, they offer excellent support so that even those with the most basic of experience can build a professional looking website.

There are also other options such as easy website builders that offer drag and drop solutions such as Wix.com or Squarespace.com that make it very easy to build a website with little to no knowledge or experience.

The tools needed to build an online business are also very easy to learn such as email marketing or social media networks so anyone with limited online or website experience can easily build an online business or website.

There is unlimited potential income/asset value with an online business

One of the great benefits about building an online business (or any business for that matter) is that there isn’t really a limited to how big you can build it. An example of this could be Google (now known as Alphabet). Set up in a garage by two students, it became the default search engine within a couple of years of its launch and is now one of the biggest businesses in the world. Another example is Amazon. Initially starting out as an online book seller, it has grown into this online behemoth not only becoming the biggest online marketplace in the world, it also runs the worlds biggest cloud computing company among many things.

Granted there’s very little chance that your new creation will become as big a company as those two examples above however there is no reason why you can’t build an online business that is worth 6 or 7 figures. Take a look through the website of two of the biggest website brokers, Empire Flippers and Flippa and there are plenty of online businesses and affiliate sites that have sold or are for sale for 6 and 7 figure amounts.

Now how would you feel if a potential 6 or 7 figure amount was dropped into your bank account?  

Even better than the above valuations, it’s the ongoing revenue these websites and businesses generate. If you are looking at a valuation of $200,000 then (based on a valuation of 40 times the last 6 months revenue), it’s producing monthly revenue of $5,000 per month. Now after removing monthly expenses I’m sure you would be taking home a nice little profit, particular if looking at an affiliate website where you are generating the majority of the content.

Online businesses, particularly affiliate sites have some great profit margins.

Online business offer the ability to scale

Let’s say you have a background in teaching and decide to set up your own tutoring service and create a website to advertise your wares to the world. From this website potential customers can read up about your offerings and use the website to book a session.

Business goes well, you increase your hourly rate and make more money, however there are only so many hours in the day and only one you so you decide to branch out and offer group tutoring discounting the one on one price however as you can now service many more people at once your revenue skyrockets as demand is still strong.

You are now developing a nice amount of repeat customers and some great word of mouth advertising and demand is outstripping the hours you can offer. Not too worry, your approach is earning rave reviews and you decide to create your first course based on the recent offerings in your one on one and group tutoring sessions.

This sells like hot cakes and your revenue skyrockets again. Things are so good that you are making sales of your course while you are sleeping, exactly what you want in your passive income stream! You keep growing this business by taking on more staff and it continues to grown and provides you with 6 figures of annual revenue.

This is an example of how you can scale a basic one on one tutoring service into a booming online business where your time working is scaled right back yet your income increases.

This can be done with a business that sells products, affiliate website, social media services, video offerings, basically anything online and is another reason why you should build an online business.

An online business can take many different forms

We’ve gone through some online business examples above however there are so many areas, so many ways you can build an online business. From social media influencing to selling products, an online business has a huge range of options for people.

As mentioned above ideally you’d want to build an online business that you can scale and one that is a highly sellable asset, both points that you may struggle if you build a business around services that you and online you can provide such

Now in this above example you probably will be able to earn a nice income (and that may be enough for you) however it is a lot harder to sell an asset when your individual services are the backbone on the business. Freelancing is also an example of this, so bear this in mind if you head down this path.

A little later in this article we go through some examples of online businesses that you can start.

The reach for an online business is worldwide

You might have a coaching client in San Jose or you might sell a widget to Mohamed in Dubai. You might be a social media consultant for Michelle who is based in the UK or you might be offered a Freelance gig by Miyuki in Japan.

The point is the internet has opened up the whole world to be your customer with your online business. Not only has this increased your potential customer base it also allows you to connect to other providers, suppliers or manufacturers to help grow your online business.

This worldwide access also opens up the amount of prospective buyers as they can come from all over the world.  

Examples of the types of online businesses you can start

  • Simple lifestyle blog
  • Selling a product (i.e. through a marketplace like EBay, your own website/Shopify, etc.)
  • Create your own Software as a Service (SAAS) business
  • Building your own email newsletter either via your own website or using a provider such as Substack.
  • Basic arbitrage, Buying a product locally you know you can sell for more online (i.e. through a marketplace or online classified, etc.)
  • Drop shipping – where you act as an online middleman/woman taking orders.
  • Building a website earning money via advertising.
  • Building an affiliate website.
  • Website flipping – purchasing a website and looking to improve then sell within a short term time frame.
  • Purchasing a website or online business as an investment (hiring others to run the website or business).
  • Become a Social Media Expert and offer your services to businesses or individuals.
  • Social media Influencer (i.e. TikTok, YouTube or Instagram).
  • Create your own videos or podcasts and earn via advertising.
  • Become a Freelancer using a platform such as fiverr.com

As you can see the answer to why build an online business is quite simple, the world is your oyster in doing so. Even if you have a small success this could give you several hundred dollars a month in passive income which will go a long way for some peoples living expenses.

Now some of you might be full of ideas to build an online business, others may need a bit of a hand to pick a starting point. For those that would like to learn about building an online business click here for more details.

Building an online business is for anyone that is prepared to put in the hard work and is willing to learn. Start as early as possible, keep believing in you, stay the journey and you can build something special.