In this post I’ll give an overview of how many online business models work, fundamentally, and why you might consider developing one, as well as some of the common challenges involved.
What Is The Online Business Model?
Put simply, the online business model is a process of developing a series of small assets that work together to produce significant income over time.
In general, this takes a couple of forms. On the one end are the giants of tech industries, who have pieces of software that provide immense services and can be sold and resold over and over again.
On the other end are small entrepreneurs, who work to develop smaller assets.
Either way, this process relies on the economics behind passive income and scalability.
Why It’s Attractive
This business model is attractive because of its ability to compound significantly over time. Internet companies, whether large or small, often have a business model that requires them to make an initial small investment up front (either in terms of capital, time, or both), and then can sell that product over and over again.
The beauty of the model, and what distinguishes it from most offline businesses, is that once a product is built, the company doesn’t have to worry about reproducing the same product. There are, of course, some maintenance costs involved, but in general this is a model that has relatively low fixed costs, after the initial product is developed.
This means that as the company grows, it can reinvest its earnings into creating more and more products. This might be in the form of an affiliate marketer producing multiple websites, or a SaaS company developing ever new and expanding features, thereby making their product more and more attractive.
In other words, earnings compound significantly.
Challenges Getting Started
The biggest challenge to this business model is overcoming the hurdles that it takes to get started.
This is clearly illustrated if you think about how anything compounds over time. In the beginning, when earnings are small, the company doesn’t appear to be making significant progress, even if the rate of growth is fairly high.
However, as the company grows, and its assets compound, the earnings will continue to grow at an ever increasing rate. Over time, this yields huge returns, for those who are successful.
If you’re in the process of starting a home business, I encourage you to think about how you can leverage aspects of this model given your existing skills and abilities. If you think creatively, you’ll find that there’s incredible opportunities hiding within every industry.
Taking the Leap
Oftentimes, the hardest and also the most important step towards becoming a home based entrepreneur is taking the leap and getting started.
Despite it being a relatively small obstacles in and of itself, this barrier holds back the overwhelming majority of entrepreneurs who are thinking about starting a company.
Whatever you do, remember that there is a huge difference between those who consider, or think about, becoming a home based entrepreneur, and those who actually do. More often than not, that difference has nothing to do with ones ability or intellect. It’s just about getting going.
A Journey of a Thousand Miles
To put this in perspective, I’m going to reference one of my favorite proverbs, often attributed to Confucious:
A journey of a thousand miles begins with a single step.
What that means is that in order to get anywhere, you have to start. If you contemplate your new venture forever, but always hesitate and never decide to take aciton, you will never be successful.
If you take that first step, however, you’ll soon be on your way to running your own online business.
Another way to think about this is to constantly remind yourself to think small.
All great leaders and efficient workers maintain a constant balance between the big picture objectives and the small, day to day tasks that will accomplish them.
If you keep your head in the clouds, and only dream of your vision, you’ll never end up realizing it. If you focus instead on what you can to today, no matter how small or insignificant that action might seem in the long term, you’ll soon start making progress.
Pretty soon, that progress will start to build on itself. Every task that you complete successfully will increase your confidence and edge you slightly more closer to your goal. Even more importantly: every task you complete will help improve your understanding of how to take the next step.
Don’t worry if your path isn’t always clear. As long as you have a sound vision and the dedication and determination to get there, you’ll find opportunities light up along the way.
Consistently achieving small tasks is the way to be successful in business and, dare I say, just about anything in life.
So what are you going to do? Are you ready to take the leap?