Starting a business online can be easier than opening up a brick and mortar location. However, you still need to be disciplined in your steps. I would suggest the below 3 steps to help you start your online business.
1. You need to register your business with the Secretary of State (SOS). Most businesses register in the state where the business is actually located (HQ Address). At the same time you will need to decide the entity type for your business such as a LLC, Inc, LTD. Make sure you register with a state so your business can operate legally.
2. Come up with a business plan. This would include items such as operations, location, capital/funding, vision/mission statement etc. You can easily get lost in the weeds on this part. Don't get caught up in details that you can figure out later. Think big picture and ask yourself what is your business really trying to accomplish? That is always a good starting point on a business plan!
3. Lastly, come up with different business goals and set dates when you want to accomplish them. Setting a timeline will help you stay on track and know where you are in the process. It is very difficult but don't let yourself get caught up in the whirlwind of the "day to day." Meaning, set yourself and the business up with clear goals and do your best to not let the "daily fires" use up all your time. Inadvertently, you will have to attend to some of these daily fires but make sure you block off time to keep the vison of the company alive.
Out of the many business books I have read, if I could only suggest two books to you, it would be the books below. Hope these thoughts help and good luck on the journey!
Daniel recommends the following next steps:
If so, I'm not a person who can help you with that, but having seen plenty of those myself, and having been a business owner, I wouldn't be inclined to spend too terribly much time hunting out more about how to do that.
It's probably still more reliable, in 2023, to run a business of some kind the way that Dave Ramsey describes in his book Entreleadership, or to follow someone like Jasmine Star on Instagram and do what they recommend.
Matthew L. Tuck, J.D., M.B.A.
Matthew L.’s Answer
Great question! I would agree with everything Daniel said and add this.
I own several businesses and, in my experience, there really is no such thing as "passive income." You have to work very hard on whatever business you own, though some are definitely easier to manage than others. For example, online businesses without a physical location have fewer headaches for you to worry about. For example, last week the building I own where my law office is located developed a leak in the foundation and the basement filled with 6 inches of water. And we simultaneously had an ant infestation, which was weird. So now I need to hire someone to fix the leaks and dispatch the aunts. You don't have these types of expenses with an online business, but you will have others.
For example, if you are selling something on line like a t-shirt or a game. Suddenly your website could go down, which means no sales until it's fixed. Or your supplier says they are going out of business or doubling the price of your game. You'll have to find another supplier quickly to avoid angry customers.
And take it from me, if you have ANY employees that's a major headache and probably the biggest time suck you will have. People are, for the most part, extremely difficult to manage.
That said, you can minimize risks by minimizing the moving parts to your business by following these general rules:
(A) Avoid having a physical location (no building means no rent, no maintenance, no insurance, no utilities) so online is the right way to think,
(B) Avoid having employees (you can outsource this or do it all yourself),
(C) Keep suppliers to a minimum, and
(D) Come up with a simple, low-risk business model and keep the processes needed to run your business as simple as possible.
This may sound like it rules out a lot of businesses--and it does. Most businesses require a building, employees, suppliers or risk. However, there are ways to make a mostly passive income that do work.
Broadly speaking, the best passive income opportunities fall into one of three categories: investing, asset building, and asset sharing. Here are some great examples.
Investing - Investing is just what it sounds like. You invest in something, stocks, bonds or something else that pays you a return. The downside is, this requires that you have stocks or money to invest. But even investing a small amount every month can really add up. Some of the best types of investments are:
1) Dividend Stocks - Dividend stocks are stocks that distribute a portion of the company's earnings to investors on a regular basis. Most American dividend stocks pay investors a set amount each quarter, and the top ones increase their payouts over time, so investors can build an annuity-like cash stream. Investors can also choose to reinvest dividends if they don't need the stream of income which causes your account to grow even faster. Here is how it works: A $5,000 investment that grows at 6% annually for 20 years could grow to over $16,000. Bump that up to 8% growth to include dividends, and that $5,000 could grow to over $24,000. The best way to invest in dividend stocks is to put your money in an investment fund (a collection of stock from different companies) that only holds dividend-paying stocks. This way, the fund manager does all the work. Check a site called Nerd Wallet for more great information on this. You do this totally on-line.
