Learn the 6 different types of online businesses

So you're ready to start you're own online business.

Time to dive in and make it happen, right?

Whoa, whoa, whoa.  Not quite.  Before you do that, it's important to understand the different types of online businesses out there that will help you generate passive, recurring income.

Before we do that, I think it's really important for us to have an understanding of what passive, recurring income really means.  

Here's how I define it.  

Passive, recurring income is defined as having a steady flow of income month after month that doesn't involve an active presence from you.  

You could be traveling to Italy, you could be on a beach, you could be taking a nap on a hammock.  It doesn't matter - the income should continue to flow in anyway.  It's what I would consider a true "Lifestyle" business.

Awesome!  Now that we agree on the definition, let's start understanding the different ways we can make money online.    

Here are the 6 types of online businesses out there:

1. The Advertising Model - In this business model, people visit your website and see ads.  The ads usually show up under the main banner or on the side so that the content remains the #1 focus.  This type of business starts with great content.  Whether you're going to blog about fashion, business, love or whatever you're into, you'll need a ton of online readers to monetize well through advertising.  The key is to focus on writing great material that really adds a ton of value to your readers.  Think about it this way:  What problem are you helping them solve when they visit your blog?  Once you build a steady stream of visitors, you can leverage advertising platforms like Google Adsense and Media.net to monetize!

 

2. The Affiliate Sales Model - This model is similar to the advertising model in that you'll need a lot of traffic to hit your website for this to work as well.  These visitors would then see your recommendations for products.  They would then click the affiliate link that you would provide for those products and once they purchase them, you would get an affiliate commission.  Commission Junction http://www.cj.com/ is an example of one of the top affiliate programs out there today!  

 

3. E-Commerce - In this scenario, you sell virtual or physical goods online in an e-commerce store.  Examples include speciality stores (for example, suits, urban clothing, hiking equipment) to much broader stores like Amazon.com.  Competing in the giant "online" store model where you sell everything is extremely tough since you'd be hard pressed to operate as efficiently as Amazon given their scale.  However, you can more likely find a niche category that is often underserved and build out an e-commerce store for that.  The Honest Company is a great example of this!

 

4. The Premium Subscription Model - You could also charge users for a premium subscription.  The Wall Street Journal is a great example of this.  In their case, you could limit readers to a number of free articles, but then prompt then to subscribe to a monthly membership fee to have additional access to articles.  

 

5. The Pay as You Go Model - You could also charge customers based on usage of a product.  For example, if you're doing selling a SaaS product (Software as a Service), you could bill customers based on their usage of their product.  Amazon Web Services is a great example of this.  Think of this like the PG&E Utiliy model.  

 

6. Freelancing - You could also freelance.  Whether it's freelancing work in the field of writing, design, consulting, coding, financial analysis, administrative work or any other services that people need, you can make a good amount of money doing that.  You can leverage sites like oDesk, eLance and fiverr to find postings for jobs.