in part one of this series of articles we looked at why you might want to start an online business, and whether you would be suited to working at this type of business.
Today we are going to look at some of the business models available to the (honest) online business person. Firstly what are we going to sell? Will it be a service, a digital product a physical product or a combination of these. So lets look at the various options in a little more detail and consider some of the pros and cons of each.
Selling a Service: if you want to sell a service is that service one that you can provide yourself, or will you outsource the work to others? If you intend to provide the service yourself are you properly experienced and qualified to do so at an acceptable standard? Will you require further training?
If you have the relavent experience/qualifications, selling a service can be a good way to earn an income working for yourself using the Internet, particularly if your service can be offered solely using the Internet as its medium and can be offered to any country (language constraints allowing). This gives you the potential to reach a huge market, but like any other business it will take some time and effort on your part to advertise yourself and your service to the world at large, but it can and has been done successfully by many online business people.
The main drawback of a service related business is that you can only provide that service to a limited number of people at any one time. After all you cannot work 24 hours a day 7 days a week even if the Internet itself is capable of doing so, the constraining factor is your available time.
Selling a Physical Product: this business model is used by the majority of businesses currently making a living on the Internet, whether that may mean selling items on ebay or having a monster store like Amazon, most are selling tangible objects or “things”. If you wish to sell a physical product there are a certain number of things you need to think about.
Will you be manufacturing the product yourself? If so do you have the facilities in place to do so effectively? (remember products can take of explosively, especially on the Internet).
If you are not going to do you your own manufacturing is your supplier reliable and capable of delivering your product on time and of a suitable standard? Will you require storage facilities for stock?
Have you researched the manufacturing costs? Worked out a suitable pricing model? Have you looked into delivering the product to your customer? Both the manner of delivery and the cost are important considerations.
Selling a Digital product: selling a digital product is a little different from selling a physical product as often there is no actual “thing” for customers to hold or touch, the exception to this would be digital media such as DVD and CD, however with these we are straying into a combination of physical and digital products.
Digital products or “info products” as they are called since they usually provide some kind of information to the buyer e.g. ebooks, video training, etc have one great advantage over physical products and that is that they reside purely on a computer as digital information. You can have tens of thousands of digital products on any run of the mill home computer, imagine the storage space required for ten thousand books, with ebooks these fit on your computers hard drive quite easily. The other advantage is that one created a digital product can be replicated ad infinitum with no further time effort or cost required.
You could set up your business as a combination of the above business models, this would give flexibility but the downsides of all three business models would have to be taken into consideration.
For example lets say you are an expert in certain computer software. You could provide a service providing personal training to business or individual users, you could produce digital training manuals and courses and you could produce printed manuals, CD or DVD training discs. There are lots of possibilities you just need to look for them, however planning the basic steps are crucial to your success.
In the next part of this series we will look at some important aspects of setting up an online business that most books and manuals seem to ignore or skip over.