October 29, 2022

10 Profitable Online Business Models Best Suited For Bootstrapped Startups Building Their Category Of One

Business choices made without proper planning can lead to the wrong selection and, ultimately, failure. Hence, it's important to consider a bunch of online business models and see what would suit your requirements best before building one! It will make your six (or even seven) figure journey way easier!

Whether you want to set up a side hustle or replace your income completely by quitting your 9 to 5, online businesses can be extremely profitable. Moreover, they can offer you the flexibility of time and location and the freedom of being your own boss!

But, with numerous options available to you today – the real challenge can be choosing THE ONE that would be best for you.

So, to make you feel less overwhelmed, we are here with this article to elaborate on the top 10 online business models to pick from by looking at their pros, cons, suitability, and a lot more!

Ready to kick-start your own online business? Dive in!

10 Best Online Business Models

1. Services

A service-based model involves providing assistance to clients for a fee. To make money from your service, teach others a skill that they can't or don't want to learn for themselves, or provide them with done-for-you services. If you are good at what you do, it can be a lucrative business for you without making any major investments.

Factsheet:

  • Expertise/Experience Required: Medium
  • Startup Budget Required: Low 
  • Operating Costs Required: Low
  • Build Time: High
  • Involvement Required: High
  • Profitability: High

Product/Service types that fall under this category:

  • Consulting: This type of service requires you to understand your client's problems and offer them actionable steps to overcome those.
  • Coaching: As a coach, you need to provide practical, in-depth guidance to your clients and help them figure out their way in any field.
  • Done-for-you services: In this type of service, you do actual work for your clients. These include content writing, copywriting, SEO, video editing, graphic designing, etc.

Successful Examples: 

  1. Frank Fourie, 24, build an eight-figure business by helping others with how to build a business through his coaching.
  2. Tyler Basu is a content strategist who built his own Influencer Studio. His team and He offer content creation and promotion services. He also offers consulting services alongside the done-for-you services that show you can opt for multiple models at the same time. 
  3. Jaime Masters, a podcaster, started her own coaching services after gaining knowledge from hundreds of interviews that she conducted. She helps her clients achieve their goals by guiding them and making them accountable. 

Advantages:

  • Extremely low investment requirements – very limited equipment, infrastructure, staff, and gadget needs
  • If you're good at it, you have a high-income potential
  • Low barriers to entry – anyone with basic skills can start selling without any qualification requirements

Disadvantages:

  • Not a passive source of income, you need to work to actively work to make money
  • High competition; it has become saturated, particularly after the COVID lockdown
  • Limited freedom and scope as you need to make money based on the time you put in

Tips/Resources to get started:

2. Productized Services

Productized services involve creating packages of services at a fixed rate instead of charging on an hourly basis as a freelancer. These enable you to expand your clientele and serve more customers without having to put in a lot of manual labor on every job. Since the model is replicable, each client or project should only require minor adjustments rather than complete customization.

Factsheet:

  • Expertise/Experience Required: High
  • Startup Budget Required: Medium
  • Operating Costs Required: Medium
  • Build Time: High
  • Involvement Required: Low
  • Profitability: High 

Product/Service types that fall under this category:

  • Courses or training sessions: In this, you sell courses or sessions at a fixed rate without any personalizations.
  • Templates: This involves selling templates for graphics, email copies, etc., at fixed rates that can be customized by the businesses for their own needs.

Successful Examples: 

  1. A notable example of a productized service is WP Curve. WP Curve has given all of its customers unlimited access to anything related to WordPress, such as development, design, plugin integration, etc., rather than trying to find a small group of paying clients who only need WordPress design.
  1. Similar to WP Curve, Design Pickle bills itself as "The #1 Unlimited Design Service." Paying subscribers to have access to weekly marketing training that can help them increase their traffic and customer base in addition to design services.