2) Real Estate - Real estate is another great way to earn passive income. But it can be expensive. To buy a rental property could cost you a lot of money up front. However, there are ways to invest small amounts and still get a great passive income over time. If you’d prefer to avoid the cost and headache of owning a rental property (a good idea--see Rule A above), consider alternative sources of real estate investing, like real estate investment trusts (REITs) or real estate crowdfunding platforms like Fundrise or RealtyMogul. You’ll just need to make sure a crowdfunding doesn’t require you to be an accredited investor (certain level of assets to invest) to invest with them. You could also invest with a partner you trust who will manage the real estate for you. Using Airbnb you can run it on-line.
3) Peer-to-Peer Lending - This an old form of lending that has been greatly enhanced by the internet. In this type of lending you loan money directly to another person or company who needs money but, for whatever reason, the borrower cannot go to a traditional bank, so they go to a private lender. With the advent of the internet, there are now websites that operate like on-line dating sites that match borrowers with private lenders. You get paid interest on the money you loan. Of course, you need to have However, peer-to-peer lending comes with not-insignificant risk that the person or people you loan to may default on their loans. You may choose to spread your funds across many different loans to minimize that risk. You meet income or net worth requirements for your peer-to-peer platform of choice. Some require you to be an accredited investor, and one site called "Prosper" has lower state-specific financial requirements. This also done totally on-line.
4) Domain Name Investing - Using this method, you can purchase domain names that have the potential for commercial purchase by a business. Something. If you are good at it, you can sell your domains for a lot of money. There is a sight called GoDaddy that manages websites and they have a web domain name valuation and auction service. For instance, I just typed in the domain "comicbooks.com" and the value it gave is $18,005. So if you had reserved that name for $12 or whatever a few years ago before it was taken, you could sell it for $18,000 today. And so on. I own several domain names and get offers on them all the time. This is also completely on-line.
Here are a couple other ideas:
5) Car Advertising - You've probably seen cars driving around with signs on them (magnetic signs or actual images affixed to the car). Doing this can pay you a few hundred or even a few thousand dollars a month with little or no investment (but you need a car and have to be willing to drive around with an ugly sign on it all the time). Not very scalable because you probably only have 1 car. A better way might be to start a business in which you find the clients who want to advertise on cars, charge them $500 a month and hire subcontractors for $250 a month to put the ads on their cars. You just handle sales and billing. Not online, but a lot of the work you do to get customers and order the signs will be on-line.
6) Vending Machines - Here again, you need to make an upfront investment to purchase or lease the machines, but they work for you 24/7. You could also hire a trustworthy person to collect the money and restock the machines. Close to passive. Not really on-line.
7) Custom Products - If you are artsy (or even if you are not) you can make money by uploading original designs to print-on-demand websites like Teespring, Redbubble, CafePress and Zazzle. Then you can earn passive income each time someone orders a t-shirt, coffee mug or other physical product emblazoned with your design. Even better, you don’t have to handle the printing, storage or shipping, reducing much of the frustration of selling physical goods. If you are not artsy but have friends who are, you can buy or license their designs from them, upload the designs. You could probably do this for no money up front by giving them a cut of sales on their designs. Totally on-line.
These are just a few ideas. There dozens more ideas on-line. In summary, unless you have money already, there are very few passive income methods out there that are truly passive, particularly if you want a full-time income from it. Even investing in stocks takes some time every week or month to monitor and manage. Most of these methods require some work or cash up front, but it is doable. Pick something you like or are good at (art, sales, etc.) and stick with it until you get it to work.
Matthew L. recommends the following next steps:
You can start a business on-line with U Tube. Using your knowledge, you can provide a video or series thereof that answer questions relevant to a subject of tremendous value to the listener. Over time, you could develop a following willing to pay a subscription or become a paid advocate..
Your name recognition, in providing such powerful advice, would be of great value. You could add endorsements for various products and services that fall within the domain of your expertise.
Should you be an excellent photographer, you could have a U Tube series where you advise on a specifically difficult series for utilizing tricks that result in excellent photos. If successful, you could then use your brand name to support ads as an advocate for various photography software, services or equipment.
Bob recommends the following next steps: