Part 1: What Type of Business Should I Start?

Welcome to part one of the online business idea mini-series. In this mini-series, I’m giving you bits and pieces from my business ideas book Step One (a book about finding and validating your first business idea). This is part one of the mini-series. In this blog, I am answering the question “What type of business should I start?”

You can access the other parts of my business idea series here:

• Part 1: What Type of Business Should I Start (Why You Should Be Starting an Online Business)
• Part 2: I Want to Start a Business, But Have No Ideas (Business Idea Generator Exercise)
• Part 3: I Have a Business Idea. Now What? – How To Test Your Business Idea (With Long Tail Pro)
• Part 4: Online Business Revenue Streams – How to Make Money with Ecommerce Revenue Models
• Part 5: Validate and Choose the Best Online Business Idea (Your Most Profitable Business Idea)
• Part 6: Next Steps -How to Build an Online Business (The Steps for Starting a Profitable Online Business)

Disclaimer: This is directly copied from Chapter Two of my book Step One. There may be references to the book, or other chapters, in this blog post. That’s because it is literally copied and pasted from the book to make sure you get all of the necessary content for free (but just a heads up, if I say “later in the book” or “in the next chapter”, that is because I copied this straight from the book).

What Type of Business Should I Start?

Imagine a business with no overhead that costs $50 to start and generates $5,000 per month in recurring passive income for the rest of your life without lifting a finger. No need to talk to customers (perfect for an introvert like me), no sales tactics or tricks, and no need to hustle 24 hours a day. Sounds pretty great, right?

That is what I have right now. That is online business (you can see my income reports for reference).

And that is only one of my online businesses. I have four, each scaling and bringing in more traffic and more revenue every month. This is the process of stacking online businesses. Imagine what is possible if you repeat this process and stack more and more new online businesses on top of your existing portfolio. Start a new online business, scale it, automate it, and there’s another $5,000 per month in your bank account…without any work. Rinse and repeat this process three or four times and you are making $20,000 per month. That is $240,000 per year. Not bad! I would take that any day.

That is the beauty of an online business. It’s inexpensive to start, it’s easy to scale, and anyone can do it with the right idea.

In this blog, I’m going to answer the question “What type of business should I start?” and tell you why you should be starting an online business (it’s the best type of business to start)

Online Business: What Is It?

I am not going to talk too much about what an online business is. You don’t need me to.

If you use the internet—and if you’re reading this, you do—you know what an online business is. If you have ever purchased something online, you have used an online business. If you search Google and click on the top result, you have visited an online business (and probably made it some money by clicking on an advertisement).

It can be overwhelming if you Google “online business.” You will see an endless number of definitions and buzzwords like side-hustle, web app, dropshipping, and e-commerce. But online business is much more straightforward than that. Simply put, an online business sells your products and services through a website. That’s it—there’s nothing more to it than that. It is not limited to apps and databases. It is not limited to Instagram and social media influencers. You do not need a podcast, you do not need a blog; honestly, you do not even need a fancy website.

If you are selling products and services on the internet, you have an online business. There is no need for an office, overhead, employees, fancy logos, or business cards. All you need is a website where you sell your products and services. If you set up a quick website for $20 and sell one pair of dirty old socks, that’s great! You have an online business.

Now that you know what an online business is, let’s talk about why I love online business. Here’s a hint: it’s one of the easiest, most profitable businesses you can start.

Why You Should Be Starting an Online Business

I’m often asked, “what type of business should I start?”

My answer is always the same. You should be starting an online business. It’s the best type of business to start. It’s easy, cheap, and extremely profitable. Sounds like the perfect business model, right? Let’s quickly cover why all my businesses are online and why your first business should be online, too.

It’s easy

I don’t care if you are nine years old or ninety years old; you can start an online business.

You don’t need investors. You don’t need capital. You don’t need coding experience. You don’t need a warehouse full of servers. You don’t need a database management system. You don’t need a complex business model designed to create the next Amazon. Online business is much easier than you think.

Put a website online, and you have an online business. Buy a domain, buy hosting, download WordPress, follow the step-by-step instructions from your host to get the website online, use a drag-and-drop page builder to build a professional-looking website, and set up an online store (I use WooCommerce with WordPress). It is an incredibly easy and streamlined process, with simple step-by-step instructions. It will take you no more than an hour, and there is no need for HTML, CSS, or C++ coding.