Advantages:

  • Requires minimal customizations, and hence, you can sell it to multiple clients
  • Helps expand your income without increasing expenses
  • It can be taken over by someone else by training them to sell these if you want to step back
  • It can give you more liberty as you can sell them even when you're busy with other projects

Disadvantages:

  • Less personalized and flexible than traditional service-based models
  • The initial stage might require a big investment in terms of time & money
  • This can result in less satisfied prospects or clients as they might want to talk to the service providers before making the purchase

Tips/Resources to get started:

  • Identify a niche that interests you, has high demand, and is profitable
  • Choose a format and pricing structure for packages
  • Refine your package by taking several iterations and doing experiments
  • Become an industry expert, level up your marketing skills, and create competitive packages

3. Info Products

An info product is a lengthy, in-depth explanation of how something works that is offered to a hungry audience in need of knowledge. Info products were initially PDFs in the early days of the digital information product industry, but today many are high-end videos and recorded webinars. These are also known as digital products, as they don't have a physical or tangible presence.

Factsheet:

  • Expertise/Experience Required: High
  • Startup Budget Required: Low to Medium
  • Operating Costs Required: Low
  • Build Time: Medium to High
  • Involvement Required: Low 
  • Profitability: High

Product/Service types that fall under this category:

  • Online Courses: These can be short or long, depending on the content. Usually, they have higher profit margins.
  • Cheatsheets: A cheat sheet provides an easy guide to achieving something complex. You can sell these at a lower price to attract more customers.
  • eBooks: eBooks can be of any length, depending on the topic. These can be about fitness, dating, digital marketing, etc.
  • Workshops/Webinars: These online workshops and seminars involve teaching and selling something to the audience. You can host a webinar at a lower price and sell another info product like a course.
  • Templates: Buying templates can make your customers' jobs easier as they won't need to start from scratch. You can sell text and/or visual templates – depending on your expertise.

Other info products include checklists, recordings of sessions, membership subscriptions, etc.

Successful Examples: 

  1. Dorie Clark made $23,500 in the initial 45 minutes of launching her first online course. She built a lot of expertise from her years of writing books and consulting but failed to share the knowledge with the masses. Her course made it possible and opened several new income streams for her.
  2. Katya, the "Queen of Viral Marketing," creates viral content and works as a marketing strategist to help business owners reach enormous online audiences. She sells Canva templates to make posts go viral. 

Advantages:

  • Substantial profit margins
  • Helps build high authority in the niche and makes you look like a thought leader
  • Make money while sleeping
  • A one-time investment of time, effort, and money

Disadvantages:

  • The refund rate is usually more for info products than physical products
  • A good customer service system setup is needed in advance to scale the sales of your info product
  • Less interactive as there's no personal contact with the customers
  • Non-personalized or customized

Tips/Resources to get started:

  • Provide free, high-value content
  • Offer a solution in exchange for an email address
  • Create a welcome series to groom your list
  • Offer a solution in exchange for a minimal cost
  • Offer your high-value product

4. SaaS

The idea behind the software-as-a-service, or SaaS, model is that businesses pay a monthly fee to gain access to software that is hosted on a cloud infrastructure and is therefore operated through a web browser. The market for SaaS products is currently booming, considering its high-profit potential.

Factsheet:

  • Expertise/Experience Required: Medium
  • Startup Budget Required: High 
  • Operating Costs Required: High
  • Build Time: High
  • Involvement Required: Possibly low
  • Profitability: High 

Product/Service types that fall under this category:

  • Accounting Software: Accounting software make automating your financial operations and costs, and management easier. E.g., QuickBooks
  • Project Management Software: PM SaaS solutions improve team collaboration and progress monitoring by making the sharing of information seamless. E.g., Notion.
  • CMS: Content Management Systems allow the publishing and editing of content like articles and blog posts. E.g., WordPress. 
  • eCommerce Platforms: They enable you to launch your business immediately, saving you money on website design as well as UX/UI services. E.g., Shopify.
  • Payment Processing Software: With the help of payment gateways, companies can accept payments quickly and easily while managing hundreds of transactions daily. E.g., PayPal.
  • Communication Platforms: Businesses frequently use these apps to facilitate communication among their staff members. E.g., Slack.

