Starting an online business is relatively simple, but actually making money online is a completely different story. If you’re going to have any measure of success in building your online business, you need to establish a solid business model that supports multiple income streams.
Solid business models what?
Multiple income streams who?
Come along girlfriend let’s get down and dirrrty.
Do you have a blog? Great. It’s not a business.
Do you have a flash website with lots of pictures and PayPal buttons? Cool beans. It’s not a business.
Do you have a splash page and a squeeze page with bold red letters, flashing arrows, and a countdown timer? Lame. Oh, and…it’s not a business.
To convert your online presence into an online business you need to develop an online business model. (Say that fives time real fast!)
In other words, you need a strategy to attract customers and generate revenue.
Okay, now pay attention because I’m about to get all textbook on you.
Although new online business models crop up all of the time, the standard online business models typically include:
A Brokerage Model – Think Priceline.com, eBay, and PayPal. These online business models usually facilitate transactions of all sorts. Typically online businesses using a brokerage model make money from commissions or a variety of service fees.
An Advertising Model – Think Google, Yahoo!, and NY Times. These online business models use content to attract Internet users and then mix that content with paid advertising like banner ads, annoying as heck pop-ups, and in-text link ads. Typically online businesses using an advertising model get paid per click, per lead, or per impression. If you plan to make any kind of meaningful income with the advertising business model, you will need a VERY, VERY, VERY high volume of traffic. Like MEGA traffic, mmmk.
A Merchant Model – Think Amazon.com, Zappos, and iTunes. These online business models are simply retail (or wholesale) sellers of services and goods. This is your good ol’ fashion online shopping experience. A successful online store requires doing a lot of preliminary target market research, and having an in-depth understanding of the online consumer. However, if you know your market, launching an online store is relatively simple, and nearly any size business can have an online store.
A Direct Manufacturer of Products/Services Model – Think Dell, Avon, and Professional Services (Coaches, Consultants, Web Designers). These online business models are manufacturers who sell the products or services they create online for themselves. They reach their buyers directly. You will probably be using this kind of online business model.
An Affiliate Model – Think Thesis Themes, Commission Junction, and Aweber. These online business models give the average Jane (like you and me) the opportunity to make money off of their products and services. Basically you become their sales rep and everyone gets a benefit.
The key to becoming a successful affiliate is to get people to purchase from your affiliate link and this can be challenging. Affiliate marketing is pretty much a mainstay revenue stream for most online business. For excellent insights on affiliate marketing visit Sugarrae by Rae Hoffman, a true affiliate master.
A Community Model – Think Wikipedia, Facebook, and Twitter. These online business models are mostly a mystery. Their success is based on user loyalty and voluntary support. Revenue may be generated by contextual advertising, donation, or paid premium features. It’s no secret that these business are wildly popular with Internet users, their profitability however is still unclear.
Note: Almost every online business that uses a blogging platform to connect with their target audience is applying a community model.
A Membership Model – Think Netflix, and Gamefly. These online business models charge a fee for access to “premium” or member-only content. This online business model can be easily integrated with advertising and community models. Revenue is generated by a daily, monthly or annual subscription fees.
Okay, so we’ve talked about models. What about money?
IF YOU CHECKED OUT, CHECK IN – THIS IS THE GOOD PART!
There are only a two ways to make money online. Either you sell products or you sell services (or both) using one of the online business models discussed supra (that’s the lawyer-speak in me – it means above).
But what every young, sassy, and smart female entrepreneur knows – that’s you- is that to build a sustainable online business you must develop multiple income streams by combining different online business models.
Simply put, your online business must offer more than one type of product or service if it’s going to be sustainable.
The most sustainable income streams to apply to online business models typically include:
Coaching or Consulting e.g. exchanging your knowledge for dollars
Providing Professional Services e.g. copywriting, web design, graphic design, and virtual assisting
Selling Goods or Web Tools e.g. tangible items (clothes, jewelry, quilts or whatever you make/create), Web-based software, or WordPress themes.
Selling Information Products e.g. ebooks, audio programs, video training modules, teleseminars, or webinars.
Affiliate or Niche Marketing e.g. selling other peoples products (Thesis, ScribeSEO) or creating multiple micro-sites selling low cost products for a collective profit.
Those are the big ones, in a nutshell.
The type of online business model combo that you decide on is going to depend on your product/service, and the buyers you want to reach. There is no one size fits all in this arena, and you need to make sure that your business model is a good fit overall.
Enough with the blah blah blah already!
Okay! Here are some real life examples:
Direct Services Model + Affiliate Model – RachaelButts.com
Rachael Butts is a web designer and provides Thesis customization services. She also is an affiliate for Hostgator, Thesis Themes, Wishlist, and Aweber. Rachael has done an excellent job in selecting affiliate programs that are a good fit for her online business. Being that she is a web designer, she can speak to the benefits of using Hostgator as a hosting company, using Thesis to design websites, using Wishlist to create a membership site, and using Aweber to create e-newsletters.
Advertising Model +Community Model – StartupNation
StartupNation is a small business online community that offers free membership. Designed to be a one stop shop for entrepreneurial success, StartupNation hosts blogs, podcasts, contests, forums, networking, and a marketplace for “tens of thousands” of members. Because of their large membership, site-wide advertising is a great fit for their community model.
Affiliate Model + Membership Model + Direct Products + Direct Services + Community Model- Copyblogger
Nicely packaged and neatly disguised, Copyblogger is a multiple income stream machine. By its nature Copyblogger is a community, but it is also a mega-affiliate of products like Genesis, it drives a membership site known as Authority, it’s the home of a highly touted educational program Teaching Sells (among others), and it’s host to the WordPress SEO software ScribeSEO. Copyblogger has at least four powerful income streams. Let’s just say it’s basically an online empire in the making.
Direct Products + Affiliate Model – IttyBiz
From what I understand, Naomi Dunford still offers consulting on a limited basis, but I’ve left it out of the model combo for now. In addition to limited-time only courses Naomi sells a number of downloads directly from the IttyBiz store. Naomi has created a variety of tailor-made courses that speak directly to her target audience. And, on occasion you can find a highly recommended affiliate products in posts.
Merchant Model + Affiliate Model + Community Model – DIYthemes
DIYthemes is a merchant model since the creator Chris Pearson developed and sells the software himself. DIYthemes also uses the affiliate model to generate sales by offering an affiliate program to others. The support forums (i.e. community model) are an added bonus for Thesis theme purchasers.
Advertising Model + Affiliate Model – Kikolani.com
Kristi Hines blogs about all things related to blogging at Kikolani.com. A high traffic site, Kristi is able to generate revenues through advertising. Also a trusted source by many (myself included), Kristi can use her know-how and experience to provide reputable reviews and recommendations of products for which she is an affiliate.
What’s Your Online Business Model Going to Look Like?
These examples barely scratch the surface of online business model combos. You can be creative in combining business models to develop multiple income streams, but when you’re just beginning it’s best to keep it simple.
Can you think of some excellent online business models I didn’t mention? Do you have any examples that we can learn from? What business model do you think is the most sustainable for long term success? Let’s talk about it in the comments below!
P.S. The DIYthemes, Third Tribe, ScribeSEO, and Aweber links are my affiliate links. If you click through and make a purchase I get a tiny cut. Thanks!