Choosing the right business model follows a clear process. In fact, you only have three business models to choose from.
Why is it so difficult to make money online?
Call me crazy, but I blame the business gurus: they are the ones who get rich by overcomplicating things.
Think about it: If you knew that starting an online business was easy, would you really need that $299 course on the latest TikTok marketing tricks?
To hell with that – I’m here to tell you that starting an online business requires only 2 essential skills:
Willpower. 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.
Business model #1 – Offer a service
Offering a service is the easiest way to earn money online. You are going to sell your experience in a timely manner – a direct and honest business transaction.
You can offer services as a freelancer, consultant, advisor or coach.
1. Your service options
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.
2. Advantages and disadvantages of services
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).
Fundamentals: Teaches you crucial business fundamentals like accounting and negotiation.
But 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.
3. How to be successful with services
First of all, you have to learn a highly demanded skill. Whichever skill you choose, make sure it’s interesting to you and that it 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 freelance platforms like 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 up your serve as much as you can and become the best.
2. Learn to attract clients: find (or attract) your ideal clients yourself by taking advantage of cold emails, your network of contacts or content marketing. Positive side effect: You’ll learn marketing and sales along the way.
Over time you will reach a point where you want to scale your service business. There are 3 solutions to achieve it:
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.
Business model #2- Sell a product
Who has never 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 repeatably by creating a great product.
But is it really that easy?
1. Your product options:
Broadly speaking, products can be grouped into digital and physical products:
Digital products: SaaS, apps, ebooks, courses, data, music, videos, graphics, website themes. Physical products: bags, planners, paintings, DIY soaps, charms, stickers, selfie sticks, posters.
If you are a newbie, I recommend you start with a digital product. Physical products are much more difficult to produce and distribute.
From an ownership point of view, you can sell your own products or promote others with the help of dropshipping or affiliate marketing.
2. Pros and cons of the products
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 be scaled efficiently.
But product-based businesses also come with many challenges:
High probability of failure: 9 out of 10 products fail in the first few 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 knowledge of marketing, sales, and management.
3. How to be successful with the products
There are many misconceptions about building a successful product.
I have read hundreds of web resources on this topic, and the following 3 tips have been mentioned over and over again:
Start with your customers: 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 is King: Identify your marketing channels early in your product development. Integrate social media, pre-sales, and customer feedback as you build the product.
Lean Startup Methodology: In 2006, startup founder Eric Ries published the book “The Lean Startup” and revolutionized the startup landscape. Designed a blueprint for product success using rapid feedback loops, MVPs, and user data. Learn it.
Business Model #3 – Build a platform
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, themes, 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 is where the power of platforms lies. Not surprisingly, Amazon, Facebook, and Apple have platform-based business models.
1.Your platform options
There are several ways to build your platform:
You can join external platforms like Medium, YouTube or Instagram.
You can build your own platform (for example, a blog or a 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. You can only act as a mediator in the background of your platform and let your clients do the heavy lifting for you.
2. Pros and cons of the platforms
Platforms have unique advantages:
They are difficult to copy: It is easy to imitate a service or a product, but it is almost impossible to copy a community of very dedicated fans. Owning a platform is the ultimate advantage.
Flexibility: One platform offers countless business opportunities to earn a living online. Third-party platforms like Medium or YouTube pay you based on the number of clicks, reads, or views you generate. You can test 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’s hard 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 and fragmented audience.
Patience: Building a platform takes time and resilience (haters and naysayers are part of the journey)
3. How to be successful with platforms
Kevin Kelly, author and founder of Wired magazine, developed the idea of the 1,000 true fans:
“To make a living as a craftsman, photographer, musician, designer, author, animator, app builder, entrepreneur, or inventor you just 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.
Service, product or platform?
To make your choice easy, 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. idea of content creation and you 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 said, it is crucial to understand that these three business models are not mutually exclusive. On the contrary, they can benefit each other:
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 experiment smart, stay flexible, and move on. Step by step, you will create your personal spiral of success. And at some point, making money online will be unavoidable.