Successful Examples: 

  1. Myles Anderson, the CEO of BrightLocal bootstrapped the local SEO tool to $9M ARR and relies 100% on inbound lead generation strategies.
  2. HubSpot, the leading SaaS tool, created an ecosystem combining software, education, and community to assist organizations in continuously improving their performance. HubSpot, Inc. has a market value of $26.30 billion. To 113,925, there are now more customers—a 45 percent increase.

Advantages:

  • Highly scalable and investible
  • Although it requires high expertise, by hiring the right team or having business partners, you can build and grow 
  • Passive income in the long run

Disadvantages:

  • A huge amount of time and money is required to build
  • The need for high upkeep costs and a committed team to maintain and improve the product
  • Higher risk, even though the reward potential is massive too

Tips/Resources to get started:

5. Memberships

In the membership model, the main focus is on a community. It requires a lot of time and personal touch to connect with the members. And you don't need to be an expert in your niche – just being a step or two ahead of your members can work well.

Factsheet:

  • Expertise/Experience Required: Low
  • Startup Budget Required: Medium 
  • Operating Costs Required: Medium
  • Build Time: High
  • Involvement Required: Possibly less
  • Profitability: High 

Product/Service types that fall under this category:

  • Mastermind Group: More intimate in nature, suitable for smaller groups of people
  • Membership Site: Requires less hands-on, built for larger groups

Successful Examples:

  1. Cindy Battye is a seven-figure membership site business. Despite being a mom of two, she owns and manages multiple membership sites with proper systems in place.
  2. In just five years, Adam Hudson's membership site generated over $60 million, made a 15-year-old a millionaire and assisted thousands of others in launching successful Amazon businesses.

Advantages:

  • Lower costs as compared to most other business models
  • Ability to reach more people than a standard service-based model
  • Allows you to create scalable products

Disadvantages:

  • Requires a lot of your time, particularly in Mastermind Groups.
  • Limits your ability to scale or engage in other projects

Tips/Resources to get started:

6. Affiliate Marketing

Affiliate marketing is always a desirable choice, especially for beginners or those with limited experience. In this type of business model, you are not required to build a product or service. Instead, you market others and receive a commission on the basis of the sales. And although the competition is high and margins are low, producing great content can help you make decent money.

Factsheet:

  • Expertise/Experience Required: Low
  • Startup Budget Required: Low 
  • Operating Costs Required: Low
  • Build Time: Medium
  • Involvement Required: Low
  • Profitability: Medium (usually depends on the loyal audience)

Product/Service types that fall under this category:

  • Joint Ventures: This entails advertising a launch or campaign, majorly through a series of emails, online advertisements, and live events like webinars or workshops.
  • Amazon Affiliate: On Amazon, the biggest online marketplace, you can earn a good living just by promoting products as an affiliate.
  • Other Affiliate Programs: A lot of other brands and websites, like Flipkart, Bizgurukul, etc., have affiliate programs that allow you to earn by bringing sales.
  • Blogging, Vlogging, Reviews: This entails producing content on social media channels or websites, growing an audience, and receiving a commission on each sale made by your audience. 

Successful Examples: 

  1. When it comes to affiliate marketing, Pat Flynn has got tremendous success. After being fired from his job in 2008, he started an affiliate marketing business. Today, over 80% of his income comes from affiliate marketing.
  2. Zac Johnson has been in affiliate marketing for over 22 years. He has succeeded in making over $100,000 a year despite never developing his own product.

Advantages:

  • No need to create your own product
  • Low startup and maintenance cost
  • Make sales even while sleeping

Disadvantages:

  • Difficult to generate revenue in the beginning
  • High competition makes it difficult to stand out

Tips/Resources to get started:

  • Pick a channel (Website, YouTube, Microblogging platforms like Instagram, etc.) and create unique, quality content
  • Be authentic, informative and try to build a loyal follower base first
  • Read this detailed guide on getting started as an affiliate marketer by OBERLO

7. Sponsorships & Ads

With a sponsorship model in place, you will receive financial and/or in-kind support from brands who seek to promote their products among your audience. Ads also follow a similar approach though they can also be via an advertising agency or partner. In these models, your presence and the audience's engagement play a significant role.

