Starting an online business is worth it. If you are willing to put in the hard work and long hours, you can make $100k+. But, it isn’t a get-rich-quick solution. In fact, 90% of online business startups fail because people get discouraged too quickly.
However, if you are someone who is determined, ready to face the challenges and daily grind, and has a great online business idea that you’re passionate about, then it is very worth it. This is because you’ll see some mind-boggling results. I’m talking earning a six-figure passive income. You’ll also get to build a community and help others. One great example of a successful online entrepreneur is Pat Flynn, the guy behind Smart Passive Income. Between affiliate marketing and selling online courses, Flynn now has a net worth of over $3 million.
I was also able to start my own successful online business through local lead generation. For the first 3 years, I didn't earn much for all my efforts. But I was determined to succeed when I found a business model that stuck with me. I now earn a steady income of $50,000 a month. It's not just Pat Flynn and me. Many other people from Reddit will tell you that starting an online business is hard but worth it.
In this article, we’ll go over 9 pros and cons of an online business. We’ll also help you choose the best online business for you, as well as provide the steps to get started.
What Are the Pros and Cons of Starting an Online Business?
Before you jump into starting an online business, it’s a good idea to sit down and weigh in the pros and cons. This will help you decide whether it’s really worth it for you or not.
Pros
Low startup and overhead cost
Immense work flexibility
Easy set up
Global reach
Can leverage a range of digital marketing channels
Cons
Income isn’t guaranteed
High competition
Lack of interaction with others
Technology issues can interfere with business
Potential for cyber security issues
The Pros of Starting an Online Business
1. Starting an online business has low startup and overhead cost
Can you start an online business at a low cost? Yes, you can start an online business at a low cost of only $25 to $1,500. There are even some successful online businesses that started with zero initial investment. Lauren Hom started her Hom Sweet Hom hand lettering business by simply posting her beautiful crafts on Instagram. Now, she’s an artist for some big companies like Starbucks and Hallmark. She also sells her own art courses.
Realistically, however, you’ll probably have to spend a few hundred dollars to get started. To give you a good idea, let’s look at the average startup costs of the most common online businesses:
Local lead generation: $200-$500
Ecommerce: $1,000-$1,5000
Online courses: $200-$500 (not including equipment)
Blogging: $50-$200
Affiliate marketing: $0-$350
2. Online businesses offer immense work flexibility
Since your business is based online, you can work anywhere you want. As long as you have your laptop and an Internet connection, you’re good to go. There’s no need to be trapped in that dull office with the endless clatter of keyboards. Also, since there is no opening-closing time with an online business, you can choose which hours to work. If you’re most productive during the late hours of the night, no problem.
3. Some online businesses are easy to set up
How difficult is it to start an online business? It’s super easy to start an online business as it only requires a website or business social media account. I don’t need to tell you how easy it is to set up a social media account. However, creating a website might make you a bit hesitant. The good news is that there are many free and paid website builders that will make the designing process super easy. Plus, a quick Google or YouTube search will direct you to very detailed step-by-step guides on how to create a website or an online store from scratch.
4. Online businesses can achieve a global reach
An online business can grow significantly because your potential customers can come from all over the world. Your target market doesn’t have to be in the same geographic location as you. Mailchimp, an email marketing agency founded by Ben Chestnut and Dan Kurzius now has 13 million global users.
On a smaller scale, Customized Corner, an Instagram business that creates customized gifts and passport cases, used to just sell their products in India. But after receiving many order requests from people outside the country, they decide to start shipping their products out. This grew their customer base beyond their imagination. So you see, the reach is limitless when you start an online business.
5. Online businesses can leverage a range of digital marketing channels
An online business allows you to leverage digital marketing channels to reach more people and get more sales. One report by Retail Dive saw 87% of consumers search for products and services online. If you want to know just how many people you can reach, let’s look into a few of the top digital marketing channels:
Of course, those are just the top channels. You can also take advantage of content marketing, affiliate marketing, influencer marketing, YouTube, and much more. Having a whole suite of channels to pick from will help your business reach the target audience and see lots of growth.
