Over $3 trillion change hands every single day.
It’s estimated that over $650 million of this is exchanged daily between online businesses and the 2.9 billion internet-enabled people on our planet.
Over the next decade, another three billion people are expected to gain access to an Internet connection, and begin contributing to this online economy.
As the world population spends more of their hard-earned income online, the opportunity for entrepreneurs to build wealth from starting an online business is abundant.
Over the past six years I’ve started nine online businesses. Not all of them have worked out how I hoped, but with every business I either succeeded or learned a valuable lesson.
I created this guide to help my friends, family, and any budding entrepreneurs out there start their first online business in an affordable and safe way, while avoiding many of the common pitfalls.
This article is extremely long and in-depth, so I don’t expect you to read all of it. Feel free to skip to the section that’s most relevant to where you’re at using the links below. If you’re completely new to starting an online business, I’d recommend bookmarking it and working through it in stages.
What’s in this guide?
I’ve split this guide into three sections, as everyone’s at a different stage with starting an online business. Feel free to skip to the section that you’re currently working on. If you have any specific questions, you can go straight to the comments and I’ll do my best to answer them.
Chapter 1. What online business should you create?
- What constitutes a good niche?
- Analysing your competitors & the opportunity in a niche
- How stiff is your competition?
- How will you make money from your online business?
- How much money can you make in your niche?
- Deciding on a name for your online business
- Registering a free domain name, web hosting, and installing WordPress
- Designing your website & logo
- Registering social media profiles
- Creating an online store & merchant account
- Joining your first advertising / affiliate network
- Setting up Google Analytics
Chapter 3. How to make your first sale
- The three systems to build a successful online business
- My first (and accidentally) successful online business
- The #1 skill every entrepreneur should learn
- Feedback is more important than making the sale
- Building your audience
Why do you want to start an online business?
T. Harv Eker is known for saying that our results are like the fruits that grow on a tree, in that the quality of our ‘fruits’ are determined by the quality of our ‘roots’. In literal terms, the quality of our thoughts determine the quality of our actions. The quality of our actions determine the quality of our results.
I believe that the first step in building a successful business is to understand our ‘roots’. Why do you want to build an online business? What’s motivating you? Without a fire in your belly, you won’t have the required drive to build a successful business.
So why do you want to build an online business? In my experience, the following reasons are common.
- To earn some extra passive income on the side of a main job.
- To be able to afford to quit a job you dislike.
- To work on a project that you’re passionate about.
- To become financially free.
For me, I began building websites in high school to earn extra pocket money. I was playing in a band at the time, and was saving up to pay for studio time and to promote our music.
What’s stopping you?
Now that we’ve identified what’s driving you, let’s figure out what’s holding you back. When I talk to new online entrepreneurs I often hear a lot of BS excuses. Before we get started, I want to totally debunk them.
“Starting an online business is expensive”
Totally false. I hired a developer to build WhatIsMyComfortZone.com for $80. It went viral and led to a TEDx talk. In this post, I’ll talk through how you can set up an online business for under $4/month.
Years ago, starting a business was expensive. To connect with customers you needed a physical location, which could easily cost over $1,000 per month.
Today, the risk of building a business is greatly reduced. Anyone can start a business online for under $4, and serve the 2.9 billion people around the World who have an Internet connection.
“Building an online business takes a long time”
Wrong. In fact, by the end of this blog post you’ll have an online business. Building your customers and traffic does take time, but it’s part of the journey. If you don’t think you have enough time to build an online business, then you’re right – you probably don’t. But in my experience even the busiest people make time for the things they truly want.
We can all make an extra hour in the day, even if it requires waking up earlier, or watching less Game of Thrones. One extra hour per day is 365 extra hours per year, which is the equivalent of 9 weeks of full time work. What can you achieve in 9 weeks?
“But isn’t it really hard to make an online business successful?”
It depends. It mostly depends on how well informed you are, on the niche you choose, and how you approach it. I’ve seen people who are near-clueless about online marketing make $1,000s just months after setting up a blog or YouTube channel. They were the lucky ones. I’ve also seen people after three years of perseverance still struggling to make a profit.
The difficulty with building an online business comes down to how well informed you are and your ‘roots’. With the right knowledge, it’s quite easy. I’ve tried my best to ensure that this guide will set you on the right path to making sales quickly and affordably.
Chapter 1: What online business should you create?
The biggest mistake that first-time online entrepreneurs make is choosing a good idea in a crap niche, or a crap idea in a good niche. I am just as guilty as anyone for this.
