What is an online business?

Last Update: Aug 11, 2022

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You've heard it on the news, read about it in magazines and some of your friends have been talking about it in the pub. You think you know, but there is a lot of jargon surrounding it that you may or may not understand. Fear not, this blog will help you discover the answer to the question you've been wanting to ask: exactly what is an online business?

Online businesses come in all shapes and sizes

Like many other things in life, online businesses are many and varied and can be anything from a drop-shipping site to some software that you write and are trying to sell which works online. What most people refer to when they talk about an online business, however, is something that they can do sitting in the comfort of their own home, in a coffee shop or at the beach(!) that doesn't need a traditional shopfront, and that they can run at any time of the day or night, as long as they have a computer/smart phone and internet connection.

The world is changing and so is the job market

We are living through what has been called the "fourth industrial revolution".

The first industrial revolution occurred at the end of the 1700s and into the 1800s and is the one most of us study at school when we learn about the invention of the steam engine, the spinning jenny and the railways and how they transformed our agricultural-based economy into a more industrial one.

The second one refers to a time in the late 19th and early 20th centuries when there was an increase in standardization, mass production, and scientific discovery.

The third 'revolution' came about with the invention of the electronics, computers and the internet as well as the discovery of nuclear energy. This happened in the mid to late 1900s.

These so-called 'revolutions' represented times of massive social, economic, industrial, or technological change that affect all of us. Traditional jobs disappear and new ones are invented to replace them. And it is still happening NOW!

The fourth industrial revolution is happening now and the term was first coined by Professor Klaus Schwab in his book of the same name in 2016. He was talking about our present, rapidly evolving situation when he said:

"The Fourth Industrial Revolution creates a world in which virtual and physical systems of manufacturing cooperate with each other in a flexible way at the global level".



But it is much more than just technological - it is a social change that we are all feeling - the world is more connected, people are more connected, and electrical devices are more connected than ever. The once inconceivable situation where we can all 'talk' directly to our computers is upon us. "Alexa, turn on the lights/kettle/TV" is now a reality for many people.

Think about some of the changes that have occurred even in the last couple of years - online ordering of food has burgeoned. OK, a lot of that was to do with the pandemic, but this is now a growing industry. Uber eats, Deliveroo, Just Eat are all companies who have seen massive growth. Most banks have moved online and it is now difficult to find a bank in many towns. Even if there is one, most transactions are automated - the job of bank teller is on the way out.

Change is not all bad

But it is not all 'doom and gloom'. The jobs are not disappearing full stop - they are being replaced with new ones, which require new skills. Eighty years ago, people were peddling encyclopedias door-to-door. Now even the young kids know how to 'Google' something or 'ask Siri". There were no jobs in green energy when we were reliant on coal-fired power stations; now there is a myriad of jobs in research and development, implementation, installation, billing, sales and maintenance. Instead of sending a bill by post, we now email everything, but the postal system has adapted to deliver the millions of online orders we now make instead of going to the shops ourselves.

It's all part of our evolution. And we can either go with it, evolve and survive, or stay stagnant and meet our demise.

I was talking to a friend of mine recently who said that he used to work in the mapping department of a large company. When he took an idea to his boss about how to integrate digital mapping into their solution, his boss apparently said "No, we've done it this way for the last 25 years, I don't see why we should change now." I'm sure you can guess which way this company is headed.

The point is, change is coming, and what we all learned about at school in our careers lessons no longer holds true. Our parents worked mostly in one career all of their lives, starting at the bottom and hopefully moving up the ladder as the years rolled on. This is not what our children will do - they don't want to and they don't need to. They will move left, right, diagonally, shift industries, retrain, become their own bosses, and take over the world. And that's just the way it should be. And online businesses that they start, develop, sell-on, and use, will be an integral part of that change.

So what constitutes an online business?- some common concepts

Below is a list of common online businesses that are currently being marketed to would-be new online business owners. Some are more established than others and some suit particular people more than others, in the same way that some people prefer coffee and some tea! The trick is to find one that suits you, your aspirations, time availability, and skills, although most of these can be learned easily and skills develop as you go. The term 'earn as you learn' is commonly applied to many online business start-ups.