6. Online businesses can simplify scalability
With an online business, it’s super easy to scale or venture into other opportunities. For one, it’s much cheaper because a new business idea simply means creating a new website - not finding and renting a new location. Also, for an online business, adding a new product or service could mean updating your website or socials. Online platforms can quickly adapt to trends and customer feedback, too. So if you need to change the product display, a few clicks of your mouse will do the trick - instead of having to physically remove the old products and put in the new ones.
7. Online businesses have better data tracking
Better data tracking is a key advantage to online businesses. This is because, when you understand how your customers behave, you’ll be able to make more informed decisions and improvements. One super helpful tool that’s used by 50% of website owners is Google Analytics.
Here, you’ll be able to get detailed insights into conversion rates, the time people spend on your page, bounce rates, and pathways customers take through your website. In a single platform, you’ll be able to identify what attracts your target audience, what holds their attention, and what drives them to make a purchase. And you only need to install and set up Google Analytics once to record all that.
8. Online businesses offer improved customer support
Since there are no closing-opening hours in the digital world, customers from any time zone can access your online business. Yes, they can even make purchases while you’re asleep. This round-the-clock availability will satisfy customers from all over the world. Moreover, you can install live chat bots to reply to inquiries while you’re not available.
The use of social media messaging is also an easy way to improve customer experience. One case study by Meta showed that 66% of people say that messaging (especially through Facebook Messenger) is their preferred method to communicate with a business. Giving what the people want can significantly improve customer support.
9. Online businesses allow greater control over financial outcomes
You have greater control over financial outcomes with an online business as you can quickly adjust pricing and marketing strategies based on real-time data. You can also lower operational costs compared to physical businesses. Plus, the more committed you are to your online business, the more income can pour in. Tim Seidler, a successful online business owner, said that slapping a coupon site on the internet made him a few dollars. However, his commitment in the long run is what led his online business to succeed and earn six figures.
Besides that, you can have multiple income channels for better security. If your website doesn’t garner enough customers, then maybe your Instagram or Facebook page will. Other ways to streamline your revenue can be through ads, affiliate marketing, and subscription models. You don’t need to rely on one income source.
The Cons of Starting an Online Business
1. Online businesses don't guarantee income
When you start an online business, it may take 1 to 5 years before you get your first earnings. Even then, income isn’t guaranteed unless you work really hard for it. Sure, there are some success stories that tell you they started earning as early as 3-6 months. However, many successful online business owners will tell you that they didn’t earn anything from all the effort they put into it until years later.
2. Online businesses face high competition
With more and more online businesses popping up, as well as big companies going online, competition is getting tougher by the minute. You’ll need to find a way to stand out among the crowd if you want to succeed. To give you an idea of the kind of competition you’ll be dealing with, there are an estimated 26.5 billion ecommerce stores. Amazon FBA has almost 7 million sellers. Meanwhile, about 7.5 million blogs are being published every day. Those are some BIG numbers!
3. Some online businesses lack interaction with others
Starting an online business isn’t for everyone as you’ll most likely be working alone. If you’re the type of person who thrives with team collaboration or face-to-face interactions, this will be a problem. Another one is that, with no or very little help, you could lack a range of skills needed for your online business. You have to be willing to accept both as you start your online business.
Of course, there are a few exceptions to this. If you have a business partner, you can work together and motivate each other. Plus, some online businesses require more interaction and coordination through chat and video calls.
4. Online businesses face technology issues
Since online businesses rely heavily on technology, one issue can make you very vulnerable. A study by ITIC Corporation found that for 98% of online businesses, just one hour of website downtime can cost $100,000 in lost revenue, customer dissatisfaction, productivity, etc… These technology issues, often stemming from server problems, software glitches, or maintenance, are typically beyond your control.
Besides the issues, you’ll also have to constantly stay updated with new technologies, and implement them. That means upgrading new software, integrating new technologies, and adapting to search engine algorithm updates and new ecommerce features. Failure to keep up can result in reduced competitiveness and lost business opportunities.
5. Online businesses may face cybersecurity issues
Small online businesses are usually the target of cyber attacks due to lower security measures. According to the 2023 Hiscox Cyber Readiness Report, 41% of small online businesses experienced cybercrime at least once. This included data breaches and hacking incidents. As a result, this led to a loss of sensitive customer information, finances, and customer trust.