If I can figure out how to put a website online with zero technical knowledge, happy that I can figure out Gmail, you can too. Even if you have never used a computer before, you can figure this out. If you can read and follow the step-by-step instructions on the back of a pasta box, then you will have no problem following the step-by-step instructions to get a website online.

It’s cheap

Contrary to popular belief, starting an online business is easy and cheap. You do not need to invest $100,000 to start a business. You do not need angel investors, partners, and startup capital. In fact, you can start a business and make money online without paying anything.

All you need is an idea and a little hustle to get the business off the ground. My first business cost me a total of $20. The online business that now generates a minimum of $5,000 per month in passive income cost me $50 to start.

You can do this for cheap. As I write this, you can buy a domain name on GoDaddy for $0.99, you can buy web hosting from SiteGround for $49, and you can sync that up with the free WordPress platform to build your website. That is all you need to set up an online business for just $50. Use the free WooCommerce platform synced with WordPress to sell products and facilitate the transaction and Stripe to collect payments (2.9% charged for each sale). That’s all it costs to start your business.

This jargon may sound confusing: “hosting,” “domain name,” “WooCommerce.” But that’s all it is, jargon. It is much simpler than it sounds. What I am saying here is purchase the web address for your website (domain) and pay someone to put your website online (hosting). For reference, my first successful business selling online courses to insurance industry employees, cost me $50 to start. This business has since generated roughly $60,000 in revenue per year, all for an initial capital investment of $50. If my math is correct, that is a return on investment of 600,000% in five years. Not bad!

Remember, you do not need a million-dollar capital injection to start your business. You do not need employees (yet). You do not need to pay $3,000 for a fancy web designer. You do not need a web app yet. You do not need the biggest hosting plan. You do not need a database yet. You do not need a warehouse yet. You do not need a team of coders yet. You do not need an office building yet. Start small and cheap and grow from there. Start with the basics, with just a $50 investment to get your business online. After you get the business up and running, then you can invest in systems, teams, databases, and any other expenses you need after your business is up and running and, most importantly, profitable.

It’s profitable

Online business is incredibly profitable. I love online business because you can charge a premium for high-ticket items. You can sell an online course for $400. You can sell coaching at $1,000 per session. You can sell a training workshop for $10,000.

Think about that. Sell 10 online courses per month, that’s $4,000. Book five coaching clients and you have $5,000 per month. Sell just five training workshops in a year and you have generated $50,000 for your business.

Most importantly, your profit margin is nearly 100%. There are almost no expenses, and there is no overhead. Your only necessary expense is paying for the domain and website hosting discussed earlier.

My profit margin is typically around 80%, and that’s because my businesses are big enough that I’ve expanded into hiring contractors and investing in automation. Most entrepreneurs I coach have profit margins of 90% or higher. That means their businesses are operating with limited expenses while they keep 90% of the revenue as profit.

When I say highly profitable, I do not mean Jeff Bezos profitable, although anything is possible. When I say highly profitable, I am talking about starting small but solidly profitable. I want you to think about how you can make $5,000 per month from your first online business. That’s $60,000 per year. That’s achievable to start with and much easier than you might think.

Tom Heffner of TomHeffner.com is a great example of how profitable this business model can be. Tom helps people and organizations accelerate decision-making, collaboration, and innovation through training, coaching, and workshops. Simply put, Tom is a coach who hosts workshops that teach employees how to be more innovative. Tom charges $9,500 for his basic one-day package plus $6,000 for each additional day. If Tom books one workshop for two days, he’s making $15,500. If he books just seven two-day workshops in a year, he’s making over $100,000! To put this in perspective, Tom went full-time on his innovation consulting practice in 2018. By the end of that year, he brought in $173,000 in revenue, almost all of which was profit. Not bad for less than 30 days’ work!

Don’t get me wrong; Tom is one of the hardest-working people I know. A lot of work goes on behind the scenes in creating his workshop and booking clients. He has perfected his craft and deserves every penny he is paid. But let his story sink in for a minute and think about how this could be you in just a few months. You can copy Tom’s business model; it is highly profitable. That is online business, and that is why I love online business.