My first online business was The Musician’s Guide. It started as a hobby of mine, as I was enormously passionate about music marketing. While it did okay in terms of revenue, music marketing just isn’t a very lucrative niche. Good idea, bad niche.
Similarly, I see far too many ambitious people venture out to build a business out of travel or recipe blogging. Those niches are so saturated that it’s virtually impossible to make a significant amount of money from them today.
So, what sort of online business should you create?
In my experience, a good niche ticks all of these boxes:
- You must care about it.
- You must be able to become the authority on it.
- You must be able to differentiate yourself.
- You must fulfill a need.
- Your niche must be commercial.
Let’s go through each of these in detail, as this is incredibly important to get right.
#1 You must care about your niche
Would you be willing to write about your niche every day for six months without being paid a penny? If you can answer ‘yes’, then you can tick this box and move on.
Now, I’m not saying that you won’t receive a penny for six months. I am, however, saying that growing your online business takes time. There will be times where you work your butt off with very little to show for it.
That’s why you need to care about your niche. When you care, you will have the willpower to get you through the tough times. Passion can also be smelt from a mile away. If you don’t care, your readers or customers won’t care either.
#2 You must be able to become the authority in your niche
What can you be the best in the World at?
If that seems like a scary question to answer, zoom in. While it may be unrealistic right now to be the most authoritative blogger on raw food, you probably could become the authority on raw food desserts.
There are many reasons why this is important. They all boil down to the fact that online business is a winner takes majority game. The majority of traffic and revenue in any niche will be going to the market leader. All of their competitors will then be fighting over the minority.
The minority is a tough place to be. In my opinion, you’re better off owning the majority of a smaller niche than the minority of a massive niche.
Choose a niche that you are credible and able to be the authority in.
#3 You must be able to differentiate yourself
A few weeks ago I was helping a friend start her first blog. She’s a pharmacist with a passion for understanding how different foods and skincare products affect the body at a biological level.
Now, there are a ton of health food and skincare bloggers and online businesses out there. What makes her different?
Few skincare bloggers can look at the list of ingredients on the back of a shampoo and understand how each chemical or ingredient interacts with the body. As a trained pharmacist she not only has credibility and authority, but she also has her differentiator.
When everyone zigs, zag. When everyone zags, zig.
#4 You must fulfil a need
Do people in your desired niche have a problem? Can you solve it for them? Does solving it involve a commercial transaction taking place?
If you can’t confidently say yes to all three, adjust your niche idea.
Let’s take this website as an example.
Do people have a problem? Yes – according to Google’s Keyword Planner (we’ll discuss this later), there are hundreds of thousands of people searching for information on how to build and market online businesses.
Can we solve it for them? Yes – we regularly write about things like the best web hosting to use, or how to recover from a Google penalty. Our blogging is based on case studies and practical experience that we’ve had with our own clients and online businesses. In other words, we’re helping people solve problems that we’ve already had to solve ourselves.
Does solving these problems involve a commercial transaction taking place? Sometimes, yes. While most of our posts are written just to establish Venture Harbour as a trustworthy source of information on digital marketing, we occasionally receive a small commission when we refer readers to paid services such as those in this post on email marketing software.
#5 Your niche must be commercial
A few months ago I setup a luxury homeware and travel blog called Qosy. On the second day of running the site (I’m not kidding) we received an offer to stay at a $2k/night retreat in Tasmania for a small fraction of the price if we agreed to write a review.
We turned it down due to feasibility and the fact that ‘a small fraction’ was still way above what I’d be willing to pay for a hotel, but this taught me a valuable lesson.
Choose a niche that helps people save or make a lot of money.
One of my recent clients worked in the stock market niche. He would earn up to a $500 commission for every customer that he referred to a broker. There are 10,000s of people searching for how to choose a broker in his niche. Because there is so much money changing hands in his niche, it’s relatively easy for him to make a lot of money.
Note: Where there’s a lot of money, there’s often a lot of competition. This is why you also need to be differentiated, passionate, and the authority.
This is in stark contrast to my experience building online businesses in the music industry. In music, most of the money is owned by the major labels, instrument manufacturers, and newly funded startups. Unless they’re your customers, generating income can be a challenge.
Analysing your competitors & opportunity
Once you’ve got a niche idea, it’s time to evaluate the level of competition that you’re up against.
Before I show you how to do this, I want you to know that having competitors is a good thing. They will motivate you to kick ass. Having competitors also helps to confirm that your niche is viable – as you can see whether what they’re doing is working or not.
