It is the question I get asked almost on a daily basis. How to start a business online and how long will it take to start earning revenue?
The truth?
I seriously don’t know how long it is going to take you, it is different for everyone. But, you can check out how long it took these Business Jump clients to start a business online and monetise it with our help by clicking here.
It is sorta like one of those how long is a piece of string questions.
How committed are you? How resilient are you? How efficiently can you work? What areas of the business are you focusing on? Are you being smart with your time? Are you working in the flow? Do you know what zone of genius you are in and working within that? Are you applying the 80/20 rule? Do you have a growth mindset, or a limited mindset?
Did I freak you out with all those questions?
Sorrz.
But when it comes to deciding on how to start a business online those things are instrumental in creating an online business that truly can afford you a life of freedom, fulfilment and profit. And, specifically why I teach them in my e-course to set my clients up for success.
Next to take into consideration is your business model and income streams, let’s break them down.
Selling a Physical Product:
Physical product-based business models frequently take 2-3 years to break even. That means you’re trading at a loss for all that time.
That was true for me when I had my old business.
It wasn’t until the end of my third year, I stopped and deeply evaluated where I was and where I wanted to go.
I broke it down like this:
The conversion rate for online retail websites is on average 2.5%
That means for every 100 people that visit your website 2-3 will buy from you.
Shall we round that up to 3 people for this exercise? Ok.
3 people buy 3 products for $20 each.
Awesome. You’ve made $20 per sale right?
No.
Out of the $20 per sale, you need to spend the following to stay in business: $10 needs to go straight into replenishing your product (assuming you are working on a 100% markup)
To get 100 visitors to your website in the first place you need to allocate funds for advertising and marketing campaigns or spend time learning how to generate traffic organically via social media and SEO.
To run your business you need miscellaneous items like bubble wrap for packaging, envelopes, packaging, stickers, business cards, stock photos, graphic designers etc
Plus you have service fees like hosting and domain, Paypal fees, accounting software fees, social media scheduling software fees.
Sometimes there will be a difference between what you charge for postage and what the customer pays or you’ll need to replace and resend lost items
Don’t forget, you’ll need to pay your tax to the ATO.
If you are buying products from overseas, the exchange rate will eat into your profit too.
So, from all that, let’s say your outgoing costs to stay in business are $15 out of every $20 product sold.
That means, there is $5 left for you to pocket.
Out of those 3 sales, you have profited $15 as your take-home income.
But wait, what if your product doesn’t sell and you need to have a sale? When you discount your $20 product down to $15, you will only be breaking even. No profit for you.
It gets down to the wire pretty quickly, doesn’t it?
We haven’t even considered the time factor yet. Or the amount of cash you’ll need in the first place to bankroll your business and purchase products to sell. But in a nutshell we need to source a manufacturer/supplier, pay money upfront to get products, (usually there is an MOQ) check stock when it arrives, sort out inventory, house products, start the selling/advertising/promoting process, pick and pack, book courier, re-order stock, attend to customer service enquiries/issues. etc. etc. etc. and etc.
I estimate that it probably works out to be 30 minutes per product.
So, in essence, we are working for one and a half hours and making $15.
How much would you like to earn a week? Let’s call it $500 just to make it easy. At a take-home rate of $5 per product, you’ll need to sell 100 units.
Remember the time we allocated per product? 100 units x 30 minutes per product is……..
The only way around this is to engage with a warehouse to dispatch your products, but most won’t take on the smaller guys just starting out with no or low sales being dispatched. Your other option is to hire someone to come and pick and pack for you, which will eat into your $5 per product profit.
This realisation took me a good few years to work out and was not something I understood properly when I decided to start a business online. This knowledge is what I pass onto my clients so they can benefit from my mistakes and learnings and get to where they want to go faster then if they were DIYing.
How to Start a Business Online Selling a Physical Product the Smart Way:
To start a business online, let’s get really smart and work out what legs we can cut off that will save us time. With this type of setup we can actually bypass having to deal with stock by setting up a website that will make the sale, keep the commission but have the website automatically send the rest of the payment and the order to the supplier, and the supplier dispatches for them. It’s sorta like dropshipping but better. We call it a marketplace set up.
Who is This Business Model For?
Great for those who want to sell a product, but don’t want to pay $1000’s upfront to buy products or lose money.
To help our clients choose the right idea, we look for things that are in their everyday life, that are a pain point they can provide a solution to, that they feel inspired and motivated to talk and post on social media about.
It is a super simple but highly effective way to flesh out an idea that can become wildly profitable because it folds into the next important part of your business journey. This next stage is mastering your marketing strategy to grow and scale your business and this is where we want them to be spending the majority of their time. In the profit-producing areas of the business, not in the non-profit producing areas of a business like picking and packing orders.
How Does This Business Model Make Money?
Generally via commissions, once a sale is made, commissions range from 10-30%. Another option is to run the website via affiliate commissions which means when someone wants to buy a product on your website, it redirects them to the supplier’s website to complete the sale.
How to Start a Business Online Selling a Service the Smart Way:
So you’ve got some knowledge or skills you’d like to share with the world. Maybe you’ve studied something, gained skills from employment or just been through some life experiences and feel like you can share it with other people.
