You are looking for profitable business ideas, with good prospects for the future, that you can operate from home without a large initial investment. This post is for you! There are many aspects that you can take into account when analyzing the interest of a business idea. And one way to do it is from the prism of the profitability of the business you are researching.
In this post, I am going to introduce you to the great types of online business that exist and we are going to order them according to 2 different criteria: the operating margin and the initial investment. It is completely true that not all businesses (online) are equal in terms of profitability, but is profitability the only criterion that you should use when researching innovative business ideas?
Let's see a little ...
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How is the profitability of a business measured?
This simple question can get complicated very quickly.
And how I do not intend to make a post about the most established financial metrics or about company valuation technicalities, I am going to list 3 main elements that make one business more profitable for me than another:
Sales volume: I'm going to focus on small businesses that have a turnover of less than 10 million a year. A good business invoices 6 or 7 figures per year.
The gross margin on these sales (Revenue - Cost of sales - Fixed Costs): some business models will leave tiny margins, others spectacular. You will see it in a few seconds.
The balance point of the initial investment: I am going to focus on businesses that do not require a million-dollar investment in Capex, such as a highway concession. We are going to focus on businesses that you can set up with a very small initial investment, without having to go to the bank to request financing.
From now on, in this post, I will qualify a business as a profitable business if I can set it up as a “Bootstrapper”, without resorting to third-party financing, be it 3 F's (Friends - Family - Fools) or banks, which allows me to sell 6 to 7 figures per year with a margin of at least 2 digits, ideally between 30% and 50% operating margin (BAI, profit before tax).
According to the definition that I have just given you, the vast majority of the most profitable businesses today, in Spain, are online businesses that you can operate from home.
It turns out that these businesses are also the ones that a priori have the best forecast for the future because they are part of the digital transformation process that impacts 100% of the world's businesses.
What is a profitable successful business?
It is another essential question to answer and it is not at all easy to define success for a business.
Because this success is measured from the prism of the founding entrepreneur. From your expectations and what you get - at the level of your personal satisfaction from this business, beyond the money.
The best businesses give you 3 things:
- Purpose, because you really help a specific group to reach their goals
- Status, because you get public recognition for your work
- Money is what the profitability of your business leaves you
For me, and again this definition is somewhat subjective, a successful business is a business that:
- Capture a customer at a reasonable acquisition cost, without too much effort
- It is capable of financing all business operations and investing in future projects
- Pays all employees a salary sufficient to pay for their current lifestyle and make them happy in their job
- Leave additional capital (Reserves) for the business founder each year.
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Common Characteristics Most Profitable Businesses Share
I have identified 3 main traits that the best profitable businesses usually share:
- They operate 100% digital, sell digital products or services, which are also delivered digitally. So they can instantly operate all over the world, without the need for many intermediaries, and you can work from home or while traveling.
- They allow the automation of a large part of the operational processes. As a result, teams are smaller and can collaborate on a network, without a physical office.
- They have focused on the scalability of their solutions, in such a way that selling much more does not mean increasing expenses in the same proportion.
Now that you have the main definitions clarified, let's go into the analysis of the different business models themselves.
LOW-INVESTMENT, LOW-PROFIT BUSINESSES: ADVERTISING AND AFFILIATION
They are businesses with a low margin (negative) and a low initial investment (positive). You find them in the lower part of the graph, on the right.
1. Advertising: put ads on your content such as Google Adsense. It is instant to start trading, but without a large volume of visits, you will not earn anything.
2. Sponsorships: look for brands willing to invest money to appear in your content. Higher margin, but more work to get these advertisers.
3. Dropshipping: the idea is to create an online store without the operations of e-commerce. You act as an independent distributor for the company that handles ordering, delivery, and customer support. It seems attractive, but the margins are usually tiny, except if you are creating your own Dropshipping agreements with sellers who do NOT usually work with this model.
4. Affiliate Marketing: The idea is to promote third-party products in your content. Amazon or TradeDoubler allows you to find many brands that work with an affiliate network. You are monetizing your reputation in exchange for third-party products. Be very careful who you marry. It takes years to build a reputation and 5 minutes to lose it.