How many people are trying to solve their problem online?
Let’s imagine that your idea is to build a blog that helps people learn about landscape gardening.
You want to inspire people to create beautiful gardens, and give them insider tips on how to do it. You plan to monetise it through advertising, and recommending gardening tools that you receive an affiliate commission from.
So, do people search for this kind of thing online? To work this out, we’re going to use Google’s Keyword Planner.
First off, I’m going to enter a few keywords that people might search for in Google to end up on my blog. I’ve entered these into ‘Get search volume for a list of keywords’, as I’m interested in knowing how many times people search for things like ‘best garden spades’ each month.
This will then take us to a page where we can see the average number of monthly searches in Google for each of these keywords. Bear in mind that these numbers are not absolutely accurate, but they’re accurate enough to give you a good idea.
Note: You can ignore the columns about competition at this stage. This is to do with the number of advertisers bidding on this keyword in Google Adwords. We’re just interested in knowing whether people are searching for answers to the problems that we plan to solve.
In the screenshot above, we can see that around 14,800 people search for gardening tools every month. There are also 1,900 searches per month for ‘best lawn mowers’.
How stiff is your competition?
As mentioned, having competition can be a good thing. But too much competition, or too strong a competitor, and you might be better off zooming in within your niche.
So, let’s go to Google and see what comes up when we search for ‘best lawn mowers’. This will give us an idea as to who we’re up against.
We can see that most of the websites ranking for this term are either forum discussions or small niche websites. In other words, we’re not up against Walmart, B&Q, or Homebase, who might be quite difficult to compete with.
We can also search for ‘landscape gardening blog’ to see who else comes up:
Having clicked through some of the results I don’t get the impression that anyone owns this niche. There doesn’t seem to be any market leader, just a collection of gardeners blogging about their gardening.
While there are many great competitive intelligence tools out there, I don’t want to overwhelm you with data. At this stage we just want to know who the players in our chosen niche are, and whether we think we can beat them.
How will you make money from your online business?
So, how can you make money from [insert your niche idea]?
There are an unlimited number of ways that you can monetise an online business. so get creative. However, I’ll run through four of the most popular ways to get some ideas flowing.
- Affiliate marketing – This is where you recommend / link to products with a unique link. If someone buys a product after clicking on your link, you receive a commission of the sale. Virtually every major website has an affiliate program that you can join for free.
- Advertising – There are a few ways you can monetise your website with ads. You could contact companies privately and agree on a monthly fee to place adverts on your site. Alternatively, you could use a service like Google Adsense, which pays you every time someone clicks on your advert.
- Selling your own products – This is often the most lucrative way of making money online, as you keep 100% of the profits from the products that you sell. Creating products can be time consuming, but it’s usually worth the effort. Many bloggers choose to create online courses and eBooks, but you can get as creative as you like with what products you create.
- Drop shipping – This is in between affiliate marketing and selling your own products. In essence, customers buy products on your website, and then you pass on those orders to a supplier who fulfills and delivers them. Often the commissions for drop shipping are higher than affiliate marketing (typically 20 – 35% of the sale).
The right method of monetising your online business will depend on your niche and the type of business you create. The best way to work out what’s best for you is to just try a few different approaches.
How much money can you make in your niche?
Trying to project revenue is a bit like predicting the future. Projections are educated guesses at the best of times. That said, I do think it’s useful to get an idea of the ball park figures that you’re dealing with for two reasons.
First of all, motivation. If you can see that ranking #1 in Google for a certain phrase will generate enough revenue for you to buy something you’ve always wanted, you’ll work harder to make it happen.
Secondly, to validate that the opportunity is worth your effort.
So, how can you work out how much money you might make in your niche?
Well, it really depends on how you decide to monetise your website. Let’s walk through a quick example of how we might monetise a blog post on lawn mowers with affiliate marketing.
Let’s say that we create a blog post on ‘Top 10 Best Lawn Mowers’. How much might we earn from that blog post if it ranks #1 in Google for ‘Best Lawn Mowers’?
The #1 result in Google tends to get around 56% of all traffic for that keyword. So, ranking #1 for ‘best lawn mowers’ would likely generate around 1,064 clicks per month (1,900 * 0.56).
Let’s say that the average lawn mower costs $400, and 1% of your readers buy one through your affiliate link based on your recommendation. Let’s also say that your affiliate commission is 5%, so you receive $20 for every lawn mower you refer.
