You may know that you want to start an online business, but you don’t know what the focus of your business should be.
This post has the steps for how to choose an online business to start based on your own financial goals, skills, and desired lifestyle.
These are the things that I wish I had known 13 years ago when I started my first online business. Since then, I have started several online businesses with my husband, Larry.
And now we live off diversified income streams from online business, real estate and stocks. But our favorite income generating assets are our online business because of their low capital requirement and large upside so keep reading.
By following the steps below, you’ll be able to identify and choose the best online business to start before you do a lot of work.
Define Online Business Goals First
The purpose of starting an online business is to make money to support your lifestyle and retire certain that you’ll have funds for life so that is where we’ll begin.
From your overall wealth plan, identify if your main goal of starting an online business is to have one or all of the following:
- Income Right Away
- Income Later
- Be Able to Sell the Business for a Capital Gain Later
Knowing this will lead you to choose an online business that meets your financial goals.
If you’re not sure if you need income or capital gains, click here to read my post explaining more about this.
Income Right Away
If you want income right away, you may want to consider doing some local consulting while starting an online business for gradual online expansion.
If you want to generate meaningful income quickly from an online business without local business, you’ll need to have funds to run ads to your website or have access to your desired market (see below) from a connection or other resources.
Otherwise, it will take time to build up enough traffic to generate income.
If you want to start an online business before you retire and plan to work another year or two this can be ideal for a content based website with the plan for income later.
With this model, you find out what people are searching for online, and write about that topic. The key is to write about topics that google still needs good information on.
For example, there are major established websites writing articles on how to bake a cake. But there are probably not many websites with articles about how to decorate cakes for teenage girls.
The key with this online business model is to give google something they need and want with high quality, relevant content.
This model generally takes a good 9 months to 2 years to get decent income from it when done correctly but I know of people who have been successful faster.
The content you create can be provided on your own website, YouTube or both since they are both owned by Google. I mention this because our most profitable business began from only YouTube videos for content initially.
It was very profitable within only a few months.
But remember that building your own website vs having your content elsewhere creates a valuable asset which leads to the next point.
Sell the Business for a Capital Gain Later
If you want to sell your business for a capital gain later, begin with this plan in mind.
If your business requires that you do most of the tasks or be present for the income generating aspects of the business, it will be harder to sell.
The more passive the income is, the easier it is to sell your business for a capital gain.
And if you want to sell for a capital gain, it’s best if you own the place where your content is. Think of your website as online real estate because that is really what it is.
Now that you know if you want to focus more on income or building an asset to sell, take the next step. If you’re unsure if you need income or a capital gain as your main business focus, read my post How to Create a Wealth Plan here.
Is It Better to Sell Information or Products Online?
The next major factor is whether to start an online business that is product focused or information focused.
While most of the principles here apply to both information based and product based online businesses, there are some extra steps that are needed for choosing physical products to sell.
This post is focused more on how to choose an online business that is information focused, at least starting out.
After having an Amazon store for almost 5 years now, I am familiar with this online business model, but I personally prefer information products and being able to create my own websites.
Information based online businesses are ideal for people later in life because by the time you’re older you’ve had a lot of experience over the years.
The Difference Between Information and Product Online Businesses
To clarify, information based online businesses have a primary focus of providing information vs a product. Examples of the information websites and the actual related products are:
- Publishing websites with various authors
- Books and eBooks
While a physical product, on the other hand, is something like a salt and pepper shaker set or a pool umbrella.
You can read more about the pros and cons of an Amazon product store in my post Is It Too Late to Start an Online Business?
Information Plus Physical Products
Choosing an information online business does not rule out selling physical products later so don’t feel like you have to choose one or the other.
Right now, we’re just looking to identify a good starting point for an online business so you can create another income stream or two before retiring.
Physical products can always be added after you have a particular market by selling from your own Amazon store, drop shipping, affiliate sales or other methods.
In fact, affiliate sales for physical products are a big income stream for most information based online businesses and blogs as you have probably noticed in doing online research for any product you want to buy.
Click here to read my related post Starting an Online Business After 50.
Choose the Focus of Your Business
Now you know the main differences between a physical products online business vs an Amazon store or other type of products business.
The next step is to decide the focus, or niche of your business.
1. List Your Skills
Assuming you want to start with an information based online business, to choose an area to focus, list the following:
- Things you know a lot about that can help others solve a problem
- Problems you have resolved
While you may not realize it, I can assure you that by the time you are past midlife, you know a lot about several things and have solved many problems. List them all.
Most people that know a lot about a topic don’t realize that others don’t know about it. You just start assuming everyone knows how to sell covered calls or how to create a wealth plan once you become very knowledgeable about it.
This is especially true for topics you have done for decades either in your career, from a strong interest or simply out of a need.
2. Be Cautious of Well Meaning Friends and Family
It may be helpful to ask family and friends, but most people discount or misunderstand how profitable an online business can be.
To avoid discouragement or blank stares, you may want to tell them you are thinking of writing a book or doing consulting and are trying to identify the topic. Everyone can relate to a book.
People like sameness, and therein lies the opportunity for those who dare to think and be different.
