“This is the first installment in HNW’s series on How to Build a Profitable Online Business. Our free step-by-step guide will take you from finding a sound business idea all the way through to establishing and growing your online company. In this edition we set out the three unbreakable rules for all online start-up businesses (before you start up), and the importance of not falling in love with an idea for all the wrong reasons…”
By E L Emerson
Many years ago, long before I ever thought about how to build a profitable online business (because “online” didn’t exist at the time), I had just passed my driver’s test and was starting to look for a used car to buy with the money I’d saved.
My father came to me and said, “Son, don’t fall in love with the look of a car, or the idea of driving it until you’re sure that it has three important things:
- a good engine
- a good transmission, and
- a good exterior.”
Beyond that, he said, “everything else can be fixed.”
That was good advice, and as useful for buying a car as it is for building a profitable online business or even investing in one.
Let me tell you what I mean by that.
HOW TO BUILD A PROFITABLE ONLINE BUSINESS
* Find an idea that solves a problem
* Make sure that problem affects a lot of people
* Create a solution that is as good as or better than what’s out there
* Deliver it online and at a profit, and
* If you can’t effectively access a big audience then your online business will own you, instead of you owning it.
You need all the to solve the puzzle or that dream of a profitable online business will remain elusive.
Don’t Fall In Love
I’ve met a lot of folks who have never, and will never build a profitable online business.
Want to know why?
Because they literally fall in love with what I would describe as bad business ideas (and bad cars), and I would include myself in that particular pitfall until recently – despite my father’s advice.
But over time I’ve come to apply his advice to building online businesses and investing.
And while there are no absolutes in life, love or money, I think there are three requirements that you can safely apply to any profitable online business or idea, whether you’re starting it yourself or investing in it with someone else:
Those three requirements are:
- A Good Engine – The company or idea has to service a large group of people or businesses, in excess of 10,000, who have a common need or pain-point that they are all grappling with. This is your online business engine – that common problem and how you respond to it is what powers it and makes it profitable.
- A Good Transmission – You have a solution to that problem that you can deliver online and at a profit. And you can do this at least as well as, or better than anyone else who’s currently doing it. This is your transmission. That means you’re in the right gear. And meeting this requirement ensures that your business can shift and change over time, just like all profitable businesses must do.
- A Good Exterior – You have an established way to communicate with that large group of people or businesses (email addresses, postal addresses, social media connections collected for a specific reason or need). This is your exterior or the customer-facing part of the business. It’s your connection; what they see and how they engage with you.
When To Say “No” To An Online Business Idea
So in simplest terms; if there’s a large audience out there with a clearly identified and common pain-point that you can help resolve at least as well as others are now doing, and do so at a profit, and you have a clear way to communicate that solution to that audience, then you have the basis for a good, strong and profitable online business idea.
And if you don’t then be smart enough to say “no” and walk away.
Sounds obvious, right?
The Online Business Truth Comes In Threes
First, notice that there is no use of the word “or” in the above statement. That’s because a profitable online business needs all of those things. Not most, not some: All.
Second, the road to online business hell is littered with more than just good intentions. It’s the assumptions that new start-up owners and investors make by falling in love with a business idea just because it looks and sounds good.
Those assumptions work like quicksand soon afterwards – you might feel like you’re moving forward and making progress when you’re actually just sinking into the muck.
And that’s usually about the time when the money runs out, and desperation due to those initial assumptions and poor planning drives more poor decisions to try and “keep the love alive.”
Don’t assume. Check there’s a working engine under your online business’s bonnet, make sure the gears shift smoothly and inspect for the rust that rose-coloured glasses won’t allow you to see at first.
Third, treble every one of your expected costs. Then divide every revenue projection assumption that you’ve made by three. Your online business will cost you three times as much as you think to get started, produce one third of the revenue that you think it will, and it will take three times as long as you planned to get it moving.
The Lesson: Count on the number “three” to tell you the truth about your online business idea and its profit potential.
Three is as much the magic number of the startup universe as the Rule of 72 is the magic number of the investing world.
Keeping Your Online Business Assessment Simple, Works
Now, some folks out there will view the above way of judging the profitability of an online business idea as lacking a certain level of sophistication.