Your income for ranking #1 for best lawn mowers, based on these numbers, would be $212.80 per month.
Now, this is an extremely conservative estimate. If you ranked #1 for ‘best lawn mowers’ you’d likely also rank for phrases like ‘lawn mower reviews’ and ‘top garden lawn mowers’, which would also drive converting traffic. You might also find that 2.5% of your readers purchase a lawn mower, and that occasionally someone spends $1,000 on a lawn mower.
This is why projections are a bit arbitrary. That said, they’re good for making relative comparisons between different keywords and niche ideas.
So, hopefully by now you know what niche you want to dominate, and how you’re going to turn it into a business. The next step, then, is getting started.
In this next section I’m going to walk through everything you need to do to setup your online business without wasting your money.
Chapter 2: How to set up your first online business
“A journey of 1,000 miles begins with a single step” – Lao-tzu
My challenge to you, if you haven’t already, is to take the first step towards running your own online business today.
This section is all about setting up your website, and making it look and function like a professional online business. As this is often the stage that most people get stuck on, I’m going to go through each step in great detail.
We’re going to go over each of the steps below. Feel free to skip ahead if you’ve already done some of them:
- Deciding on a decent name for your online business
- Registering your domain name, web hosting, and installing WordPress
- Designing your website & logo
- Registering social media profiles
- Creating an online store
- Setting up advertising, affiliate, and merchant accounts
- Setting up Google Analytics
Deciding on a decent name for your online business
I won’t dwell on this point, as you shouldn’t over think it. I have friends who spent months delaying building a business because “they couldn’t decide on a name for it”. I call bullshit.
When deciding on a name for your business, I’d have three recommendations:
- It should either be self-explanatory (e.g. AfricanSafariReviews.com) or, if you’re in a fast changing niche, something ambiguous (like Venture Harbour). I chose the name Venture Harbour for two reasons, first of all we build and ‘harbour’ a portfolio of online ventures. Secondly, companies with words like SEO, content marketing, or social media in their name seem to change their names like the wind due to the fast changing nature of the industry. I wanted to avoid that.
- Don’t violate trademarks. A few years ago I setup an online business which accidentally violated a competitor’s trademark. While our name was unique, it contained their (generic) name within it. Unfortunately, we had to rebrand. Luckily, this happened within 30 days of launching the business so we didn’t lose too much progress, but I hate to imagine what we would have had to do if the dispute was raised several years down the line.
- Make it memorable and brandable.
Registering your domain, web hosting,f and WordPress
In order to get your website up and running, you need three things:
- A domain name – This is the address that people will type into their browser to access your website. For example, www.ventureharbour.com is our domain name.
- Web hosting – This is the ‘web space’ where you upload your website’s files to. When someone types in your domain name it serves up web pages from your web host. Think of it like a hard disk drive on the Internet.
- A content management system (CMS) – Instead of having to code every page on your website in HTML, a CMS enables you to add pages and make design changes without having to write any code. WordPress is a free CMS, and also happens to be one of the best.
You can get all three of these up and running in a matter of minutes using a web hosting company called Bluehost.
Choosing a good web hosting company is extremely important. It determines the security, speed, uptime, and overall performance of your website. Fortunately, we’ve done much of the hard work for you.
Bluehost are my favourite affordable web hosting company. We use them for virtually all of our websites, and have never had any downtime or problems.
They offer new customers a free domain name, as well as the ability to install WordPress (we’ll talk about this later) in one click. In other words, you can have everything you need to set your online business up in under 5 minutes for less than $5 per month.
So, how do you get started?
First of all, you need to go to the Bluehost website, click get started now and create your account. You’ll be able to claim your free domain name on the following pages.
On the ‘create your account’ page you’ll need to decide which hosting package you want. For most people, the most affordable option is absolutely fine. The more expensive services are designed for websites that already receive a large amount of traffic. You can always upgrade later when your website starts to generate a lot of visitors.
You can also untick all of the bells and whistles.
Once you’ve created your account and have registered your free domain name you should be able to log in to your control panel shown below. From here, you want to look for the button that says ‘Install WordPress’, which I’ve circled in red.
From here it should be nice and intuitive. Just follow the instructions until you reach this page where you can click install.
After the installation has completed, you can then visit www.yourwebsite.com/wp-admin/ (just add /wp-admin/) to the end of your domain name. Usually this works instantly, but sometimes it can take a few hours for everything to propagate.
You’ll then need to login to your website using the credentials that you created in the installation process, and that’s it! You’ve officially installed WordPress, which means that you have yourself a working website!