5. Influencers: Both on YouTube and Instagram, “micro-influencers” are swarming, doing product placement actions for big brands. It is a complex model in which brand loyalty is difficult for the content creator, and also the objectives of the brand and the community can be misaligned, which generates tensions.
6. Network Marketing: The favorite model of Termomix, TuperWare, and the like. Small meetings between acquaintances in which an action of sale of some products is made. Selling to my friends because they are my friends and not because they need it doesn't really interest me. And if I have to make friends with people because I think about selling them a cosmetic product ... it generates internal tension in me, because I would have to redefine my concept of friendship.
7. Online comparators: a priori a fantastic idea. Compare offers on a web page. Super useful, especially on the Internet, where there are hundreds of offers in some cases. The problem stems from their business model, they charge for membership and likewise are judge and party because where there is an economic interest, there is a biased opinion involved.
As you have seen, all these completely legal business models tend to excite kids with the spirit of hackers who want to generate extra money without worrying about creating a personal brand.
For me, these businesses can bring you reasonable money for many (between € 500 / month and € 2,500 / month), they allow you to fully explore the automation of online businesses but they are completely devoid of purpose or allow you to consolidate your personal brand.
BUSINESS WITH THE HIGHEST INVESTMENT AND LITTLE PROFIT: E-COMMERCE
They are businesses with a low margin (negative) and a large initial investment (negative). You find them in the lower part of the graph, on the left.
- Crafters
- E-commerce
- Direct feed
They are the typical online stores that sell products. E-commerce sells third-party products, crafters create their own products (they are artisans). Direct food is producers that connect with consumers to place orders online and deliver them later, either to the buyer's home or in temporary markets that are set up to recover these products.
Some sectors are experiencing great competition, but what bothers me the most about e-commerce is the traditional part of the activity, which somehow takes away some freedom from your lifestyle.
And that selling to consume, in some cases, does not lead you to generate many purposes in your life.
BUSINESS WITH THE HIGHEST INVESTMENT AND A LOT OF PROFIT: BITS & SOFTWARE
They are businesses with a high margin (positive) and a large initial investment (negative). You find them in the upper part of the graph, on the left.
- Applications
- Themes / Plugins in marketplaces
- Bits in marketplaces
- Programming
- Software As A Service (SaaS)
This category includes native digital products, such as mobile apps, addons for certain Software (such as themes or plugins in the WordPress community, for bloggers), the sale of music, photos, and pieces of the shortcode.
In these 4 cases, the initial investment to create the digital product is reasonable, but the sale prices are very low since these types of resources have to be sold in global MarketPlace like those of Envato.
Creating attractive products is a difficult exercise, but some digital creators make a living like this. It is almost impossible to achieve it with a single product, but if you work with dozens of mini digital products, and they all sell, you can make a living like this.
The fifth model is for me a very attractive model, that of selling Software from a web platform and charges a monthly fee for the service provided.
It is a very stable and linear business model in its growth, which ends up generating many benefits in the long term.
The only but that I would put is that it is NOT for novice entrepreneurs:
You have to identify a recurring and real need in a market
You have to be able to create the software and make it evolve based on the requests of the customer base
Believe me, it is a topic for established entrepreneurs.
BUSINESS WITH LITTLE INVESTMENT AND A LOT OF PROFIT: VIRTUAL SERVICES AND ONLINE TRAINING
They are businesses with a high margin (positive) and a small initial investment (positive). You find them in the upper part of the graph, on the right.
- Freelancing: web design, copywriting, web writing, community management, digital trafficker, sales closer, virtual assistant, etc ...
- Services for individuals type online classes
- Consulting
- Coaching
- Mentoring
- Online training (ebooks, online courses, info products, memberships, etc.)
- Workshops & face-to-face workshops
They are my favorite businesses:
- You add value and this gives you purpose because you help people achieve their goals
- You can consolidate your (personal) brand because you are proud of the business you have
- You apply Premium rates because you have greater interaction or involvement in projects with your customers than when they sell canned goods.