Passive income

Yesterday, I took my dogs to the beach at 10:00 am, met my wife Brooke for lunch, and came home to wrap up the day with a little spring cleaning around the house. I checked my phone at 6:00 pm and had four new course sales for a total of $1,200. Not bad for a tough day’s work!

That is passive income. That is the type of business I love to build. We always hear Warren Buffet talking about passive income. We always hear the richest people in the world talking about making money while you sleep, making your money work for you. But no one ever tells us how to make passive income.

Online business is one of the easiest ways to earn passive income, which simply means you generate revenue from your business without trading time for money. Your business does not need you to be there to make money; everything happens automatically. Unlike a service business, where someone must be present at a worksite and charge an hourly or daily rate, an online business generates passive income without your having to work for it. That is the type of business I want you to think of, a business where you do not need to trade hours for money. Instead, you do the work upfront, then turn on the autopilot and let the money flow in.

If your dream is passive income and building an asset that will pay you recurring revenue while you play with your kids and for the first time in your life prioritize living instead of working, online business is the way to go.

Of course, none of my businesses are 100% passive. I spend five or ten hours per week on each business, answering emails and implementing new products to grow revenue. If you want your business to grow, you need to put in the time to nurture your business. That’s not to say I can’t step away for a bit and let it run automatically. When Brooke and I got married, we took two months off work and drove across the United States from Massachusetts to Washington State. Other than answering a few priority customer service emails once a week, I did not do a single hour of work for those entire two months. If I wanted to, I could absolutely step away for months at a time and let my businesses generate truly passive income. But that’s not me; I cannot sit still for longer than 20 minutes. I like to tinker, scale, and improve my businesses. They are my babies. So, I spend time on them, nurture them, and grow them. They are passive income-based businesses, but I choose to put in the time to scale and grow that passive income.

Get rich slowly (forever)

Let’s quickly debunk a myth. This is not a get-rich-quick scheme. If anything, it’s the opposite. It’s a get rich slowly, steady, and forever scheme.

Do not expect to put a website online and watch millions flow in overnight. It is a slow and steady journey you are embarking on. Online business is built for the long term. Think of it like investing in stocks or an annuity. You put in the capital (the hard work) upfront and then sit back and let the revenue flow in for the rest of your life.

Don’t worry; it’s not too slow. Later in this mini-series, I break down why I expect you to have your first sale within three months of starting your business and how I expect you to be making a minimum of $2,000 per month after a year or two of operating your business, which is when the snowball effect kicks in and things really pick up. With AssociatePI, my insurance business, I made my first sale of $554.97 within two months of buying the domain for my website. That site scaled up to $3,000 per month within the first year. With every other website I have ever started (other than my first two failures), I have reached $2,000 in monthly passive income before hitting the two-year mark. That’s what I expect from your online businesses. I do not expect you to make a million dollars overnight; I do not expect you to make the Fortune 500 when you launch; I do not expect you to take your business public with an IPO this year. I have realistic expectations. Start slow and steady; you are building long-term wealth. You are building a long-term, profit-generating asset.

If you want to get rich quick, take your life savings and invest it in BitCoin, or dump it into penny stocks. Or better yet, head to Vegas, tell the person spinning the wheel to put it all on black, and get rich quick. Online business is not a get-rich-quick game. It is a process for earning sustainable, passive income. This is the process of creating long-term wealth of building a profit-generating asset that will put money in your pocket every day for the rest of your life. You are building a business; it takes time and effort.

But it’s worth it. It’s worth getting rich slowly, steadily, and forever.

Easy to find a niche

The riches are in the niches. That is one of my all-time favorite sayings, because it’s true.

You do not need a million Instagram followers. You do not need 100,000 website visitors. You do not need a target market of 300 million potential customers valued at $5 billion annually. You need one extremely specific market of no more than 10,000 people who have a problem you can solve.

I see far too many new entrepreneurs defining their market as “anyone age 65 or older in the United States.” That’s a market of 40 million people, and that’s too big. Instead, how about widowed men aged 65 and older who are first-time grandfathers trying to learn how to be the best grandfather possible? Now that’s a niche; that is a specific target market that you can help.