Designing your website & logo
Now that you’ve got WordPress installed, you should have a pretty generic looking site like this:
To change the design of your website you will need to choose a new theme. There are thousands of beautiful themes, some free and some paid.
It’s absolutely fine to use a free WordPress theme, but they tend not be coded as well as premium themes. I usually find that it’s worth paying $40-50 for a good mobile responsive WordPress theme, but it’s really up to you.
Once you’ve chosen a theme you like and havhttps://www.ventureharbour.come downloaded it, go back to your WordPress dashboard and find the tab called appearance. Under this tab you’ll see themes, which will bring you to a page like this:
Click add new and upload the theme that you downloaded. Once this has finished, you just need to click activate. Depending on your theme, you’ll then probably need to go to ‘theme options’ and begin customising your theme with your desired colours and styles etc.
Designing your business’ logo
As a designer myself, I’ve always just whipped up logos in Photoshop myself. However, there are a few good options for non-designers:
- 99Designs – For about $300 you get 30 different designers to all create a logo idea for you. You then choose your favourite design, and the winner receives the majority of the $300 as a prize.
- PeoplePerHour.com – A marketplace where many designers offer ‘gigs’ to design a logo for your business. Prices range from $10 to $250.
- Freelance.com – Freelance is very similar to PeoplePerHour, but slightly more professional. The difference here is that you can post a job saying that you need a logo, and then designers can pitch you with their portfolio and provide you with a quote on how much it will cost.
- Fiverr – If you just need something quick and simple you can use Fiverr.com. This is essentially a super cheap version of PeoplePerHour, where you can get a logo designed for $5. It goes without saying that at this price you’re not likely to get anything bespoke.
Registering social media profiles
If you haven’t already, now would be a good time to register your profiles on popular social media platforms. At this stage, I’d just recommend registering the following accounts:
- A Facebook Page
- A Twitter Account
- A LinkedIn Company Page
- A Google+ Company Profile
- A Company Youtube Profile
- A Pinterest Profile
Creating an online store
If you plan to monetise your online business with advertising, affiliate marketing, or some other method that doesn’t involve directly selling products, feel free to skip this section.
If, however, you’re planning on selling your own products or drop shipping, you’ll need to setup a merchant account with PayPal and add the functionality to sell products on your WordPress website.
To add this functionality, we’re going to need to install a plugin called WooCommerce.
WooCommerce is completely free and easy to set up. To install it, go to your WordPress dashboard, and under plugins click ‘add new’. Search for WooCommerce and click install.
Once installed, you need to activate WooCommerce. Then, you can begin adding product pages by clicking on the sidebar tab called products. The layout is fairly intuitive, so I won’t go into too much detail about how to setup products.
If you do get stuck, there’s a great guide on setting up WooCommerce here.
Setting up your Paypal Merchant account
Regardless of how you monetise your online business, you will almost certainly need a PayPal account to get paid.
To set this up, go to PayPal.com and follow the instructions to setup a business account. PayPal’s offerings vary from country to country, but in most countries they offer a free account where they receive a small percentage of every inbound transaction. If possible, that is probably the best one to go for.
Joining your first advertising / affiliate network.
The best advertising or affiliate network to join will depend on your niche and the type of online business you run. I’ll run through a few of the most popular ad networks and affiliate programs, but I’d recommend doing a bit of research on this.
Google Adsense (ad network) – This is probably the easiest ad network to get setup on, and it pays relatively well. You just create an account, decide on the size of advert you want, and then paste the code into your website’s theme. How much you earn from Adsense depends, but typically you can expect $0.50 every time your ad is clicked.
You can view what Adsense looks like here on WhatIsMyComfortZone.com. Those ads currently generate $0.38 per click and are clicked by 1.5% of visitors.
Amazon Associates (affiliate network) – A few years ago I wrote a blog post on the best earplugs for musicians to use. I was already linking to some products from Amazon, so I decided to set these to affiliate links using Amazon’s associates program. I thought nothing of it for a year or so.
Then I started to receive monthly payments of $40, then $80, then $200! What was really odd was that when I logged into my Amazon account I realised I was earning commissions from people buying everything from cat litter trays to bulk quantities of Haribo turtle sweets.
I’m pretty sure I’ve never written about cat litter trays or turtle sweets. So, what was going on?
As it happens, Amazon pay you up to 8.5% commissions of anything people buy from Amazon within 24 hours of clicking on your affiliate link.
