What’s the best online business to start?

If you Google “online business ideas,” you’ll find no shortage of articles claiming to have the “100 Best Business Ideas” or the “10 Online Businesses That’ll Make You Rich.”

Don’t be fooled though — just a quick look at these articles show that their ideas are weak, they won’t give you more money and flexibility, and they’re definitely not worth your time.

In fact, I want to show you just a few of the typical ideas you’ll find online — and why they’re actually horrible.

1

Become an affiliate marketer

Affiliate Marketing
Unless you’re lucky, you likely won’t make a decent amount of money off of affiliate links. Even if you do, your click-through rates will tail off and you’ll end up wasting time dealing with advertisers.
2

Start an e-commerce store

E-Commerce
The profit margins are incredibly low and don’t justify the amount of time and money you’ll have to sink into the venture — especially when considering the alternatives like online courses. Also, you’d have to maintain an entire stock of products — a full time job in itself.
3

Become a drop-shipper

Drop Shipping
The market is highly competitive. As a result, the profit margins are incredibly low and don’t justify the time and money you’ll have to sink into the venture — especially when you consider the fact that people can just as easily find the same product on Amazon (and for much cheaper too).
4

Deal in domains

Domain Names
This is essentially gambling on the popularity of certain domains in the hope that someone will be willing to pay you a large sum of money for it. You might as well go buy a lottery ticket (not really though).
5

Trade currencies

Trade Currencies
There’s just too much risk when it comes currency trading. You’re also essentially gambling on the power of a country’s currency.
6

Start an online sports betting business

Sports Betting Business
The investment overhead is mind-bogglingly complex — with some basic requirements including obtaining a gambling license, investing money into good iGaming software, and finding a reputable payment provider. Also, it’s incredibly competitive as well.
7

Become a translator

Translating
While this isn’t an entirely bad idea, it’s basically a low paying freelance gig. The profit margins are too low for the amount of time you’ll have to invest in competing with many other translators for the same gigs.
8

Start an online bookstore

Online Bookstore
The profit margins are just too low to justify the work needed (e.g. finding a book supply, dealing with vendors, etc.). It’s also impossible to compete with big box stores like Amazon or Barnes and Noble.
9

Start an online car dealership

Online Car Dealership
The profit margins are too low to justify how much work is needed to own and operate an online car dealership. You’ll also have to front the cost for obtaining a dealer’s license and all the appropriate licensure … and that’s BEFORE you even buy any cars to sell.
10

Start your own social networking site

Social Networking Site
Even if you’re able to secure funding from investors, chances are your social networking site won’t become the Next Big Thing™. On top of that, you’ll have to devote too much time and money into something that probably won’t pan out. You want safe income and flexibility and this just isn’t a safe bet.
11

Develop an app

App Development
The chances that your app becomes the Next Big Thing™ are practically nonexistent. You’ll just end up gambling too much of your time and money into an app that very few people want to download. You want safe income and flexibility and this isn’t a safe bet.
12

Start an online cigar store

Online Cigar Store
Even if you live in the few states that allow you to sell tobacco online, you’ll still have to jump through a lot of bureaucratic nonsense in order to get the proper licenses to start selling cigars.
13

Create and sell online wallpapers

Sell Desktop Wallpapers
The profits for this venture are simply too small to justify the time and energy you’ll put into it. Plus, people would rather get their desktop wallpaper for free anyway.
14

Become a freelance telemarketer

Telemarketing
Aside from how annoying telemarketers are, you’re not going to earn enough money to justify how much time you’ll have to devote to your clients.
15

Advertise on your blog

Blog Advertising
I’ve actually done this before with my blog and discovered that you need a HUGE amount of visitors on your page (close to 50 million) in order to generate a decent profit. Even with my traffic, it’s just not worth it. It’s also a good way to fall prey to writing clickbait for the page views.
16

Start a listicle blog

Listicle Blog
Google has recently implemented an update that weeds out most listicle blogs from their search results due to the frequent low quality of its content. Also, you need a HUGE amount of visitors on your page (close to 50 million) in order to generate a decent profit.
17

Outsource for a company

Outsourcing
You’re going to have to devote a lot of time, money, and energy into finding companies that’ll hire you and workers who’ll work for you.
18

Go into web host reselling

Web Host Reselling
The market for web host reselling is crazy competitive — so much so that you’ll have to invest money into marketing in order to even let people know about your business. Plus, you won’t even earn that much if it does pan out.
19

Take up some Fiverr gigs

Fiverr
The money offered to you is abysmally low (that’s why it’s called Fiverr). You can find better paying gigs on Craigslist.