And that’s one of the biggest problems with simple approaches to things – people tend to think things have to be complicated in order to work.
In fact, anyone who has ever read billionaire investor Warren Buffett’s investment platitudes will know that common sense, when applied correctly, will overcome every algorithm ever invented.
And if that last sentence didn’t make any sense to you, then click here to read a few of Mr Buffett’s quotes about investing, and you might find them to be as true about stock markets as they are about creating companies and even how you go about your life in general.
Good strategic thinking, like good poetry, works on a lot of levels and can be effectively applied in a lot of ways.
How Do You Find That Profitable Online Business Idea?
Ideas are easy. And they’re everywhere. It’s servicing those ideas – sticking to the three unbreakable rules (above) – that stop businesses from becoming profitable.
Here’s a really good example with a lot of possible business ideas in it.
Profit Through Changes In Legislation
In case you don’t know, the qualifications and requirements continuously change for those who work in industry sectors like insurance, accountancy and legal.
Continuing professional development – studying for and taking these exams, and keeping up to speed with these changes through courses and other training activities – is the lifeblood of remaining relevant.
There are new practice exams and study tools created to support this need all the time, and help the hundreds of thousands of people in the UK who work in these types of professional services to keep their qualifications up to date and compliant.
And anyone with direct knowledge and experience in these areas, or the focus and temerity to learn about it has an advantage. They could easily put together a website with these tools (or with the links to them) to help parts of this audience continue their professional development, and in so doing make a healthy profit.
Sounds pretty straight forward, eh?
Personally, I’ve always seen the area of changing legislation as a huge potential money-maker.
But for me, on a personal basis, I’ve also thought that doing so would be a very slow build.
That’s because the transmission and exterior are faulty – the solutions will have nuances that would take a long time to understand (because I don’t work in these businesses) and it would be a hard climb to find and get traction with large groups of these individuals (I’m not connected with them).
But your circumstances will be different than mine.
So, for many of you reading this your knowledge (or willingness to learn) about things like the latest insurance exam qualification changes may lead you to creating and launching a six-figure revenue generating website that points tens-of-thousands of people towards the resources they need to buy to study for these exams.
And you’ll either find or have access to a resource that allows you to access this audience, and you’ll make your site easy to navigate and link through to these resources so that people not only use it themselves but recommend it to others.
We’ll talk more about this in future installments of the How to Build a Profitable Online Business series.
What If You Don’t Already Have A Online Business Idea?
If you don’t already have a potentially profitable online business idea, here are some questions to ask yourself that can lead you to identifying some:
- Your Work – What problems do you see where you work just now? Does that company serve a large audience? Are there any common things that audience is upset about (whether related to your company’s business or not)? Is there anything you could provide to that audience – information or otherwise – that could assist them? How would you monetise that information – how much money / time would it cost to create and how much would they pay you for it? What other things might that audience be commonly interested in that they could buy from you or through you (affiliate products)?
- Your Hobbies – What are your hobbies? How do you get better at them? Can you show other people how to get better at them? Can you monetise that step-by-step process?
- Your Life – What things do you find annoying in everyday life? How could you fix one of them or make it better? Now look at yourself (your age, gender, socio-economic status) – how many people like you would appreciate that solution and how could you connect with them?
If You Do Already Have An Online Business Idea
Put your idea to the test by applying the three unbreakable rules of start-ups to what you have:
- Is your audience big enough? You’ll need that for any chance of gaining market share.
- Can you deliver a solution to them online and at a profit? If it’s not profitable it’s a noose around your life.
- Are you connected to them? No communications channel, no business.
Now have the strength of character to be objective.
If the idea works then it works. If it doesn’t then drop it, and accept the fact that someone else might be better positioned to pick it up or it’s simply a no-go.
The Next Step
This is the first installment in HNW’s step-by-step guide on How to Build a Profitable Online Business.
The next installment will take you through the crucial step of choosing the right website and the support for your new online business.
And the only one way to make sure you won’t miss out on any of this extended series is to sign up to receive each of these guides below.
You can do that here:
Signing up will guarantee to keep you on the right track as you create, launch and grow your new profitable online business.
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