As Kevin Kelly said in a famous blog post “1,000 True Fans,” all you need is a thousand people to pay you a hundred dollars per year. That translates to a business generating $100,000 in annual income. Now that is achievable. That you can do. Start with one small profitable business idea, and start today.

My best business to date is a website selling online courses to insurance industry employees to help them pass the CPCU exam. Only 12,000 people per month search for this certification on Google, and fewer than a thousand people per year earn this certification. Only 5,000 people visit my website in a month, but it has been generating $5,000 to $10,000 in monthly passive income since 2017. You don’t need a big business to generate real, sustainable income. I found a very small, very niche market and meet its needs with my online courses. The course sells for $400. If I sell 13 courses per month, I’ve generated $5,000 in revenue. Just 13 sales per month: that is doable.

You can carve out a niche in any industry, even an industry with lots of competition. You are reading this on my website The Entrepreneur Ride Along. This website showcases my successes and failures as an entrepreneur and teaches entrepreneurs how to start and scale online businesses. I may be one of 10,000 people this year to start a business on learning to be an entrepreneur. Whatever the exact number, I am far from the only one doing this. Yet I built a profitable business in this space and here you are, reading my words. I carved out my own niche. Don’t be deterred by seemingly saturated markets; you just need to find your niche in that space.

Don’t go broad, go niche. Remember, the riches are in the niches.

Simple business plan

You do not need a traditional business plan for your online business, you are not pitching this to investors. If it helps you, go for it. But you do not need it. Let me quickly show you a high-level overview of what an online business looks like and an overview of my process. In its simplest form, this is all you need to build a successful online business:

• Find a niche; this mini-series will show you how
• Choose a product and differentiator; this mini-series will show you how
• Create content and a website
• Drive organic (or paid) traffic to the website and capture email leads
• Create an email funnel and sell your product
• Keep creating content and drawing more eyeballs to your website

That’s it. There is your business plan. It’s simple. Find an idea, create content about that idea (blogs, videos, podcasts, etc.), get eyeballs on your content, capture email leads, and sell your product. That is all you need to do. Just create content, get views, and get sales. That is why, when asked, “what type of business should I start?” I ALWAYS say online business. It’s the easiest, and the best type of business to start.

That is what we are doing in this mini-series. We are going to get you started on this simple process of building a business (starting an online business) and generating revenue. It starts with the idea; that’s where we begin our journey in Part Two of this mini-series.

The first stepping stone

With this mini-series, you are going to find one perfect business idea to start with.

But don’t limit yourself by thinking that this one idea is the be-all-end-all. This is not the one and only business idea you will ever have. It is a starting point; it is a stepping stone. You might keep this business for the rest of your life; it might be your million-dollar idea, but it does not need to be.

Consider this a starting point, a stepping stone into entrepreneurship. Use this to set up your first business and replace the income from your day job. You will learn more than you ever imagined possible about entrepreneurship, marketing, sales, social media, and everything else that goes into owning, running, and profiting from a business. You will make money with this idea, and you will be hooked; you will be hooked on entrepreneurship.

I am not saying to give up if you don’t make a million dollars in the first week. I am saying not to think that this is the one and only business you will ever start. There is a good chance that this first idea will be the business that supports you financially for the rest of your life, but it does not have to be that way. This is a starting point, your first business; you can easily take what you learn here in the mini-series, rinse and repeat, and start another profitable business. That’s what I did; I have done this eight times now and I will probably do it another twenty times in the next ten years.

What I am saying is don’t hold yourself back by thinking this one idea has to be your forever idea. This might be a five-year or ten-year business. This is a starting point. This is your first idea, your first profitable business that will get you to $5,000 or $10,0000 per month in income. But it might not be what you want to do for the rest of your life. You might want to sell this business in the future, for a nice hefty profit like I did with my website Pomsky Owners Association that sold for $95,000. You might want to automate the business and live off the passive income as you sit on the beach all day. Or you might want to run with this business for the rest of your life and pass it on to your children. That is up to you; take this idea and run with it. You can figure out the rest later.