What a good idea looks like

Now you know how to spot a bad business idea — but what does a GOOD idea look like?

I’ve taught over 30,000 students how to start successful online businesses through proven SYSTEMS. And below is the start of the system we use to find those six-figure business ideas.

What you’re about to read:

  • Is a tested and proven system to generate a successful business
  • Has helped thousands of my students find their perfect business idea
  • Allows you to test your idea to see if people are actually willing to PAY for it — before you invest any of your money

It is designed to lead you right to a well of fantastic business ideas that people will pay you for TODAY.

Contents

Just want to jump to a list of business ideas?
Click here for our business idea explorer!

What’s the best online business to start?

Well, there are actually 6 main options for online business ideas to pursue — and I have systematically tried them ALL. I can tell you with no uncertainty that there is only one online business that I think is the best. By the end of this post, you’ll know exactly what’s the best online business to start.

Before I tell you, though, there are two rules to online businesses that you need to remember if you want to find success:

Online business rule #1: It’s about your customer…not you.

When I asked my readers “What excites you most about starting an online business?” 2000+ of you responded — which was awesome…

…until I realized how ME-focused a lot of your responses were.

 

 

“I want ___.”

“I need ___.”

“I’ll have more time for ___.”

Rarely do I hear things like:

  • “I’m really good at helping my friends with their relationship problems. I don’t want to just help people 1-on-1… I want to help THOUSANDS of people.”
  • “I love helping people get in shape. I want to help as many people get fit as possible.”
  • “My friends are always coming to me for cooking advice — and I LOVE it. I want to share my delicious recipes with as many people as possible!”

Look, I get it — we all want to go into online businesses because it will give us flexibility, time to spend with family, more money, and a bunch of other great reasons…

…but those shouldn’t be the ONLY reasons. That can’t be where you start but it can be where you END.

If you really want all those things, you need learn to dig deep into what your customers really want and put their needs first.

Only by factoring your customers into your system can you turn your dream or passion into a real business that’ll make you money.

Which brings me to…

Online business rule #2: Passion isn’t everything.

This is a brutal and hard truth to swallow — but it’ll make you a better entrepreneur once you do.

Others will sell you dreams of a 100% automated “turnkey” business based on your passion that’ll make you millions while you nap on a beach in Hawaii.

That’s a lie.

Don’t get me wrong: your passion is important. You should create a business around something that interests you — but it won’t help you decide what idea to pursue, how much to charge, and how to SELL without coming off like a sleazeball.

The determining factor between successful online businesses and the ones doomed to fail are BUSINESS SYSTEMS.

So, which online business system will be the most profitable? How do you know if people will pay? How do you get traffic and buyers and repeat customers?

Today, I’m going to show you the different ways you can start your first successful online business — with my specific recommendation for the best.

The 6 best options for starting an online business

Here are the 6 options for online businesses you can start.

  1. Software (including apps)
  2. Physical products
  3. Advertising
  4. Affiliate marketing
  5. Coaching
  6. Online courses

Better yet — here’s an illustration that’ll show you where these businesses stand in terms of startup costs (low costs beats high cost) and profit margins (the higher the better).


business model graph
 

A few takeaways:

  • Using a simple framework lets you see instantly if a business model is attractive or unattractive (most people never do this).
  • You don’t have to quit your job and raise millions in venture capital funding — which I’ve actually done and can safely say it’s not all it’s cracked up to be.
  • Online courses and coaching look like the best businesses to start. They’re both very attractive…so how do we decide?

Before we jump into that though, I want to explain each online business model — and how I’ve approached them in the past.

Software

Everyone wants to create the next Snapchat or Instagram — and it can be even more tempting if you’re a programmer.

I mean, we’re always hearing stories of sexy new Silicon Valley startups getting billions after their company goes public — why would you NOT start drooling?

The reality is that this simply isn’t a viable option for a lot of us, though.

