Define Online Business Goals FirstThe 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
Income Right AwayIf 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.
Income LaterIf 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 LaterIf 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 BusinessesTo 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
Information Plus Physical ProductsChoosing 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 BusinessNow 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 SkillsAssuming 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
2. Be Cautious of Well Meaning Friends and FamilyIt 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 NicheNow 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 ServeLooking 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 BusinessThe 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 MarketThere are several ways you can learn more about a market focus or niche you are considering serving.
Online CompetitionA 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.
Product OfferingsWhile 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 IdeasType 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 TrendsTake 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 InsightsWhen 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.
Plan Your Income SourcesThe 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
After Your Have Chosen an Online Business to StartNow 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 SummaryNow 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.
The information on this website is for education only and is not to be construed as personal financial advice.