Factsheet:

  • Expertise/Experience Required: Low
  • Startup Budget Required: Low 
  • Operating Costs Required: Low
  • Build Time: Medium
  • Involvement Required: Low
  • Profitability: Depends on traffic and engagement 

Product/Service types that fall under this category:

  • Online Event Sponsor: Herein, you promote a brand that sponsored an online event for your company. It helps you cover the cost of the event while helping the sponsoring brand get more visibility. 
  • Email Newsletter Sponsor: Under this type of sponsorship, you promote brands in your newsletter or other emails that help reach potential customers more directly & effectively.
  • Sponsored Article: Here, a brand pays you money in change for an article that you publish on your website for their publicity.
  • Website ads like Google Ads: You run ads on your website that generate income via impressions and clicks. This is directly proportional to your visitors and views.
  • Social Media Sponsored Posts: Under this, brands pay you to post promotional content for them on your social media profile to get them more visibility or sales.
  • Sponsored Posts on Marketplaces: If you run a marketplace or an eCommerce website such as Amazon, you can promote certain products (or brands) in exchange for money.

Successful Examples: 

  1. Kylie Jenner, an entrepreneur, is the highest-paid celebrity influencer on Instagram, earning an estimated $1 million for each sponsored post on her account.
  2. Danielle Bernstein is a fashion and lifestyle influencer. She has worked with numerous brands since 2010, and each of her sponsored posts costs between US$8,000 and US$20,000. 

Advantages:

  • Low investment and maintenance requirements
  • Almost a passive source of income
  • Not much of your time would be required to produce sponsored posts

Disadvantages:

  • Takes time to start making money (generate traffic and engagement)
  • Income mostly depends on the nature of the audience

Tips/Resources to get started:

8. Ecommerce

Ecommerce is a business model that enables customers and companies to buy and sell goods over the internet. Business-to-Government (B2G), Business-to-Business (B2B), Business-to-Consumer (B2C), Consumer-to-Consumer (C2C), Consumer-to-Business (C2B), and Business-to-Business-to-Consumer (B2B2C) are the six main categories of e-commerce business models.

Factsheet:

  • Expertise/Experience Required: Medium
  • Startup Budget Required: Medium 
  • Operating Costs Required: Medium
  • Build Time: Medium
  • Involvement Required: Medium, but it depends on the type
  • Profitability: Medium 

Product/Service types that fall under this category:

  • Physical Products: These include tangible products that you deliver to the customer's doorstep. For example, television, grocery, cosmetics, etc.
  • Digital Products: These entail intangible products such as software, ebooks, courses, etc.
  • Dropshipping: This typically entails selling physical goods, but under this type, you never have to keep any stock or deliver any orders.

Successful Examples: 

  1. Tim Brown is a millionaire founder of the $1.4 billion eCommerce startup "Allbirds." He started his footwear business after retiring.
  2. HiSmile is an Australian cosmetics business based in Queensland that was founded in 2014. Two businessmen, Nik Mirkovic and Alex Tomic saw a need in the market and set out to create a universal teeth-whitening kit that was both vegan-friendly and cruelty-free. Today, it exceeds $130 million.

Advantages:

  • Scalable, profitable, and can be an excellent source of income
  • Not much experience needed

Disadvantages:

  • Competition is too high, irrespective of the niche
  • Need a lot of time and money to invest
  • The margin may be low because of high competition

Tips/Resources to get started:

9. Lead Generation

In a lead generation business model, you get paid for the traffic you generate, or lead you bring for a client company. Although every lead generation program is completely unique, the basic idea remains constant. The action might involve making a phone call, completing an online survey, or filling out a web form. You will be either paid on a subscription basis, or on the basis of cost per action (CPA).

Factsheet:

  • Expertise/Experience Required: Medium to High
  • Startup Budget Required: Medium
  • Operating Costs Required: Medium
  • Build Time: Medium
  • Involvement Required: Possibly Low
  • Profitability: Medium to High

Product/Service types that fall under this category:

  • Direct clients: You can reach out to nearby clients and offer to generate leads for them for a fee.
  • Affiliate: You can use a variety of affiliate programs and get paid per lead based on leads, i.e., on the basis of the number of phone calls, filling out forms, etc.