Start small, start niche. Learn the ropes, learn everything you can about being your own boss and building your own business. Then, you can go big and scale this business or launch your next business with everything you have learned. Take Cliff Ravenscraft, for example. Now one of the biggest names in podcasting and personal development, Cliff’s first business was teaching people how to make money on eBay. Then he pivoted to a totally different interest in life and started a blog about the hit TV series Lost. That blog evolved into Cliff’s first podcast, which sparked his love of podcasting and started his journey to recording dozens of shows, including another podcast about the movie series The Hunger Games. He was generating revenue from podcasting through advertising and affiliate products; more importantly, though, during this venture into online business Cliff engrossed himself in the process and perfection of podcast production. He quickly became one of the most knowledgeable people in the world on podcasting, so he took his knowledge and started teaching others how to create podcasts. Cliff soon became known as the Podcast Answer Man, turning his podcasting hobby into the biggest podcasting education brand in the world, generating over $500,000 in revenue per year! But Cliff didn’t stop there. In 2018, Cliff decided to shut it all down. He closed his podcasting education business and pivoted once again to focus on what he loved doing: teaching and life coaching. Cliff took everything he had learned about business in the previous 10 years and became known as the Mindset Answer Man, with a life coaching business generating over $300,000 in its first year.

Like Cliff, like me, and like so many other entrepreneurs, your first business does not need to be your last. If Cliff had continued his eBay business or his Lost podcast, he would never have grown into the Podcast Answer Man or become the Mindset Answer Man. That being said, if he had not started small with his eBay store and Lost podcast, he would not be the Cliff Ravenscraft we know today, and hundreds of thousands of lives would be worse without him.

This is your starting point. This first idea is your own Lost podcast. It might be your $500,000 business, but it does not need to be. This is the first step; this is a stepping stone to get you started in entrepreneurship. This is the starting line; start with this one small business. Learn to crawl first, then to walk, and then to run.

But first, you need to learn to crawl. That is what you are doing with your first business.

Stop asking “what type of business should I start?“, and go out and start an online business.

Summary

There is one simple answer to the question “what type of business should I start”. Your first business should be an online business. It’s easy to start (no coding needed), it’s inexpensive ($50 or less), and it’s highly profitable ($5,000 or more per month with a 90% profit margin). It’s the best type of business to start.

Online businesses offer countless ways to generate revenue. You can sell digital products and books, offer coaching, or launch a membership program. I use a combination of courses, books, memberships, and affiliates programs to generate more than $7,000 per month. You can do the same; it’s easy to achieve with an online business.

Keep it simple. You do not need angel investors, partners, or large amounts of startup capital. You do not need a million YouTube subscribers, a hundred thousand monthly web visitors, or three million app downloads; you do not need to go viral. You need one great idea and just a couple hundred loyal customers to build a highly profitable business that can support you financially.

Remember, this is your first stepping stone into entrepreneurship. Start with a single business idea that is small but profitable to get your feet wet; then, you can expand and move on to your next big idea.

If you are wondering, “what type of business should I start”, you should be starting an online business. Start today.

Continue The Online Business Idea Mini-Series

Continue with the online business idea mini-series. Continue on to the next section of the mini-series below:

• Part 1: What Type of Business Should I Start (Why You Should Be Starting an Online Business)
• Part 2: I Want to Start a Business, But Have No Ideas (Business Idea Generator Exercise)
• Part 3: I Have a Business Idea. Now What? – How To Test Your Business Idea (With Long Tail Pro)
• Part 4: Online Business Revenue Streams – How to Make Money with Ecommerce Revenue Models
• Part 5: Validate and Choose the Best Online Business Idea (Your Most Profitable Business Idea)
• Part 6: Next Steps -How to Build an Online Business (The Steps for Starting a Profitable Online Business)
• Step One: The Surprisingly Simple Process To Research, Validate, And Choose The Perfect Online Business Idea (access the full book here)

Ready to Start Your Business?

If you find yourself saying “I want to start a business, but I don’t know what to do,” this is the book for you. In Step One you will research, validate, and choose the perfect online business idea. By the end of this book, you will come away with a business idea list, one validated business idea, and a plan to launch your first business.

Step One is all about taking action. With this book, you will come up with over one hundred and fifty business ideas, you will conduct market research to narrow your list of ideas down to one viable idea, and you will validate the idea so you can hit the ground running and launch your business.

Ready to start your business? Pick up your copy of Step One today, and get started today. By the end of this book, you will come away with the perfect idea–and plan–to launch your online business.