For most, we can’t even code. And I think I’d rather go play in traffic than figure out the technical stuff that goes into it.

And even if you CAN code, chances are you don’t want to deal with the challenge of marketing, distributing, and constantly upgrading your app.

Software and apps require you to absolutely nail it right away. Otherwise, you spent all that time creating a product no one will buy.

Don’t believe me? The app store is a graveyard of apps no one ever downloads (check one developer’s story here about how he only made $36 in TWO months).

Later, I’ll describe some better options that allow you to adjust to the needs of your customers — options that’ll take less time and energy and help more people.

Physical products

You might think your idea to start selling steampunk cosplay outfits on Etsy is amazing — but the truth is, the profit margins are incredibly low.

For example, we have a notepad that our designers created internally for the IWT staff. We debated selling it to our readers — UNTIL we found out that we would have to price the notebook at around $50 just to break even.

And after we shipped it to people, our profit margins would have disappeared completely — all for a tiny notepad.

I know there’s some money to be made with physical products — but the profits are much better with online products.

Advertising

We’ve all seen (and been horribly annoyed by) this business model before — typically in the form of little advertisements a la Google Adsense on the sidebars of websites.

And they DO make money…kind of.

As you get traffic to your site, some people will click on the ads and when they do, you get a few cents — or maybe even a few dollars.

BUT they don’t really make that much money.

I tried this for IWT before — but quickly realized that I needed a HUGE amount of visitors (somewhere in the neighborhood of 50 million) per month in order to make good income on ads.

That’s a lot of traffic and a good way to fall prey to churning out pointless clickbait. No thanks.

Affiliate marketing

I used to dabble a lot in affiliate marketing back in the early days of IWT. The way it works is a blogger will write a review of something like “My favorite credit cards” and at the bottom they’ll say, “You can sign up for the card here — NOTE: this is an affiliate link.”

So if you click that link and sign up, the credit card company pays the blogger an affiliate commission ranging somewhere from $50 to $75.

There are affiliate programs for anything too — books, weight loss products, what have you.

And it’s great — at first.

When I used affiliates, I only promoted products that I used myself and knew that my readers would value and enjoy.

As soon as I put in an affiliate link on my site, I became ING Direct’s number one affiliate in the world — overnight.

I was making more than $10,000 a month just by putting a link on my site!

However, I soon learned that it wasn’t a great long-term plan. My click-through rates tailed off and I ended up having to spend all this time dealing with advertisers.

At the end, it just wasn’t worth the time so I stopped.

Coaching vs Online Courses: Which is the best for you?

Spoiler: Both business models are great — but the best one becomes clear once you weigh the benefits of each.

 

coaching vs online courses comparison
 

I love coaching. I actually believe it’s one of the best ways you can learn business skills. In fact, you’ll pick up skills you’d never learn with any MBA through coaching.

Some other benefits:

  • It’s a fast way to get started with your online business
  • You can charge premium prices for the work
  • You’ll learn your clients’ deep fears, desires, and barriers — incredibly valuable nuggets of information you can use to grow your business

Coaching also has its limitations though — you can only take on a limited number of clients, constraints of travel as well as time to meet with clients, etc. — which is why I prefer online courses.

I’ve taught thousands of people how to start new businesses, become freelancers/consultants/coaches, scale their existing business, and adopt psychology mindsets on how to live a Rich Life through my courses.

This is my favorite business model by far. Online courses are low-risk, high-reward, and they scale incredibly well. All it takes is for you to sell an information product like a video or written course.

Some other benefits of online courses:

  • You’ll be able to reach out to tens of thousands of people all over the WORLD
  • You can create something ONCE and have it generate money for years to come
  • You can scale your course LIMITLESSLY and watch your profits grow every time you do

It’s the cornerstone of IWT — we generate over 95% of our revenue through online courses.


alt text here
 

This is revenue we generated just a few years ago — you can BET it’s much more now.

In the end, whichever one you choose will be good. BUT I would highly recommend doing both if you can.

Still not convinced? In this video I tackle getting over the mental hurdles we place on starting an online business around coaching or courses.

Which online courses could you create?

Now comes the fun part (as if you weren’t having fun already).

It’s also easy to get tripped up when coming up with a course idea.

“I don’t know, Ramit,” people say, “I’m not an expert in personal finance or salary negotiation. I don’t know anything that people would pay for!”