The real benefit of using Amazon Associates is that there are very few things you can’t buy from Amazon. Whatever your niche may be, there are likely to be products that you can recommend on Amazon. Amazon also have excellent conversion rates, which makes it easier for you to earn commissions.
Affiliate Network Aggregators – If you want to refer customers to high street brands or specific companies, like American Express or JC Penney, you will likely need to use an affiliate network aggregator.
There are a ton of these, including Commission Junction, Clickbank, ShareaSale, and LinkShare. Using these services you can join the affiliate programs of many brands and online stores. Every brand has a different commission structure – some offer as much as 50% of the sale, whereas others offer as little as 1%.
Setting up Google Analytics
Google Analytics is how we monitor our website’s performance, and what our visitors are doing on our website. We can even seen what people do on specific pages of our site.
Here’s what GA looks like when we drill down to view the stats on our article ‘20 Best Sites for Royalty Free Stock Images & Creative Commons Photos’.
In one glance, we can see that the traffic to this post is generally increasing. We can see that the majority of traffic is coming from search engines (the orange line), and that on average people spend 2.49 minutes reading the article.
If we drilled down even further we could find out where those visitors come from (by country or city), as well as what their browser or operating system is.
In other words, Google Analytics gives us a lot of information on who our audience is. It also tells us what we’re doing that’s working, and what isn’t.
As Google Analytics is completely free to install, it’s best to install it and gather data even if you don’t think you’ll use it much to begin with.
To get setup, visit analytics.google.com, sign up for an account, and add a website. You’ll receive a snippet of code that you’ll need to copy and paste into your website’s header. Once this is added, GA will begin gathering data for you!
Chapter 3: How to make your first online sale
When it comes to selling, you can either work hard or you can work smart. When I first launched Venture Harbour, I chose the former.
The business grew month-on-month until ten months later, I crashed. Since then, I’ve grown the business the smart way, using systems.
I want to be clear in saying that working smart isn’t inherently better than working hard. I believe they both have their place. The reality is that you’ll probably need to work hard and hustle to attract your first few customers.
Over the long run, though, I’ve learned that hard work is overrated and rarely sustainable. Working smart, on the other hand, is. So, what are we talking about when we talk about working smart?
The three systems
A few days ago I came across a great concept by Ramit Sethi. He explains that in order to scale your online business you need three systems:
- A system for getting attention
- A system for capturing data
- A system for selling products
We’ll touch on each of these in a moment, but first – why systems?
If you talked to me about systems two years ago my eyes would have glazed over. Today, when I hear the word systems they light up. Perhaps I need to get out more…
The band U2 have a great song called ‘With or without you’, which I’m pretty certain is all about building systems for your online business. See, a system will run itself with or without you, You could be sitting on a beach in the Bahamas sipping Mai Tais, and your system would still be plugging away.
My first (accidentally) successful online business
My first successful online business was MusicLawContracts.com. I built it as a friend of mine asked if I could help him sell the contract templates he was creating for his clients. At the time, I was running The Musician’s Guide, and was happy to introduce his contracts to our readers.
I uploaded the contracts he sent over and left it. At first, nothing happened, but after six months or so we began to see a few sales come in.
Over the past three years this website has consistently generated around $1,000 per month. The income is completely passive, 100% profit, and requires no ongoing work whatsoever.
Now, you might be thinking that $1,000 per month is not really a life transforming amount of income to be generating.
Maybe not, but the point is that because it runs like clockwork, it doesn’t require an exchange of time. Imagine what happens when you own 10 or 100 of these kinds of businesses?
It’s just like building a real estate empire. Sure, the first property you buy might net you an extra $300 per month. So what? But most real estate entrepreneurs go on to own 20, 50, 100, or 500 properties. The results then compound.
Passive income requires systems. So how do you build systems into your online business to generate sales while you sleep? Let’s go through the three systems mentioned by Ramit earlier:
A system for getting attention
Think of this as any form of marketing that generates a positive ROI (return on investment) and doesn’t require an ongoing commitment of your time.
This can be different for every online business. I’ll share a few of the ways I’m doing this with a handful of projects that I work on:
Venture Harbour – We predominantly focus on content marketing to attract traffic. We regularly produce content like this article which brings traffic to our site via search engines and social media.
A proportion of those people then contact us to consult to them. While it takes a long time to produce the content, once it’s live, it helps to drive traffic for a long time.
What Is My Comfort Zone – This site is so unusual that it regularly gets coverage on sites like The Next Web and Smart Planet (which drives users).
We’ve also worked out that for every person who measures their comfort zone, they generate (on average) 1.1 new visitors through social sharing. This system means that we have a constant stream of new users.
FanDistro – This is a client of ours who uses an ongoing Facebook advertising campaign that consistently drives a hundreds of new users to their website at a cost effective ROI.
We occasionally tweak this campaign, but even if we were to leave it running for months, it’d still work just fine.
As you can see, there’s no right or wrong way of doing this, and each approach has its pro’s and con’s. The point is that we could do nothing for a month and, thanks to the traffic generating systems, all three of these projects would continue to generate new visitors.
Experiment with different traffic sources to see which systems work for you. To get you started, here are some traffic sources that you can experiment with:
- Run a Google Adwords ad campaign
- Run a Facebook Ad campaign
- Run a contest on social media
- Create an epic blog post that will attract potential leads
- Build a YouTube channel and add regular video content
A system for capturing data
What good is traffic if you do nothing with it? The next phase is to build a system that captures user data. The most valuable piece of data is their email address.
At a very basic level, people will only exchange their personal data with you if they get something in return. This may just be your wisdom in the form of a regular newsletter. It might be something more tangible, like an eBook or, if you’re in a B2B (business to business) niche, a white paper.
Remember, we want this to be a ‘set and forget’ system that drives a regular stream of new leads for you. A good place to start would be to add a signup form on your website that encourages readers to sign up to your newsletter.
Below is a good example of how Unbounce do this on their blog.
Alternatively, you could get creative by giving your readers something to do or sign up for.
BrowserStack do a good job of this. They allow anyone to test their website across multiple browsers in return for some basic personal data. This allows them to build an enormous database of web developers and designers to market their premium services to.
A system for driving sales
Now that you have systems for capturing traffic and collecting leads working like clockwork, it’s time to start monetising those leads.
To drive sales, we need three things:
- A product (it doesn’t necessarily need to be your own product if you’re an affiliate).
- A pitch to sell that product.
- A platform to communicate that pitch to your leads.
We’ve already discussed the pros and cons of different kinds of products and monetisation methods, so I won’t go into that here.
However, I want to raise the importance of creating evergreen products. By evergreen we simply mean a product that won’t go out of date for a long time.
Too many times I’ve heard from friends who wrote an eBook or filmed an online course that they were hoping to set and forget. Then, they realised that aspects of their book or course became outdated. Predictably, they ended up spending years chasing their tails.
I can’t stress how important it is to be able to leave your product alone for a long period of time. Everything from your payment system (WooCommerce) to your follow up emails should be 100% automated.
If they’re not, you’re going to be that person that hasn’t had a holiday in five years and checks their phone every ten minutes while out at dinner. Don’t be that person.
How you pitch your product is more of an art than a science. It can take years to learn and decades to master.
A good place to start would be to heed Otto Von Bismark’s advice:
“Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.”
There are thousands of great case studies, training courses, and business owners willing to share their perspectives on what does and doesn’t work. In my opinion, the best way to learn how to improve your pitch is to simply test it.
Using a tool like VWO (Visual Website Optimizer) you can test how different landing pages affect your conversion rate. For inspiration, you can see the results of thousands of tests and case studies from existing VWO customers.
How you deliver your product to your customers can make or break how smoothly your business runs.
For years, MusicLawContracts.com had a crappy self-coded integration with PayPal. This was causing about one third of customers to end up not receiving the product they bought. We had angry customers contact us daily, and we spent more time doing customer service than we did trying to grow the business.
Then, one day I decided enough was enough. I implemented WooCommerce.
We haven’t been emailed by a customer in a long time. The platform runs so smoothly that we don’t even have to think about it.
With some of our clients we use an amazing piece of software called Infusionsoft. Without going into too much detail (here’s a more in-depth review of Infusionsoft), Infusionsoft is a really smart piece of software that allows you to set up follow up emails and campaigns based on specific customer behaviour.
For example, if it’s one of your customer’s birthdays, you can use Infusionsoft to send them a 20% discount. If a lead has looked at a product on your website, you can send them an email asking if they needed any help.
The #1 skill every entrepreneur should learn
Every human on this planet should learn sales. Here’s why – everything is sales.
Sales has some bad connotations, but ultimately it boils down to the ability to effectively and honestly communicate with people. Sales is the true test of personal and interpersonal skills.
We’re not talking about snake oil car salesmen here. We’re talking about the people we feel warm around, who help solve our problems.
