Different Types of Online Businesses

Your Mentor

If you are new to online marketing then I can’t stress highly enough  the importance of chosing the right mentor. Making the right choice can be the difference between your business succeeding and you making some serious cash or failing leaving you seriously out of pocket. Your mentor will have been where you are now so, providing you make the right choice and listen to their advice, you should avoid many of the mistakes and be quickly in profit.

 Types Of Online Businesses

Online bussinesses tend to fall into five categories. These are:

1. Affiliate Marketing
2. Information Products
3. Business Opportunities / Direct Sales
4. MLM/Network Marketing
5. Misc. / Other

Lets go into them in a little more detail and look at the pro’s and con’s of each.

1. AFFILIATE MARKETING

This is a very legitimate way to create income from anywhere in the world. Basically the way it works is there is a merchant who provides a product or service that is willing to share some of its revenue with affiliates when they refer sales. With physical products the margin is very small (usually around 3% of the sale value), but with digital delivery products the commissions can be as high as 75% and even 80%.

Pro’s

•You’re your own boss

•You can promote as many products/services as you wish

•You are not attached to any specific company.
Con’s

•Steep learning curve

•Must seek mentorship/coaching elsewhere

•Commissions usually under $100

•Stiff competition

•Successful affiliate marketers have gone through a really steep learning curve. You need to be innovative at all times, it is a “each man for himself” environment. Without proper education and preparation, you’re not likely to succeed. Only about 3% of affiliates world wide ever make any money at all and an even lower percentage make a full-time income as affiliates.
My Recommendation: Unless you’re willing to commit yourself (and your wallet) to learning the ropes through trial and error, I would not jump into affiliate marketing until I have gained more experience on the web.

2. Information Products

Information products are the #1 thing sold on the internet today! Information is what most people come to the internet for. Whether it’s how to make money or how to grow the perfect tomato plant, it’s all information. The biggest money makers online sell information because of the incredible profit margins that they contain.

Info products can be eBooks, audio courses, videos or any other info delivered electronically.

Pro’s

•Cost very little or even nothing to create

•Profit margins are huge as there is no delivery or inventory costs

•You keep 100% of the sale amount

•You can buy Master Resale Rights or Private Label Rights and have products to sell immediately, so you have very little set up time

Con’s

•The biggest downside is the perceived value with a digital product

•Because these products are typically downloaded to a person’s hard drive, there is no tangible product in many peoples minds

•If you are marketing Master Resale Rights products, you may have others marketing the same thing and thus have more competition

•Some products are not of the highest quality and can have a poor public image

My Recommendation: Information products hold a huge place in the making of money online and you should seriously consider adding a few of them to your product portfolio. They offer the greatest profit margin and are the quickest way to bring in money immediately.

3. BUSINESS OPPORTUNITIES / DIRECT SALES

Similar to MLM, direct sales pays its affiliates a commission on products being sold by yourself and your team through residual compensation plans. The main difference is that direct sales mainly involve high ticket items, usually ranging from $500 all the way to $20,000.

The biggest benefit of high ticket direct sales is that commissions are a lot more attractive and substantial, and you don’t lose the feel of mentorship and team work.

Pro’s

•High commissions averaging $1,000 per sale

•Most direct sales companies provide replicated websites

•Mentorship & coaching is usually included or even part of the product itself

•High-demand products usually in the personal development and education fields

•Low or no risk on companies offering a money-back guarantee

•Less effort required to earn a substantial commission

Con’s

•Some companies literally sell garbage products for an astronomical price

•If you join the wrong program, you can easily be left with rubbish products and no return on investment

•Some “cash-only” type programs don’t comply with FTC laws
My Recommendation: Personally I feel this is the best way to earn an income on the internet. I have found that it takes the same amount of time and effort to make a $20 commission as it does to make a $1,000 commission. It all comes down to what audience you’re targeting. Many people are scared about the economy right now and this leaves a wide open market for this type of program, so I have chosen to take advantage of it.

4. MLM/NETWORK MARKETING

This is another legitimate way to create income on the web. Much like affiliate marketing, merchants distribute their products solely through “distributors” or “associates” using a network or multi-level compensation structure. The most common products range from health to household cleaners. Associates normally earn “points” by consuming the products themselves and by referring products to other consumers. They can also earn by referring other distributors who use the products and refer them to other people.

Pro’s

•Most MLM’s offer mentorship

•Most MLM’s offer pre-made sales websites

•You can learn as fast/slow as you wish

•Your sponsor has a vested interest in your success
Con’s

•Commissions for the average distributor in any MLM is usually under $200/month

•Training materials are usually an extra investment on top of your monthly product consumption

•Most MLM’s will only allow you to promote them by word of mouth, making it almost impossible for the average person to succeed

•Some MLM’s have a volume quota that if not met means you might lose your commissions earned through that particular pay period

•Unnecessarily tough way to make money online

•MLM’s have been around since the 1950′s and most of them have extremely outdated compensation plans.

•Products are usually overpriced and if you sell items at retail price, commissions are usually under $20. The “real” money is in building a network, but you need large amounts of distributors moving products for you to make any significant income.

My Recommendation: MLM is a great opportunity for you if all you want is learn the basics of running a referral-based business. You should not expect to make any significant income, but you can expect to make a lot of friends and learn the basics of selling. This is a wise addition to your portfolio after you are established and already have a following.

5. MISC. / OTHER
 Examples include: /Data Entry / Email Readers / Cash Gifting / HYIP’s / Auto-Surfing
I will not even go there. These type of opportunities have been proven time and time again to be either scams or simply opportunities to earn a buck or two while spending a lot of time on the computer. Not worth your time or money.

The real money is made by the individuals or businesses that sell you the tools or the lists where you can find paying surveys or data entry jobs.

My Recommendation: Do not believe the ads, do not believe the likely false testimonials… it just doesn’t work the way they say it does. You have been warned :)

In summary my recommendation if you want to earn “serious” money online then you should be looking to have a mixed portfolio of :

  • Business Opportunities
  • Affiliate Products
  • Digital Products

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