Code Spaces, a code-hosting service, was forced to shut down after a cyberattack deleted all their data and disrupted the service. The small online business couldn't continue operations because of financial losses and ruined reputation. Cybersecurity issues are very real.
6. Product-based online businesses undergo complicated returns
If you start an ecommerce business with physical products, it may be complicated to process returns when a customer isn’t satisfied. This is especially true if you’re a dropshipper or Amazon seller. Since you don’t hold inventory in dropshipping, you’ll have to do back and forth communication with the supplier on how to handle a return. It becomes even more complex as each supplier has a different set of policies. Then, you’ll have to communicate with the customer on how and where to ship the return. Finally, you’ll have to deal with processing a refund or sending a replacement.
For Amazon sellers not using Fulfillment by Amazon (FBA), similar challenges arise. They must handle the logistics of receiving returns, inspecting them, and deciding whether they can be resold. You have to do all this while ensuring customer satisfaction and managing costs.
7. Online businesses face logistical challenges
As an online entrepreneur, you need to be prepared to navigate several logistical challenges. This includes inventory management, shipping logistics, handling returns, and supplier coordination. For example, if you have too little stock on hand and many people want to buy the product, you will need to rely on your supply chains to quickly restock. So you have to come up with a good plan to keep everything flowing smoothly.
There’s the logistical challenge of implementing technological infrastructures, too. This includes seamless connection with ecommerce platforms, inventory management systems, and customer relationship management (CRM) software.
8. Online businesses have complex regulations and compliance
Just because your business is based online doesn’t mean you can avoid your area’s regulations and compliance. Depending on your business activities and location, you might need to establish a sales tax nexus and get a business license. You’ll need to do a lot of research and paperwork on this if you want to operate a legal online business.
9. Your abilities and efforts determine your success in an online business
The success of your online business depends on YOU. For the most part, you’re in charge of all the brain work, initiatives, decision-making, and efforts. You’ll have to work more hours than the regular 9-5 job. Some online business owners in Quora say they work 12, 16, or 18 hours a day. Plus, the hours you put in won’t count - only the results will. So if you’re someone who prefers a clear boundary between work and downtime, owning an online business may not be the best fit for you.
Should You Start an Online Business?
Yes, you should start an online business if you have the right work ethic, mindset, and expectations. Work ethic is necessary as starting and growing any type of business requires discipline, determination, and effort. A strong work ethic allows you to persist through challenges, dedicate time and resources, and strive for excellence. A Zipdo survey saw a whopping 93% of leaders say that work ethic has the greatest impact on business success.
Besides that, you should have the right frame of mind, too. Starting an online business for unlimited passive income is a big motivation. However, it shouldn’t be the only motivation. You need to be passionate and knowledgeable about your business, as well as use it to make an impact on others. Make sure you’re doing your dream job - but this time, you’re the boss. This will help you become really successful in the long run.
Having the right expectations is also super important. If you fall into the flashy promises of “you’ll be able to earn $100 million in two years”, you won’t get far. Why? Because you were expecting to earn $100 million in two years, but you've only made $100 after all the effort you put in. Becoming a successful online business owner will take years of hard work. If you already know this and are still determined to succeed, then you should start an online business.
If you don’t have these 3 qualities, it may be better to stay away from an online business for now. This is because it will most likely result in financial loss, reputation damage, operational challenges, legal and compliance issues, and stress and burnout.
How to Start an Online Business?
Here’s how to start an online business:
Pick your niche and business model
Learn about your product and audience
Create an online presence
Build customer relationships
When you pick a niche and business model, it should align with your passion and expertise. One good question to ask yourself is, “What specific problem or need do I want to address? How do I want to address that?” When you’re able to answer that, evaluate your resources. Check if they are sufficient to realistically implement and sustain your proposed solution.
The next step is to learn everything you can about your product and audience. Julia McCoy, a successful online businesswoman and creator of Content Hacker, says that her biggest business growth came with big investments in knowledge and skills. The good news is that you can find many online courses about your niche and business model, including my local lead generation course. If you’re on a low budget, you can find many helpful online resources that you can study.