Last year, I spent a morning with John Perrin who founded Tactical Sales Training. At first, I was reluctant to go on the course, as I never considered myself a sales person. I’d tell myself “you’re a marketer and an entrepreneur, not a salesman”. Bullshit. We’re all sales people whether we like it or not.
The afternoon after John’s course, I closed a potential client over the phone in half an hour. This was unheard of – usually clients took weeks, if not months to close. Maybe it was a fluke?
The months following the training, clients began to sign up more and more effortlessly. I also began to notice that I was communicating better with my girlfriend, friends, and virtually everyone I came into contact with. I realised that what I’d learned about sales wasn’t just relevant to making sales.
I want to share three key lessons that I learned from John with you. If you’re in South England, I highly recommend going along to one of their courses, but for those who aren’t here are some valuable takeaways.
1) Be brutally honest – According to John, the number one quality of a top sales person is honesty. As a marketing consultancy, we’re often asked questions like “why should we pick you over [insert competing agency]?”
I’d usually respond with some mediocre response about how we’re more specialised in a certain area, or how we have a proven track record with various clients.
Since John’s training, i’ve began to simply respond to this question by acknowledging that most of our competitors are actually really good.
Similarly, I often advise our clients to just go for the cheapest options in our proposals, if that’s all they need. This builds trust, which is fundamental for building your customer base.
When growing your online business this is extremely important, because you don’t necessary have the benefit of speaking to your customers face to face. Honesty has to shine through every aspect of your business, from your website copy to your email responses.
2) Ask better questions – If you ask a crap question, you’ll get a crap answer. Learning to ask good questions is one of the most important things you can do to boost your sales.
We had a potential client last year who requested three meetings, over ten phone calls, and five revised proposals from us. They never became a client. That works out at around five days of un-billable work down the drain. It was entirely my fault for not asking the right questions.
After John’s training I began asking potential clients two great questions:
- When do you expect to kick off with this project?
- Is their any reason whatsoever that this might not go ahead on that day?
If the potential client picked a date four months down the line, I’d then ask “what’s stopping us from kicking off next month?”
The answer to this question can be extremely revealing as to their situation. But it’s the second question that really gets to the heart of whether or not they’re committed or not.
3) Measure what matters, and do what needs to be done – In the course, John asked me how many potential clients I’d called that month. Embarrassingly, the answer was zero. I was waiting for potential clients to call me.
I was scared of calling up potential clients and getting turned down.
Sales is, to a large extent, a numbers game. At first, you might need to call or email 50 potential clients to get one sale. But, if you’re measuring what works and what doesn’t, soon you’ll be able to contact 30, and then 20, potential clients to get a sale.
The biggest lesson that I learned from John was ironically something I’ve been preaching for years with my talks on comfort zones. Get out of your comfort zone and just get on with whatever needs to be done to grow your business.
Feedback is more important than making the sale
When you first launch your business, your aim should be to collect as much information from your potential customers as possible. This should be prioritised over making the sale.
Why? Because feedback will enable you to quickly iterate your product or offering to be more in line with what your customers want.
In The Lean Startup, Eric Ries talks about the iteration cycle.
In essence, Eric advises that the less time it takes you to go from coming up with an idea to improve your business to getting feedback, the faster you can improve.
Building your audience
A few months ago I wrote an enormous post on The Ultimate Startup Marketing Strategy, which outlines most of the popular methods for increasing your online sales.
To avoid repeating the content in that post, I’m not going to talk about tactics here. If you want to learn how SEO, video marketing, or conversion rate optimisation can be used to grow your online business, I recommend reading the article linked above.
Summary & Comments: That’s me done – your move.
Starting an online business is not easy, but it can be extremely liberating and rewarding.
I’ve done my best to cover virtually every aspect I can think of to ensure that your online business has a great foundations. That said, no two online businesses are the same, and so you will undoubtedly have many unique challenges and obstacles to overcome.
In hindsight, those obstacles are a great thing. They force you to learn and grow, which is all part of the adventure of building a business.
So, congratulations on making it to the end of this long article! I hope that learning from my mistakes and wins will save you at least a handful of headaches and tough days.
I’d love to hear about your experiences or challenges in setting up your online business. You’re more than welcome to email me at any time, or if you want to share your story / challenge publicly with our community, feel free to leave a comment below. I’ll do my best to respond to every message posted.
Finally, remember what Lao-tzu said. A journey of a thousand miles begins with a small step.
Take that next small step – now.