What is the “truth” about Internet businesses and making money online? Over the past few weeks I’ve received a tremendous number of unsolicited e-mails about how to make a lot of money online “this afternoon” or “overnight” or make money at home on the Internet by following “a few simple steps,” and I can do this because the sender (or the person they refer to) made “$710,000 in 30 days” or makes “$428/hour” or … You’ve probably received some of these, too—if you haven’t, all you need to do is respond to one of the “make money online” links or ads that come up in Google when you search for online businesses and you’ll be added to “opt-in” e-mail lists that are then resold and resold and resold.
I’ve had websites for the past 20+ years and have used them as a way of providing information about my consulting businesses. I’ve not really used them as a primary source of customers because most of my business has come from referrals. However, in this phase of my life—as you may infer from some of my earlier blogs—I’m looking at reaching out to many others who are at roughly the same stage of their lives as I am, and who are looking for “what’s next?” So, I’ve spent a lot of the past few weeks looking at the various types of Internet businesses that are out there and sorting through all the wild claims that are made by some of them. What I’d like to do in this blog is try to add some understanding about what you’ll find if you have an interest in making money with an online business. What I’d also like to do is add some sanity about what it takes to build a successful online business.
Here are some of the ways you can make money online:
- Directly sell a product or service through your website (example: Out of Your Mind… and Into the Marketplace)
- A variant of this is to sell products or services that help others be more successful at selling on the Internet (example: ShoeMoneySystem—this one looks like the “get rich quick” sites but lays out the truth about what it takes to be successful on the Internet)
- Sell someone else’s product or service through your website—called affiliate marketing or publishing (example: see ClickBank, one of the largest and most reputable promoters of affiliate marketed products and services)
- One variant of this is private label reselling (PLR or private label rights) of someone else’s products—almost all for electronic delivery—which you then appear to sell as your own (example: BeginMarketing)
- Another variant of this is to resell the products or services that were sold to you that allow you to have an online business—these seem to be mostly multi-level marketing approaches. More about these later (example: Empower Network)
- Sell your or someone else’s product or service through someone else’s website (example: Amazon’s Webstore and aStore)
- Use the Internet to support or complement your physical business (example: Dynamic Energy Crystals)
- Rely on someone else to promote your product or service as a way of generating traffic for your website (example: Your Life Without Limits)
- Or many combinations of the above!
Each of these can be a legitimate way of having a business on the Internet. Over the next few weeks, I’ll go into each of these (or most of them—I’ve already talked about multi-level marketing in Blog 8 — New Streams of Income: Network of Multi-Level Marketing). For now, I’d like to cover two topics: What does it take to build a successful online business? And what are the criteria I suggest you use to evaluate whether or not you would consider selling or promoting someone else’s product or service (either as an affiliate marketer or in an online store)?
What Does It Take to Build a Successful Online Business?
There are some very basic principles that apply to creating a successful business, and these apply both to physical businesses and online businesses. Let me emphasize that there are basically no shortcuts to these principles, although there are things you can do much more quickly online than physically. So, here are those principles—also see The Four Rules…:
- There has to be demand for your product or service—that is, there have to be customers who want to buy what you are selling.
- You have to be able to reach these customers to let them know about your offering.
- Your outreach has to be sufficiently compelling that they will buy from you, not your competitors. You must be able to differentiate yourself.
- There have to be enough customers who will buy from you that you can make sufficient profit to have a sustainable business.
- You have to have sufficient resources when you are starting out that you can stay in business long enough to reach sustainable profitability.
- You have to be sufficiently passionate about and committed to your business and your success that you will put in the hard work required to reach sustainable profitability.
Much can be said about each of these, but they speak for themselves if you fully accept what is being said in each. If you need help in your business to apply them, please contact me at email@example.com for an initial, no-charge consultation.
Do you have other requirements that I’ve overlooked, or do you have other perspectives? Let us hear from you!