Oh really?

Just choose the skills you have from the list below, and I’ll show you a list of businesses that have turned those exact skills into a profitable online business.

Still not sure? At IWT we believe in SYSTEMS. And below is the start of the system we use to find six-figure businesses for thousands of students.

They’re designed to lead you right to a well of fantastic business ideas that people will pay you for TODAY.

Four questions to ask yourself:

Question #1: What do I already pay for?

It’s so obvious, it’s damn near brilliant. We already pay people to do a lot of different things and by asking this question, you open the floodgates to all the possible business ideas around you.

For example, you might pay someone to:

  • Clean your home
  • Train you at the gym
  • Cook you dinner
  • Train your pet (maybe to use the toilet?)

Whatever it is, take just a few seconds right now to jot down a list of things you ALREADY pay people to do.

Question #2: What skills do you have?

Now, what do you know — and know well? These are the skills you have that you’re great at — and people want to pay you to teach them.

Some examples include:

  • Fluency in a foreign language
  • Knowledge of a computer program like Excel or Photoshop
  • Cooking ability

Write down a list of 10 of these skills. I don’t want you to hold back. Write down ANYTHING that comes to your mind and you’ll start seeing what people might want to pay you for.

Question #3: What do my friends say I’m great at?

I love this question.

Not only can it be a nice little ego boost — but it can also be incredibly revealing.

Are your friends always telling you that you cook the best meals? Maybe they’ve been asking you more for fitness advice and gym routines? Have they ever complimented you on how great your apartment looks or how well you dress?

All of those things can be turned into successful businesses.

Go ask your friends today what they think you’re great at. I assure you that they’ll give you a big list of things right away.

Add these things to your big list. Aim for around 3 – 5 new items.

Question #4: What do I do on a Saturday morning?

This question actually comes courtesy of my friend, Ben Casnocha.

He said, “When you’re trying to find a business idea, think about what you do on a Saturday morning before everyone else is awake.”

How do you spend that morning? Are you browsing fashion websites or fitness subreddits?

Which YouTube channels are you binge watching? Maybe there’s a project you’re devoting yourself to all day.

Alternatively, ask yourself: If you were stuck in a room with a person for 3 hours, what could you talk about with them the entire time?

This is a powerful method of discerning your passion if you’re unsure — things you’ll love to share with the world.

When you’re finished writing your 15-20 ideas down, you’re well on your way to finding a successful business idea. They don’t all have to be good — but try and get them all down so you have a good place to start.

Bonus: To find out more on finding the perfect online business idea, check out my Ultimate Guide to Starting an Online Business.

At this point, some of you already jumped 50 questions ahead:

  • “But what if I’m not sure what I’m good at?”
  • “An online course? But I don’t have a website/traffic.”
  • “What kind of software should I use for…”

SLOW DOWN.

Part of trusting the system is focusing on ONE step at a time, not jumping ahead. I have a proprietary process to show you how to identify what you’re ALREADY great at… and what the market will pay for. You need to find a burning pain.

Am I going to teach you that right now? Not yet. You can join my course when I open it again — join the waitlist and I’ll let you know when it launches.

For now, I want you to know that YES — you have passions and experiences in you that people will pay for. Even if you’re not yet the world’s expert on them!

Let’s take a minute and celebrate. You already learned more in this post than in the last 3 months of reading blog after blog.

What I want you to do TODAY

I want to make it easy for you to learn the best online business to start — and how to grow it.

That’s why I’m revealing some of the real numbers and results from my business — along with case studies and other premium material — to my behind-the-scenes priority list for Zero to Launch.

Get ready to learn the exact beginning-to-end system I use to run a successful online business and make money online.


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My 10-minute video on “How I went from a $4.95 eBook to a $12,000 Course.”

What you’ll learn from this “Behind The Scenes” video guide:

  • The 4 crucial turning points that skyrocketed my online business success
  • How pricing and positioning can be the ONLY difference between a colossal flop and a runaway success
  • Mistakes that cost me millions of dollars — and how you can avoid them
  • The exact steps that took me from a $4.95 eBook to a $12,000 course

Are you ready to go from no idea to a recurring revenue stream? Do you want to build an online business that PAYS YOU to live the life you’ve always wanted?

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