If you plan on starting an online business in 2024, you’ve got options! But which one is the right one for YOU?
In this post, I’ll share the 6 main types of online businesses, their initial startup costs and earning potentials, and exactly who each type of business is best suited for.
These are all proven, sustainable online business models, I’m not going to cover any weird, random unproven side-hustles that aren’t capable of making you some real money over the long haul.
When you’re deciding on what the best online business model is for YOU, it’s important to know your ultimate goal. It goes without saying that you PROBABLY wanna make as much money as possible, but consider these 3 things as well:
- Are you looking for just a little extra cash, or a full time income to replace your job?
- Do you need to start making money right now, or do you have time to build a business a bit more slowly?
- Is money your only motivator, or is it important to find something you’re passionate about and also leads to a lasting impact on other people?
Keep those questions in mind as we go through each business model, so you can pick one that really meets your needs and that you’ll be content pursuing for the long haul. And make sure you stick around until the end ‘cause I’m gonna be sharing my absolute favorite online business model, that’s brought me the MOST satisfaction AND the biggest amount of income—well over 7-figures to-date.
I cover all of this in the latest video on the channel (which you can check out below). But if reading is more your thing, just keep scrolling, and I’ll fill you in on all the details.
Online Business #1: Service-Based Business or Freelancing.
In this model you provide a service for a fee, and there are tons of options, from web design to coaching, copywriting, virtual assistance, Facebook ads, SEO—ENDLESS opportunities here. After art school I started making money as a freelance designer and it was a great way to make money before I landed a full-time gig at an ad agency.
This is probably the easiest option to get going and start making money right away, and there’s probably not going to be any initial investment, unless you need to pick up certain software or physical equipment you’ll need to get going. Consider a skill you already have and then ask your existing network to make a few referrals, or you can even join a freelancing site like Upwork or Fiverr.
To get paid you can charge by the hour, per project, create service packages, or even offer a monthly retainer where the client pays a set amount of money each month, regardless of the amount of work they send your way. With a service-based business you can start earning a part time income pretty quickly, and lots of people build up their business into a full-time income. I even know several coaches that make over a million dollars a year with their businesses, though it is admittedly a competitive space.
So who’s a service-based online business best for? Anyone with a skill set that other people generally don’t have, or someone who’s willing to do the work that other people either don’t have time to do or don’t want to do. The main downside to this business model is that it can be difficult to scale, since there’s physically only so many 1-1 clients you can take on at a time. BUT, you can always raise your prices, create higher end offers, or add digital products into the mix once you really get going. Also, you don’t HAVE to scale if you don’t want to. That’s not in everyone’s plan and that’s totally fine.
Online Business #2: Digital product business.
This can include anything from an ebook, to an online course, to templates, to presets, to printables. There are a few ways to do this. If you’re starting from scratch with no audience, you can sell your products through a third party like Etsy, Skillshare, or Udemy, where you’ll be able to leverage their existing traffic in exchange for giving them a cut of whatever you make. Or, you can sell your products on your own site, driving traffic to your site through ads or SEO. Or you leverage someone else’s audience by working out an affiliate partnership where you pay that person a percentage of the sales in exchange for that person promoting your product to their audience. And of course, if you already have an existing audience of your own, you can sell to them.
There’s also no huge start-up cost here; especially if your product is something like an eBook. If you’re going for something bigger like a digital course, you can expect to spend some money on various softwares, like a course-hosting platform and email service provider, but there are inexpensive and free options as well.
The earning potential really varies here; if you’re selling products like templates, presets, or printables on a site like Etsy, it can be difficult to really make a lot of money. Not impossible, just difficult. But the online course business is absolutely booming and there’s huge earnings potential there. According to statistics by Elearning, the online course market was worth $190 billion in 2018 and it’s expected to be worth more than $319 billion by 2029.
This business model is best for creative types with a design eye if you’re selling things like templates, presets, or printables, and if you’re looking to get into online courses you need to like to teach, know how to break down larger pieces of information into easily consumable pieces, and have a solid understanding of the problems a particular group of people faces, AND the solution to those problems that you’ll provide through your course.
Online Business #3: Physical Product Business
There are a few variations here. First, you’ve got dropshipping, which is when you promote a product that someone else creates, on your own online storefront. When someone places an order, you send the order to the dropshipper who then sends the product to the customer. There’s also print on demand platforms like Redbubble, where you upload your custom designs and customers can order things like t-shirts or mugs with your designs on them. In both cases the supplier ships directly to the customer so that you never have to deal with any inventory.
Another option, if you’re someone who likes to make your own handcrafted products, is to sell those products on a platform like Etsy.
And a final option, if you’ve got an idea for a product that’s just not feasible for you to make yourself for whatever reason, is to source a manufacturer to make it for you, and then sell that product either on your own website, through Shopify, or on Amazon. If you plan to sell on Amazon you can either fulfill the orders yourself, or you can use FBA (Fulfillment by Amazon), where you send your products to an Amazon warehouse and they fulfill the order when a customer buys it on Amazon.