Awesome.
Serviced based business models can generate an income faster, I out-earned my old full-time salary in about one year when doing my web and graphic design freelancing *but* I gave myself PND from trying to keep up with my workload and deal with a baby that hated sleeping with a passion. I had no freedom or flexibility and my husband hated me as well, because I worked so much.
Typically with serviced-based businesses, unless we get super smart and scale without scaling our time, like I did with Business Jump, we will reach a ceiling with how much we can earn, because when we are doing the work ourselves, we only have so many hours in the day.
There are only so many clients we can take on, so much work we can do and a lot of time these businesses are stuck in feast or famine mode which means while we are looking for the clients we aren’t doing the work and while we are doing the work we aren’t looking for the clients.
Also, what happens when you want to go on holidays or get sick? Cash flow completely stops. Right?
So, should we kneecap this business model?
Not at all.
How Do We Work Smarter Here?
This business model can be hacked so we can learn to make more time via outsourcing, automating and streamlining. We can also flip it into a sell one to many format, instead of a one to one format.
For example, you can still do your one to one work, but get really smart with how you generate your traffic to your website, how they enquire and gain information about your packages and how you work with them and then compliment it with digital products that can create semi-passive income, such as wrapping your knowledge up into an e-course, or e-book, or some type of digital download.
Who is This Business Model For?
Excellent for anyone who has previous skills, knowledge or information that they would like to share with the world to help people. Here is my biggest tip. Don’t let fear tell you that you aren’t enough. You only have to be a step or two in front of other people to share your knowledge with them.
How Does This Business Model Make Money?
Start with your service based one to one work, but then as I show my clients, you want to continually be absorbing yourself out of the business and perfecting it to run without you. Refine and automate your business to do the heavy lifting for you and then turn your advice and expertise into an e-course, or a digital product, or e-book, grow your audience, automate it.
You can also leverage off affiliates for complementary products and services your clients may need as a natural progression to working with you. For example, one of the ways we help our clients automate their business is by utilizing really smart email marketing software, it is the same email software I use so I am happy to recommend it. If a client decides to also use it, I’ll receive a commission.
How to Start a Business Online Monetising a Blog the Smart Way:
With all of my businesses, I have utilised the power of a blog and monetised it as well. A blog can absolutely be a stand-alone business, however, the truth is, the majority of blogs never go on to make any money because some people don’t understand what it is a blog sells or does.
A blog is about creating a following, a community, engaged readers, an audience. You need this in order to monetise it.
How Do We Work Smarter Here?
Traditionally bloggers sell advertising space on their blog in the form of ‘banners’ Banner advertising isn’t my favourite way to make money to be honest and it goes against my philosophy of ‘serving and giving value’ No one really ever gets value from a banner smacked in their face on your website. So, here we can again work smarter, not harder and set ourselves up with a ‘sell one to many’ format.
Who is This Business Model For?
Anyone who loves to write, it doesn’t really matter what your topic is, if you like it I am confident there are other people out there who feel the same way, so it is your job to find them and put your blog in front of them. Also, don’t be fooled into thinking you have to be a great writer, or an expert on your topic. Look at it from the perspective of simply sharing what you know, or have learned or picked up along the way.
Mastering it will come as you practice your skill by actually doing it. When I started blogging, I didn’t think writing was one of my strengths and I easily could have said to myself, I am not a good writer so I won’t do it, if I hadn’t of just given it a try I never would have come to know that writing is now one of my favourite things to do and is a major strength of mine which I know teach my clients how to write and engage with their customers and clients too.
How Does This Business Model Make Money?
As mentioned, traditionally via banner advertising and this is still fine if you want to do it but my suggestion is all the same ways I mentioned with a service-based business, less the one on one part of course. A blog can be aligned with an e-Course offering in-depth knowledge about your topic, affiliates woven into your blog, digital downloads created around useful information on your topics like planners, e-books, checklists, downloadable art or images.
So, How to Start a Business Online From Here?
Now you have a bit of an insight as to how you can start working smarter, not harder and the types of income streams you can apply to your business.
From here, how to start a business online will depend on whether you have an idea already or not and if you want us to help you find the perfect idea, validate an idea or you already have an idea we can help you piece it all together, simply just click here.
However, in the meantime, I suggest backtracking a bit first and working out what is your why?
Why is it you want to start an online business? What is it that is driving you? Do some soul searching on it because knowing what your why helps set you up for success. The reason is, running a business can be tough, hard and challenging, I always say, running a business is just as much a personal development journey, as it is a business journey.
I promise you there will be days where it all feels like it is going to shit, that’s normal. It isn’t you. So, on those days, take yourself back to your why, steel yourself with remembering why you wanted to do this, what it is that is important to you and what you want out of it.
If you can connect to your inner strength, you’ll be able to ride those days out and bask in the glory of success and all the amazing things an online business offers you.
You may also like to check out my free masterclass, which takes you through video training on how to find your purpose, how to use it to find the perfect business idea and then how to monetise it, click here to access it now.