Successful Examples: 

  1. Anthony Sarandrea, an entrepreneur, generates approximately $100,000/day simply from their local lead generation business.

Advantages:

  • Evergreen model – every business needs leads
  • Low setup costs
  • Easy transfer to similar clients in the niche if the client doesn't pay

Disadvantages:

  • Just traffic isn't enough to make money – you need targeted traffic
  • The risk of clients failing to pay can be catastrophic for your website's earnings (particularly in the absence of similar clients)
  • The unwillingness of customers to shift (in case of switching to a direct lead generation model)

Tips/Resources to get started:

  • The article “How To Start A Lead Generation Business” by Anil Salvi at salesHandy offers some ingenuous takeaways to create your first lead gen business.
  • The course from Coursera “What Is Lead Generation? And How to Get Started” provides know-how on the ways lead generation can improve your business.

10. Content Creator

Content creation is one of the top inbound marketing practices. Putting out helpful, authoritative, and/or entertaining content helps attract possible clients to your website and also retain existing clients. The content can be in any format – text, video, audio, images, graphics, or a combination of these, depending on the platform.

Factsheet:

  • Expertise/Experience Required: Low
  • Startup Budget Required: Low
  • Operating Costs Required: Low
  • Build Time: Medium to High
  • Involvement Required: High
  • Profitability: Can be High – But varies as per the presence

Product/Service types that fall under this category: 

  • YouTuber: YouTube has gained popularity as an educational and entertaining video content platform. You can generate revenue from ads, affiliate programs, and sponsorships.
  • Instagram Blogger: Instagram is a micro-blogging platform used extensively to share inspirational and fun content and make money from promotions.
  • TikTok Influencer: TikTok is popular for short video content. As a TikTok influencer, you can make money via sponsored posts too.
  • Authority Site Blogger: Website blogging has been one of the oldest forms of content creation. You can make money from ads, sponsored posts, affiliate links, premium content, and more.
  • Twitter Influencer: Just like Instagram
  • LinkedIn Thought Leader/Influencer: LinkedIn is a text-based platform for more professional communications. You can make money through sponsored posts & leads.
  • Podcast Creator: Spotify is one of the most popular podcast platforms from which you can make money via streaming and donations.

Successful Examples:

  1. One of the most popular young YouTubers, Ryan Kaji, whose YouTube channel is called Ryan's world, accumulated 30 million subscribers in more than five years.
  2. Addison Rae has almost 40 million followers on Instagram. She makes a lot of money by posting sponsored content for brands. 

Advantages:

  • Doesn't require any major investment
  • No barrier to entry; anyone can become a content creator
  • Personal branding can help convert followers into customers quickly

Disadvantages:

  • Takes time to build an active audience & monetize
  • High competition makes it difficult to charge higher

Tips/Resources to get started:

  • Pick a less-saturated niche and build a personal brand around it
  • Create authoritative content that helps you become an industry leader
  • GIVE! GIVE! GIVE! Then ASK!

Which online business model is the best fit for you?

Most founders & marketers believe that a product-market fit is the only factor for the success of a product. While we can’t overlook whether or not the product fits the market, it is certainly not the sole factor. 

Your product can be top-notch and yet fail miserably. Similarly, a terrible product can also generate $100M+.

So, what decides whether it will be a success or a failure?

The market, product, channel, and model. All of it should be in sync. Even if one of the 4 factors isn’t in place, it can affect your business negatively. So, if any of it changes, you would need to re-consider the other 3 too.

Before you choose any of the above-stated business models, consider your market, product, and channel, and then ask yourself:

  1. What kind of lifestyle do you desire?
  2. What impact do you want to make through your business?
  3. What are you passionate about?
  4. How much risk can you take?
  5. What's your time & investment availability?
  6. How much money do you want to make?

After considering the answers to these questions, you should just go out there, play the game, get your jersey dirty, and experiment. The lessons you learn from being roughed up at first will be extremely helpful to you and help you move in the right direction.

Written by Aastha Kochar, a freelance writer at Shnoco.

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