Criteria to Evaluate Selling or Promoting Another’s Product/Service
Some selling philosophy first: A sale is an exchange of value. You must provide something that your customer values, and your customer must pay you an amount that is of mutual value to you. If you both value what you receive, then there is a mutual overall growth in total value. If not, then some value has been destroyed. Always endeavor to create true value for you and your customer—that is, create a mutual exchange of value.
There are some very good products and services available to resell as part of your own online business, and there are many which don’t create true added value or are risky or unsalable or require so much work that you can’t be profitably successful.
Products That Don’t Create Added Value
A prime example of this is Empower Network. My objection to this online business is twofold: 1) It’s a multi-level marketing business model, and few who join an MLM organization make much money (see Empower Network’s Income Disclaimer). And 2) The supposed value each product creates is the training (and a blogging website that most likely won’t be used) to sell the product to someone else, who in turn sells the same training to someone else. There is no other product.
There is added value, in that theoretically you could use the blogging tools they provide to set up your own blog for a product of your own, but in actuality the entire focus is on reselling the training and the website you bought, so there is very little actual added value. There are a few (most likely those in the top 2% of earners) who do build something more on top of what Empower Network has. In actuality, however, very few will do more than just use what is already there to try to build a downline underneath them.
My belief is that, to establish a sustainable, profitable business, you must offer a product or service that creates true value for the buyer.
A Risky Product
A prime example of a risky product is this one from Cedar Finance. The video below is what an affiliate marketer presents to prospective binary options customers, ostensibly to show how easy it is to make money with binary options trading:
In very fine print at the very bottom of where this video is presented is this disclaimer:
Before investing in the markets, it’s crucial to understand that trading involves a high level of risk. There are no guarantees, and it is possible to lose all or more of your initial investment. You should not enter into this type of trading without accepting these risks and being prepared for the worst-case scenario. Never trade with money that you can’t afford to lose. If losing your investment will put you in a very precarious financial situation, you should not proceed. If your current standard of living would be impacted by a loss, you should not be trading. This site is not an offer to buy or sell. It is not a solicitation. No claims are being made about the ability of any account to achieve profits or losses that mirror those that are highlighted on this site. Keep in mind that past performance of any technique, methodology or trading system is not indicative of future results. Prior to taking any action to buy or sell, you should speak to a licensed financial professional. The information that is listed on this site is intended for educational and reflective purposes only and is not designed to be financial advice. If you have any doubts about futures trading, you should consult with an experienced financial adviser. Such an individual should be able to apprise you of the myriad risks that are involved in trading.
In truth, it is very difficult to make money in securities trading. More than 85% of day traders lose their trading accounts within the first year of trading. Binary options are no different, but this affiliate marketer presents binary options trading as a “get rich quick” scheme, when in fact it’s potentially a money sink for most people.
Products Which Are Unsalable or Require Much Work
Most products sold online fall into this category! What is required to actually build a large base of customers is a great deal of work. Your website has to be found by a sufficient number of prospective customers willing to buy from you that you can have a sustainable, profitable business. Building this base of customers requires painstaking work over many weeks or months for most products. You must be found in the search engines and on FaceBook and on Twitter and on …, you must be recognized as having a creditable product or service, and you must be able to rise above everyone else selling the same or similar product.
There are some very good online sites which provide excellent training on how to become a successful online entrepreneur. Two that I recommend you take a look at are ShoeMoneySystem—this one looks like the “get rich quick” sites but lays out the truth about what it takes to be successful on the Internet—and RenegadeSuccess. In future blogs, I’ll review both of these. Disclaimer: I’m not an affiliate marketer for either of these at this time. In a future blog, I’ll also review other websites that have legitimate, value-creating products and services for anyone wanting to do business online.
I strongly recommend that you spend some time with the training and information provided by sites like these two before you spend any other time or money trying to develop an online business. It will give you a much more realistic perspective on the challenge you are taking on.
As always, what’s your perspective on online businesses? Have you had success with an online business that promotes a product? Let’s hear about your actual personal successes.