When you’re ready to begin, start by creating an online presence. This is either through a website, Amazon FBA, dropshipping platforms, or social media channels. You’ll then need to promote your business brand through search engine optimization, paid ads, social media, email marketing, and content marketing, to name a few.
Another crucial step for a successful online business is to build strong relationships with your customers. This way, they will always come back to you and will even recommend your business to others. So ensure you provide excellent customer service and meaningful and personalized communications. It’s also good to ask for feedback and work to improve based on it.
What Kind of Online Business Is Most Profitable?
The kinds of online businesses that are most profitable include:
With all that in mind, here are the most profitable online businesses to start in 2024:
3 Online Business Success Stories That Show Why It’s Worth It
1. Ippei Kanehara - Local Lead Generation
Hello there! It’s me. I can genuinely say that starting an online business is worth it because I have experienced the hardships and successes myself. My online business venture started off rough. I transitioned from several businesses like Amazon FBA and affiliate marketing. After 3 years of hard work and no real outcomes, I discovered local lead generation. I shut myself in and started creating websites for local markets and ranked them on Google. I then had to contact businesses in the area if they wanted to rent out my ranking websites. That was a few years ago. Today, I make more than $50,000 a month. And I don’t even have to do anything once the website is ranking and rented.
2. Iman Gadzhi - Social Media Marketing Agency
Iman Gadzhi didn’t let his hardships get in the way of his success. He started his IAG Media brand by persuading his local football club to let him manage their social media account. For this gig, he earned £300 a month. By 7 months, he got another client. Then another. Pretty soon he was making six figures. His friends and even some of his own social media followers started asking for advice. That’s when he created his first online course ‘Six Figure SMMA’. He had a blasting start. However, after several failed Facebook ads, he started to lose clients and his business started crashing. Instead of giving up, Iman Gadzhi brainstormed how he could get back up. He then realized that he needed help. So he decided to hire people that could focus on the ads service, while he did sales and operations. Long story short, Iman Gadzhi now earns $45,000+ a month with IAG Media. Besides that, he also earns from his online courses, affiliate marketing, and more, totaling his net worth to $25 million.
3. Adam Enfroy - Blogging
Adam Enfroy is a good example of someone who works extra hard for what they want. Although he was already earning big as a full-time tech worker, he found himself overworked, stressed, and wishing for freedom. With his acquired knowledge of digital marketing and SaaS, he decided to start his own blog. With both his regular job and blogging, he worked for 100+ hours a week. His long hours of work paid off. After 9 months of obtaining backlinks, accelerating organic growth, and partnering with affiliates, he started earning 35,000 a month. It was only until 2020 that he was able to quit his full-time job and focus all on blogging. That was 3 years of endless working hours. He now earns an estimated $2 million from his blog alone. But according to Enfroy, his biggest achievement was his freedom.
Conclusion: Is Online Business Worth It?
Yes, online business is worth it as it’s easy to start, gives you freedom, and has an unlimited passive income potential. Plus, there are 2.71 billion online shoppers - and it is going to keep on growing. What’s more, a Hubspot survey saw around 60% of Gen Z and Millenials prefer buying products or services from a small business. So you can have a stable market, too. However, you need to know that it isn’t going to be an easy ride. An online business will only be worth it if you’re also willing to go through the long hours, challenges, and maybe even years of nothing. You have to be someone who says, “No matter what, I am going to become successful.”
If you’re unsure what online business to start, try local lead generation. This business model will see you creating websites for local services, ranking the website, and then renting it out to actual companies with no online presence. What you’ll love about this is that it’s super affordable and easy to get started. Really, you only need around $25 to $50 to create a website. You can then use SEO techniques to rank the website. As it’s already ranking, a company will be willing to pay big to put their name and contact information on the site. Since this is a rent, you’ll earn consistent income monthly.
Local lead generation also removes a lot of the cons of starting an online business. You won’t have to worry about high competition since you’re focusing on local areas. You can also remove the burden of technology and cybersecurity issues, logistical challenges and returns, and regulations and compliance.