If like me, you have a lot of knowledge to share with the world, these business models are ideal for all experts/coaches / Consultants who want to operate a 100% digital business.
Because the idea is to complete your digital transformation process and not only attract customers online but also deliver your solutions online.
What is the most profitable business?
At first, I recommend you focus on a single business model. But I want you to know that combining business models is completely possible.
What's more, it's a great income-generating diversification strategy.
Some possibilities that open up for you:
- If you bet on services you can start by providing services to your clients (Freelancing), then sell consulting / coaching and end up selling group coaching and/or online training. They are very complementary business models.
- If you bet on consulting you can recommend SaaS tools as an affiliate
- If you are a personal trainer or chef or personal shopper, you can recommend products to buy on Amazon or sector Marketplaces, naturally as you progress with the advisory service you provide to your customers.
- If you bet on the advertising & affiliation block, you can pull several models since they are completed quite well.
Be careful, it is not always a good idea to mix business models. For example, the sale of service and online advertising are on 2 opposite poles. Better not to make weird mixes.
78 easy, profitable business ideas, from home and with little investment in money
I know you want examples of jobs you can do from home or a list of low-investment business ideas to pick one up, get started with, and start generating income… right?
Well, here it is!
Some activities are lifelong activities, but I present them to you because they are especially suitable for sale and delivery online:
- Write Ebooks and sell them on Amazon
- Buy and sell domains
- SEO consultant for positioning in Google
- Instagram Marketing
- Manage campaigns in FB Ads
- Manage campaigns in Google Adwords
- Personal shopper
- Wedding planner
- Personal trainer
- Distance language teacher
- Small Business Consultant
- Project Manager
- Telephone sales closer
- Community Manager
- Copywriter
- Web writer
- Web designer
- Musical production
- Audiovisual production
- Video Marketing
- Life coach
- Business coach
- Health coach
- Remote psychologist
- Consultant
- Mentor
- Start a blog and monetize with advertising
- Be an influencer and monetize with sponsorships
- Set up a niche blog to sell affiliate products
- Create a store on Amazon
- Sell courses online
- Create a private membership
- Virtual assistant
- Develop applications
- Financial controller
- project manager
- Ghostwriter for experts (white label writer for others)
- Translator
- Home appliance repairman
- Answer online surveys
- Mystery Shopper
- Yoga instructor
- Concierge at AriBnB
- Tourist guide
- Therapist
- Spiritual guide
- Music teacher
- Sport teacher
- School support
- Breathing techniques
- Self-knowledge
- Personal growth
- Travel assistant
- Interior designer
- Feng shui
- Investment consultant
- Pet sitting
- Childcare
- Elderly care
- Fixes on clothes
- Cleaning services
- Dance classes
- Chess classes
- Drawing / painting classes
- Image advisor
- Tax consultant
- Online store of specific categories (example: baby products - special for multiple parents)
- Beauty tips
- Home staging
- Online makeup artist
- Resale of cosmetics
- Resale of accessories
- Crafts
- Do It Yourself Techniques for Furniture
- Lettering
- Creative stationery
- Chef at home
- Healthy diets and eating habits
What is the secret to starting a profitable business?
I'm glad you asked me this question because I want you to know that the secret is that there is NO secret.
There is no universal formula for starting a profitable business.
There are no guarantees that your investment will be profitable when you start a business.
You have to choose a business model that you like and that can offer you the profitability to expect from your business, but then you will have to correctly execute the necessary actions for your business to generate the expected profitability.
In other words, profitability is not a characteristic of a sector or a type of business.
Profitability is the tangible result that the entrepreneur who owns the business is doing well in their day-to-day operations:
- Enough customers are captured at a reasonable acquisition cost
- The team delivers the purchased solutions in such a way that customers are happy
- The manager manages human resources, time and money correctly, in such a way that all collaborators receive their compensation and are happy working in this company
- After paying all the taxes of a business, there is an economic benefit that is the profitability of the business.
But while there is no secret, there is a fundamental ingredient in every business that works.
Content Credits: lifestylealcuadrado
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