If you’re having a hard time thinking of what you can offer, click here to read my post with 115 cool ideas for businesses to start later in life.
3. Narrow Your Niche
Now that you have one or more ideas for your online business focus, you may want to narrow your focus so it becomes more of a niche. The narrower your niche the more valuable your expertise is but there does need to be enough people wanting what you provide.
For example, how to update your wardrobe after age 50, or how to protect your family from liability in Michigan are both niche topics that are probably not too small. (I have not researched these topics. They are just examples.)
Pick your top 3 to 5 ideas remaining open at this point.
Identify Who You Want to Serve
Looking at the business niche ideas, write down who you would like to serve. For example, I personally prefer to write about investing and income topics that will help people between midlife and retirement since this is what I have been doing for the most recent 15 years.
I don’t envision me helping twenty somethings to open their first investment account because it has been almost 40 years since I did that, and a lot has changed.
You get the idea.
Identify Customers for Your Online Business
The next step is to ask yourself if you can easily reach the people you want to serve. This is huge in choosing an online business to start.
If there is a particular thing that these people do, that’s best.
For example, lawyers or people who do yoga can be identified easily.
Or people doing certain things in their life are ideal, like people who have kids about to apply for colleges or people who own RV’s.
The main thing is that you can identify and find them online.
Evaluate the Market
There are several ways you can learn more about a market focus or niche you are considering serving.
A lot of people avoid competition, and even think it is too late to start an online business because there is so much competition.
But competition is good because it shows that there is a healthy market. You can always niche within that healthy market.
For example, “lawyers” is a huge market that would be hard to penetrate. By narrowing your focus or niche to “estate planning lawyers that own firms with less than 10 attorneys” is much narrower with two qualifiers.
While you’re checking out the competition, see what they are offering. Get ideas. See if you are interested in offering similar products.
Sometimes this feels like you’re copying or spying but this is just research.
While there are unethical people who steal other people’s intellectual property, you are getting an idea of what others offer to see if you could offer a similar product.
When you create your own product to offer, you’ll naturally add your own experiences to it. This is what makes your product unique and different from the competition.
The truth is that all knowledge comes from someone else. And most people write or create products based on learning from many different people plus their own experiences.
This is what makes you an expert on a topic. There will always be large overlaps among expert content and products unless your expertise is very rare, like how to raise a bear in your backyard.
Google Your Topic Ideas
Type into google one or a few of the problems you will help others solve.
Check out the results to see if there are people interested in solving this problem. Forums can reveal a lot.
Look for a topic that has a lot of information but is not completely impossible to edge your way into if you provide some good content on a website, YouTube or social media.
Check Google Trends
Take a look at google trends to see more about your topic ideas.
You can see if the topic you are interested is very seasonal, in which case you will probably want to avoid it unless you prefer seasonality.
Or interest in the topic may be waning.
A vibrant growing market is best even though it can feel intimidating.
Find Your Unique Insights
When searching, notice if you can add value based on your experience to the already available information online.
For example, there are a lot of financial advisors and large institutions that write about planning to retire financially, but all the content is about the same investment type products in stocks, bonds and annuities, with a heavy focus on what the firm sells: investment services.
I have created income streams with Larry by combining investment products, real estate and online businesses which is somewhat unusual. I like to write about what I learned firsthand.
This is very different from the information provided with a narrow focus on only stocks and bonds, often from hired writers.
Here are some other examples to help you recognize your uniqueness because most people don’t recognize it in themselves.
- The person with Asperger’s syndrome has valuable insights and strategies that the therapist won’t have.
- The person that got rid of headaches by eliminating gluten can offer something different from the doctor that prescribes medicine for headaches.
- The person who ran the marathon can offer a different perspective than the coach.
- The person that got fired and lost their home has painful firsthand information that can help others avoid or get through something.
This isn’t to say that the doctor, therapist and coach won’t have great information, but it will be different from what only you can offer.
What have you experienced that gave you valuable and unique information that others aren’t sharing from the same perspective but that would help others if they were?
It is important to Google that you have the experience or credentials to provide advice or information so make it clear where your advice is from.
While I have my Accredited Financial Counselor® license to increase my credibility, for example, I write a lot from from my own experience vs textbooks and you can, too, as long as you’re authentic.
You can read more about the different types of income streams we have in my post Income Producing Assets.
At this point, you probably have good idea of the niche for your online business. The next focus is on income streams.
Plan Your Income Sources
The ways which you can get paid will reveal themselves more based on what your market needs but have a lose plan for what you want to offer.
Great product ideas which we have done include:
- Group programs
- Digital courses
- Affiliate products
You’ll have a good idea for other products based on your competitive research.
After Your Have Chosen an Online Business to Start
Now that you have chosen the focus and model for your online business, the next step is to build a website or hire someone to build a website. This is easier than it sounds.
I can write about this in another post, after hiring someone to build several websites and building this website myself.
How to Choose an Online Business to Start Summary
Now you have the steps for how to start an online business.
Spend some time on this, but don’t get caught up in analysis paralysis.
You can always tweak your focus as you get started and see where your online business takes you.