Why is it so difficult to make money online?
Call me crazy, but I blame the business gurus: they’re the ones who get rich by overcomplicating things.
Think about it: If you knew starting an online business was easy, would you really need that $299 course on the latest TikTok marketing tricks?
Screw that – I’m here to tell you that starting an online business requires only 2 essential skills:
- The ability to choose (and maintain) the right business model.
Now, unfortunately, I can’t help you increase your willpower. However, choosing the right business model follows a clear process. In fact, you only have 3 business models to choose from.
Offering a service is the easiest way to make money online. You are going to sell your experience in a timely manner – a direct and honest commercial transaction.
You can offer services as a freelancer, consultant, counselor or coach.
The list of service opportunities is endless. Here’s a short list of high-value skills that pay well:
Marketing and sales: Facebook ads, social media management, SEO, sales funnel design.
Programming and data: Web application development, data analysis, database management, server administration.
Lifestyle: Life-coaching, fitness, dating, accountability, mindset.
Content: Writing articles, translation, proofreading, video editing, sales texts.
Design: Logos, UI/UX, illustrations, landing pages, Photoshop.
To find more inspiration for high-paying services, I recommend browsing Fiverr and Skillshare.
Selling services has many advantages:
Fast monetization speed: It is the fastest way to earn money online.
Low risk: Services have a predictable business model with a low risk of failure.
Small investment: There is no initial investment (except learning a new skill).
Basics: Teaches you crucial business fundamentals like accounting and negotiation.
But the services have limits:
They are not scalable: Your time is directly proportional to your work.
Routine: Doing the same thing over and over again can get boring.
Interpersonal challenges: Let’s face it, some clients are painful to work with.
Lack of vision: You may not feel like a “real” entrepreneur.
First, you have to learn an in-demand skill. Whatever skill you choose, make sure it is interesting to you and suits your individual strengths and talents.
Ideally, you should also choose a skill that other people can’t or won’t do.
As a beginner, you can offer your services on freelancing platforms such as Fiverr, Upwork or Toptal. But on these platforms there is fierce competition and therefore low pay.
To differentiate yourself, try the following strategy:
1. Level your service everything you can and become the best.
2. Learn to attract clients: Find (or attract) your ideal clients yourself by leveraging cold emails, your network, or content marketing. Positive side effect: You’ll learn marketing and sales along the way.
Eventually you will reach a point where you want to scale your services business. There are 3 solutions to achieve this:
1. Get more work in the same period of time.
2. Increase prices.
3. Create an agency, hire freelancers/consultants and become their boss and project manager.
Who hasn’t ever dreamed of getting rich by inventing an innovative product?
The process seems simple:
1. Find a painful problem for a clearly defined group of people.
2. Solve that problem in a repeatable way by creating a great product.
But is it really that easy?
Broadly speaking, products can be grouped into digital and physical products:
- Digital products: SaaS, apps, ebooks, courses, data, music, videos, graphics, themes for web pages.
- Physical products: bags, planners, frames, self-made soaps, charms, stickers, selfie sticks, posters.
If you are a newbie, I recommend starting with a digital product. Physical products are much more difficult to produce and distribute.
From the ownership point of view, you can sell your own products or promote those of others with the help of dropshipping or affiliate marketing
The benefits of the products are tempting:
Passive income: Products have the best chance of earning real passive income.
High profit margin: low reproduction and distribution costs.
Scalability: A product-based business is a repeatable business machine that can scale efficiently.
But product-based businesses also come with many challenges:
High probability of failure: 9 out of 10 products fail in the first years.
Massive initial investment: You will have to invest a lot of time, money and/or energy to develop a great product.
Complex: A product-based business requires extensive marketing, sales, and management knowledge.
There are many misconceptions about building a successful product.
I’ve read hundreds of web resources on this topic, and the following 3 tips have been mentioned over and over again:
Start with your clients: Start with your customers’ pain points, not your solution. Use surveys, customer interviews, and market research to validate your business idea before building it.
Sales and marketing are king: Identify your marketing channels early in your product development. Integrate social media, pre-sales, and customer feedback while building the product.
Lean Startup Methodology: In 2006, startup founder Eric Ries published the book “The Lean Startup” and revolutionized the startup landscape. He designed a plan for product success using rapid feedback loops, MVPs, and user data. Learn it.
Selling a product is fine, but why not own the entire market?
That’s what platforms are all about. Basically, a platform is a unified (digital) place where a group of people can come together, based on common goals, topics or interests.
From a practical perspective, a platform can be a newsletter, a community, or your Twitter account.
When you own a platform, you automatically own the transactions on that platform. That’s where the power of platforms lies. It is no surprise that Amazon, Facebook and Apple have platform-based business models.
There are several ways to build your platform:
- You can join external platforms like Medium, YouTube or Instagram.
- You can build your own platform (e.g. a blog or podcast) and drive traffic through SEO, ads, or viral marketing.
- You can even build your own technical platform by connecting two different groups of people like AirBnB (owners and renters) or YouTube (viewers and creators).
Your platform can be built around your brand, but it doesn’t have to be that way. You can only act as a mediator in the background of your platform and let your clients do the heavy lifting for you.
The platforms have unique advantages:
They are difficult to copy: It is easy to imitate a service or product, but it is almost impossible to copy a community of dedicated fans. Owning a platform is the ultimate advantage.
Flexibility: A platform offers countless business opportunities to earn a living online. External platforms like Medium or YouTube pay you for the number of clicks, reads or views you generate. You can try sponsorship or ads on your own platform. Or let your audience tell you their problems – and then build the solution to solve these problems, be it coaching, software or courses.
Scalable: A platform is a non-linear business model. This means that your platform can grow exponentially at any time.
However, the challenges of growing a platform should not be underestimated:
Get Traction: It is difficult to create a critical mass of people. Competition on external platforms is brutal, and marketing our own platform can be even more difficult.
Early Monetization: It can be difficult to make money with a small, fragmented audience.
Patience: Building a platform takes time and resilience (haters and detractors are part of the journey)
Kevin Kelly, author and founder of Wired magazine, developed the idea of 1000 true fans:
«To make a living as a craftsman, photographer, musician, designer, author, animator, app creator, entrepreneur or inventor you only need thousands of true fans»
According to Kelly, a fan is a person “who will buy anything you produce.” Your 1,000 fans will buy your products, spread your message, and do most of the marketing for you. Focus on them.
To make your choice simple, I recommend the following rule:
- If you’re interested in learning a new skill and don’t have any business experience, start with a service.
- If you can’t stop thinking about your product idea and you have marketing experience (or an audience), build a product.
- If you love the idea of content creation and want to experiment with exciting ideas, build a platform.
But in case you want to be more methodical in your decision process, take a look at the following table:
Don’t let the business gurus fool you: choosing the right business model is easier than you think. Can:
- Offer a high value service.
- Sell a useful product.
- Build (or join) a platform.
That being said, it is crucial to understand that these three business models are not mutually exclusive. On the contrary, they can mutually benefit:
Your service business can lead to great product ideas.
Products can be marketed on your own platform.
Your platform will provide you with valuable feedback for new service and product opportunities.
So, do smart experiments, stay flexible and move forward. Step by step, you will create your personal spiral of success. And at some point, making money online will be inevitable.