Affiliate marketing - this is where you earn money if people click on links to products that you either recommend or review. You can do this by adding links to a website, blog, sending links directly to people or through social media channels. And it's not just links to Amazon products either. Many companies use affiliate marketing to further market their products leveraging the fact that their potential customers may visit other people's websites first to find a review or some information. So a gardening information website may post several blogs about how to design a garden or build a pond, but then may do a review post about the best lawn seed and add affiliate links to that article, If a reader then clicks on the link and subsequently buys some lawn seed from an affiliated supplier, the website owner will receive some commission.

Blogging and Vlogging - a blog is a basically an article on a website. In its full form it is a web log or video log - shortened to blog or vlog in common parlance. A blog is mostly words and images but can include video too, but a vlog is usually only video such as the things you can see on sites like YouTube or Vimeo. They can be anything from a diary of someone's life, a list of things they like to eat, a professional portfolio, or how to do something or almost anything in between. A lot of bloggers and vloggers use affiliate marketing to monetize their sites or they can accept paying adverts provided they have enough traffic i.e. people visiting their site.

Drop shipping - this is a bit like having a shop but without keeping any of the stock on your premises. Instead, you have a 'shop window website' which shows the products that you sell and the prices, and then when someone places an order, you buy the product directly from the supplier who ships it directly to your customer. So you don't handle the goods yourself but you take the profit. Drop shipping companies such as Modalyst, Spocket and AliExpress are companies where you can source products to sell. You 'business' is really getting people to buy from your site as opposed to other sites.

Ebooks - you can either write your own, outsource them and sell them or promote other people's books on your own site.

Esports - ask a young person nowadays what they want to be when they grow up, and a good percentage of them may say an 'esport professional'. Yes, there are people who make their living playing computer games and getting paid for it. They may be part of a team or may play alone, but if you are good enough, you can make money in this arena.

Ghostwriting and or Online skills - if you are good with words and like writing, then you can make money as a writer online, either by writing for yourself and setting up a blog/affiliate marketing site, or, as in the case of a ghostwriter, writing anonymously for someone else and being paid for it. You will usually have to start small and build up your customer's trust and faith in your abilities and websites such as Fiverr and Upwork offer opportunities for people to advertise their skills. It's not just writing though as many people offer to make banners, social media posts/images, and videos as well depending on their own skills.

Online sales - this is where you find some products to sell, set up a website and offer things for sale. You can sell virtually anything online from sets of matching pyjamas (as per a recent The Apprentice wannabee) to cat food and clothes. In these cases, as distinct from drop shipping, you would need to send out the products yourself so you would need an area to store them depending on what you were selling.


Online training/subscription site - if you have some expertise in a particular area, such as being a teacher or an expert lawyer for example, you could set up some training programmes to sell online as webinars or online courses. During lock down, the motivational coach Tony Robbins has successfully moved his seminar business online and mostly runs the training from his basement. People are looking for all kinds of knowledge nowadays so you could sell a course on dog training or how to draw as long as you have the expertise to sell. You could also have a small subscription to your site and offer exclusive content to your subscribers. An example of this would be Patreon.

Podcasts - these are similar to blogging and vlogging but are mostly sound programs a bit like radio programmes that people can download and listen to. You might be an expert in something and interview other interested parties or you might just want to tell jokes and have some fun. You will probably find an audience out there if you look.

Remote consultancy - again if you are an expert in your field, be that a fly fisher or a tarot reader, you could set up an online consultancy business.and sell your expertise online for a fee.

Software and app development - if you have the skills (or even if not but you are willing to learn), you could develop software or apps, games or quizzes, based on anything you are interested in. A friend of mine has recently developed a software solution for surveying trees, whilst another person I heard about set up an online pub quiz all run from his living room.


Surveys - you can make some additional money doing online surveys, getting paid a few dollars or pounds for each survey you take. These are often marketing or focus group surveys about different products.

Website development - if you have the skills and can design or set up websites, then there are lots of people who might need your services. Your local plumber, for example, may need a site but not have the time or skills to set one up or maintain it. This is where you can set up a business setting up other people's online presence.

This list is not exhaustive - I'm sure there are other ways to make an online business too, but it's a start!

What does it cost to start an online business?

You will need some money to start a business online despite what websites say however this can be minimal if you are clever. For starters, you will need access to a computer and the internet but you can find free access often in libraries or some charities help people get online if money is really tight.

After that, you can invest in your business as much as you can - from starting for free at places like Wealthy Affiliate (where I have written this blog), or paying extra for more training and information such as Premium memberships on different sites.