If you’re selling your own designs on a POD platform like Redbubble, there’s no startup cost, and if you’re drop shipping, all you need is a basic e-commerce website, or you can join Shopify. But If you want to create your own products, have them manufactured somewhere overseas, then either warehouse them yourself or go the FBA route, you’re probably looking at at least $2,500 to get started with some product samples, inventory, promotional giveaways, UPC codes and a small advertising budget.
Generally, you can expect to make small earnings with POD sites. Great earning potential if you create your own product, BUT a steep learning curve and high competition can make getting started a LOT more challenging than the other business models we’re talking about. But I do know people making over 7 figures with their physical products.
If you’re using a third party POD site, this is a great option for someone who doesn’t have any money to get started, is creative and knows how to create compelling designs that can stand out, and who isn’t looking to make a full-time income. Otherwise, creating a physical product business is for someone who isn’t afraid to put in the time, effort, AND money to get going, and is really gonna be in it for the long haul.
Online Business #4: Self-Publishing
This is one of my favorites because it’s one of the easiest ones to get going and it’s the one that got me making multiple 6-figures in a relatively short period of time.
How it works is you self-publish books in either e-book or paperback format on a platform like Amazon KDP (Kindle Direct Publishing) and earn a royalty each time a copy of your book is sold. You get to take advantage of an already existing marketplace—Amazon—so you won’t need to drive traffic to your book. I’m not talking about writing a novel or thick nonfiction volume here. In order to scale (unless you’re an established author or someone with a substantial following), you’ll need to publish many books quickly. You can do this by outsourcing the writing of fiction or nonfiction books, so you can have multiple books being created at the same time, or you can go my personal favorite route, which is publishing low-content books that you can quickly and easily create yourself. Low-content books are books that, as the name suggests, have small amounts of content rather than lots of text, and include things like planners, journals, guest books, log books, coloring books, activity books, and anything similar. You create digital files of your book, upload the file to KDP, and then your book is then made available for sale on Amazon.
If you go the low-content publishing route there’s going to be no initial investment—it’s free to sign up for KDP. If you’re outsourcing fiction or nonfiction books you can expect to pay $500 a book for something decent. That’s why I recommend going the low-content route.
For payment, KDP’ll pay you royalties every month, about 60 days after the end of the month the book was bought in.
Earning potential with this one can be amazing—I made over $100,000 in profit in my first 14 months of publishing low-content books.
This model is best for creatives with a great eye for design who can create books that really stand out against their competitors. And it’s also best for those that are looking for a side income, rather than a full time income. The reason is because even though you CAN make a lot of money, your business will be ultimately tied to Amazon, and I think your main source of income should be more under your own control.
If low-content publishing IS something you’re curious about, you can download my free guide, 3 Steps to Publishing Your First LC Book in Less Than a Day.
Online Business #5: Affiliate Marketing
In this model, you get paid for promoting OTHER people’s products or services. You can do this by writing blog articles that include links to products or services offered through an affiliate program like Amazon Affiliates or ClickBank, and then when a visitor to your site clicks on one of these links and makes a purchase you earn a small commision. OR, you can promote a product from an industry peer either on your blog or to your email list. As an example, every year I promote Amy Porterfield’s Digital Course Academy to my own email list.
To start, you’ll need a website and, ideally, an email list. If you’re starting from scratch, there’ll be many months, potentially a couple years, of hard work to build an audience.
This one can be super lucrative, but it’s really best for those that already have some sort of an audience, because you need people to promote your affiliate products to. Even if your plan is to create a niche website that houses all of your affiliate links, you’ll still need a way to get traffic to that site.
Affiliate marketing’s a long game, but once you have an audience it can be a massive and super easy money maker. I made about $100K in affiliate earnings last year, just selling other people’s products. But again, I already have an audience to promote those products to.
Online Business #6: Online Education Business.
Online education usually involves sharing information through blog posts, YT videos, podcasts, or even social media posts in order to build up a following, and then offering things like digital courses, workshops, or other products or services. This gives you the opportunity to combine multiple streams of income, like advertising, affiliate marketing, brand deals, sponsorships, digital products like online courses, physical products, and even services like coaching. And that really is the key to making money as an online educator—especially in the beginning, since you won’t make a lot of money from YouTubing alone, or podcasting alone, or blogging alone. But when you bring all of those income streams together, the earning potential is massive.
This business model is really best for people who love the creative process, love to teach or entertain, want to make as much money as possible, and who love the idea of leaving a lasting impact on other people. It’s also best for those who DON’T need to make money in the immediate short term, since it CAN take a bit of time to start building a following. Expect to put in 6 months to a year of creating content in order to build up enough of an audience to have customers to sell to. And of course, you have to be comfortable—or willing to get comfortable—with being out there as a bit of a public figure. This was actually pretty tough for me in the beginning, especially as a highly sensitive introvert, but I actually REALLY enjoy it now. Out of all the online business models I’ve tried, becoming an online educator and creator has been the most rewarding, most satisfying, and definitely the most lucrative.
If you’re planning on starting an online education business this year, make sure you download my 4-Step Online Business Start-Up Blueprint.
Also, to make this year your best one yet, check out my recent blog post How to Plan Your Year Like a Millionaire.
And if you liked this blog post, please share it with anyone you think might find it useful!
Chat soon,
Rachel
