Online business basics: The different business models

(This is the second article in my Online business basics series. You can find links to the other posts in the series on this page: Online business basics)

One of the big pitfalls when you’re in the early stages of your online business is trying to reinvent the wheel.

I know this one well because I’ve done it myself!

Online business looks easy – you set up a website, get Facebook and Twitter account and start blogging. You get a few followers and everything looks great. Until one day you realise you’re not making any money!

It’s much easier to follow a tried-and-tested online business model than it is to make it all up as you go along. Here’s a quick guide to the different types of online business:

The information website

The information website is based on giving away free information. It’s main source of income is Google AdSense, advertising and affiliate product sales.

The trick is to pick a narrow, well-defined subject that people are searching for on Google and other search engines. Then build relationships with your visitors using a blog, a mailing list and social media.

Affiliate marketing

Affiliate marketing is when you’re making money by selling other people’s products. Instead of having to create a product, a detailed website, set up a shopping cart and handle customer service, all you need to do is bring in traffic.

Once you get the traffic to the vendor’s website, their job is to make the sale. Once the sale is made, you get a percentage of the sale price. For physical products, the commission is usually between 5% and 20%. For digital products, the commission is usually between 50% and 75%.

You can find out more about affiliate marketing in the Super Affiliate Handbook. Also, I have an affiliate programme for my e-course Earn What You Deserve as a Mumpreneur.

Online Shop (eCommerce website)

Another way to make money online is to sell products from an eCommerce store. Here, you would actually own an online shop where customers would place orders and then you send them a physical product.

You can buy in your own products from a wholesaler, work with a dropshipper or if you’re into crafts you can make your own. You can find out more about this in my article how to start and online shop.

Selling information products

Information products can be e-books, membership sites, online videos, audio files (podcasts) or even physical products such as DVDs and books.

You need three main skills to succeed in information marketing:

1. The ability to bring traffic to your website.
2. The ability to create good content in a specific area.
3. The ability to convince people online that your infoproduct is a good investment that will help them solve their problem.

Once you have these three skills, you’ll be able to produce as many information product websites as you wish

The easiest way to get started if you already have a blog is:

1. Find a hot topic that your audience wants to know about (e.g. look at your most popular posts, create a survey and ask them to fill it in or just ask “What’s your top challenge?” on Facebook or Twitter)
2. Write an e-book and convert it to PDF format. You can do this for free using Open Office
3. Create an EJunkie account, upload your e-book and sell it from your blog.

If you don’t already have a blog, or you want to avoid making a lot of frustrating mistakes, I recommend the e-course 3 Day Money.

Build a business that you can sell

If you want to earn more than a few thousand pounds a month, you could work on building up a business that you can sell for profit.

This will take considerably more experience and investment than the models above, so it’s usually a good idea to build at least a couple smaller successful online businesses (as above) first.

So there you have it – five different online business models with a proven history of success. Just pick the one that best matches your skills, experience and interests and get started!

Contains affiliate links