Passive income

When talking about online businesses, you will hear a lot of people talking about "passive or residual income" which is income you make from the things you have set up online, that do not require you to be present at the time of the sale. The opposite would be 'active income' where you have to show up and sell your time for money, e.g. you clock on at work in a factory for 8 hours and receive the appropriate wages for 8 hours' work.

Sometimes people refer to passive income as 'making money in your sleep". Think of it like this - if you open a coffee shop on a high street, then you have to actually be in the coffee shop during your advertised opening hours, e.g. 9am till 5pm, Monday to Saturday. You have to pay overheads such as rent and rates, staff costs and consumables such as coffee, milk and sugar. Then you have to wait for a customer. If you are lucky enough to get someone, you have to be there to make them a coffee, deduct your overheads, and what's left is your profit.

Now consider an online business that is a website giving people information about how to be a better gardener. The blogger will write several posts about different subjects and they appear online. One of their blog posts happens to be a review of the "Top 5 hover lawn mowers" for that year, and they write an honest review of the features and benefits of the lawn mowers and offer links for their readers to click on to find out more or where they can buy them. In this case, once the blog is written and published, it is available online 24/7, 365 days a year across the globe. Anyone who is interested in buying a lawn mower can access the site and if they click on one of the links and make a purchase, the blogger would receive a small commission. This happens regardless of whether the person is awake, working, at their desk, or in their bed! They have the potential to make a passive income, from their blog indefinitely.

Oh no it isn't! Oh yes it is!

Many years ago, I wrote a pantomime that was published by a NODA, which publish a lot of pantomimes for amateur and professional companies to produce. It took me time to write the panto, of course, but once published, it has given me some extra income every year ever since. This is a passive income. I don't have to do anything else to the panto, and yet I receive royalties from companies who have performed it. I live in the UK, but my panto has been performed as far away as Australia!

This is the idea of a passive income - do something once, so that the money can flow to you without you having to physically be 'in a shop', selling your time for money.

A word of warning

Now, starting an online business is not the same as waving a magic wand and suddenly the money flows in! Like anything, it takes time, patience and effort, but the difference is, it can be done at YOUR PACE, and in YOUR TIME, and ultimately, the rewards will be YOURS!

What you get out is directly related to what you put in. If you work hard, consistently and even better if you have the benefit of excellent training or mentors, then you can be successful and can make your dreams come true.

One of the main benefits I have found from starting my online business exploration here at Wealthy Affiliate is the amazing wealth of information and expertise that is available from other members as well as all the training sessions and classes.

I have found that by dedication and hard work, success is possible online just like any other form or business, and I really love the fact that I'm writing this at a time that suits me from the sofa in my living room!!


Any questions?

I hope you have found this article useful. Please post your questions or comments below.

All the best with your own online business.

Gail

Recent Comments

16

Nice post. We are going through interesting times. The distribution market is starting to make more than the manufacturing market. How will it affect our lives in the future and the Govs. approach to collecting taxes. The introduction of a digital dollar with total Gov. control..hmm
Nice share..
Thanks

Hi Zoopie. Thanks for your comment and insight. I think you might be on to something but I guess we'll just have to wait and see. We are all evolving: all species, the planet, human beings - don't see why the tax system won't as well.
All the best. Gail

Very informative post Gail. Appreciate the share, thank you.

All the best,
Michael

Thanks, Michael. I'm glad it was helpful. All the best. Gail

Wow, Gail! This is an article that needs to be read and reread over and over again! Very well done, my friend!

Jeff

Ah thanks Jeff. Glad you liked it. Yes, it took a while but it's all part of my master plan!!!
Cue the manic laugh!
Hope you are managing to keep cool.

You're very welcome, Gail

You seem to have an excellent Master Plan! Mwa Ha Ha!

I'm keeping as cool as I can, my friend! Stay safe and Successful!

Jeff

Will try!

I know you will, Gail!

Jeff

I did find this article useful. In fact, I would say I will point people towards it in the future, who are asking what an online business is.

Thank you for putting it together.

Alex

Hi Alex. Good to hear from you, and thank you. Glad you found it useful and even better if you are helping other people too. Hope you have a great day. Gail

A very thorough analysis, Gail.

Thanks Phil. I hope your own online business is working well for you.

Yes indeed (I have 30 of them).

Great going Phil. Excellent work.

Been doing it for a while, Gail.

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