The top online businesses in UK are:
- Local lead generation
- SEO services
- SaaS business
- e-Commerce store
- Affiliate marketing
- Digital freelancing services
- Online bookstore
- Online business consulting services
- Blogging
- Online coaching business
Starting an online business in the UK is a good choice because of its strong digital infrastructure and supportive government policies. With 96% of UK households having internet access, the market is primed for online businesses to thrive. According to World Bank, the UK ranks 8th out of 190 economies for ease of doing business. Its stable economy and favorable tax laws create a conducive environment for entrepreneurship. The government also provides various resources and support programs to help businesses grow and succeed.
One Reddit user shares that starting an online business in the UK is simple. They mention that it only costs £12 to register a limited company online. They point out that HMRC offers useful tools for paying taxes and filing VAT returns. And accounting software helps reduce the need for hiring staff, making management easier. They explain that the internet allows small businesses to compete with larger ones through social media and SEO.
However, some entrepreneurs might find it difficult to secure funding. One Reddit user explains why it is hard for entrepreneurs to get funding in the UK. People are more traditional and less willing to invest in startups. The venture capital industry is also much smaller. This makes it harder to find funding compared to the US.
I've invested countless hours and dollars into various ventures, only to watch them fizzle out. But then I finally found a profitable online business. This business model is different - it's tangible, it's scalable, and it's profitable. In this article, I will list down the top online businesses to start in UK. I'll also discuss each business model's market demand, potential profit, and challenges you might encounter. Lastly, I will present the best online business model that is profitable and scalable.
1. Local Lead Generation
Local lead generation is in demand in the UK because businesses want to reach customers near them. A study found that 72% of UK consumers prefer to support local businesses. This is because local businesses are more likely to understand the needs of their customers and offer better customer service. The pandemic also sped up local shopping, with 64% of UK shoppers choosing to support their community. This trend makes local lead generation important for reaching changing customer habits.
Agency owners can also sell services to businesses lacking time and lead generation expertise. Doing this will allow you to earn significant profit. I was able to earn $20 to $50 per lead, which adds up to $500 to $2,000 per lead generation site. You can focus on selling leads in roof repair and landscaping for higher commissions.
2. SEO Services
The UK market offers significant opportunities for SEO services. With over 580,000 e-commerce websites in the UK, there is a large potential client base for SEO services. The 2024 LOCALiQ UK Digital Marketing Report shows that 32% of businesses focus on local SEO to attract local leads. And 38.4% of businesses wish to implement SEO but lack the resources or skills. This creates a great opportunity for SEO experts to sell their services online.
SEO professionals can earn a good income by helping businesses improve their search rankings. Data shows that:
- Junior SEO specialists' earn $28,570 to $41,559 per year
- Experienced SEO specialists make $45,453 to $58,440 per year
- SEO managers or heads of SEO earn $64,933 to $103,894 per year
- Freelance SEO consultants charge $129 to $324 per day (depending on experience)
3. SaaS business
SaaS is a great online business to start in the UK because of its scalability and recurring revenue model. The UK’s strong tech infrastructure and skilled workforce make it an ideal location for SaaS startups. According to SaaS Academy, 99% of companies are expected to use at least one SaaS solution by the end of 2024. The Office for National Statistics reports that the UK now has over 2,100 SaaS businesses, which are expected to grow to over 2,300 by the end of 2023. This shows a thriving ecosystem for new entrants.
Profit margins for SaaS businesses can reach as high as 80%. Aaron Wallis Sales Recruitment reports that SaaS sales professionals in the UK can earn between $422,116 to $259,764 per year. For SaaS business owners, earnings can be even higher. Successful SaaS companies can achieve high valuations.
4. e-Commerce store
Starting an ecommerce store is a good online business to start in the UK because of its growing ecommerce market. The UK has a large and engaged online shopping population, with 65 million customers. According to Analyzify, 91% of UK residents aged 25 to 34 made an online purchase in the last year. On average, UK online shoppers spend $4,679 per year. This high level of consumer spending shows strong demand for online products and services.
According to industry data, a good net profit margin for ecommerce is around 20%. Glassdoor estimates that an Ecommerce store owners earn about $45,185 per year in total. This includes:
- Base salary: $37,580
- Additional pay: $7,605
5. Affiliate marketing
Affiliate marketing is a popular online business model in the UK due to its low startup costs and potential for passive income. Shopify states that 56% of online consumers have made purchases through affiliate websites. And 65% of retailers report that affiliate marketing contributes up to 20% of their yearly earnings. Some programs offer commissions as high as 30%-100% of the sale price. For example, NordVPN’s affiliate scheme is among the highest paying in the VPN market.
According to Refersion, 80% of affiliates earn $81,818 annually. While 15% can earn between $81,825 $1,026,067 per year. Top performers, representing about 1% of affiliate marketers, earn 6-7 figures monthly. However, it’s important to note that these high-earning cases are not typical and require significant effort and expertise.
6. Digital freelancing Services
The UK has a thriving digital economy and a high demand for skilled freelancers across various sectors. A study by PeoplePerHour found that demand for freelance services in the UK grew by 41% in 2020. A survey by Website Planet found that 86% of freelancers work from home. This allows for a better work-life balance and reduced overhead costs. The YunoJuno Freelancer Rates Report says the average day rate for freelancers is $492. This could translate to an annual income of over $116,883 for full-time freelancers.
You can freelance in the UK as an American. But there is no self-employed visa for freelancers unless a UK employer sponsors you. The best visas for freelancers are the Innovator and Global Talent visas. The Innovator visa requires a viable business idea and at least $64,935 in funding. It is renewable for up to 3 years. The Global Talent visa is for top people in academia, research, arts, culture, or digital tech.
7. Online bookstore
An online bookstore is a top UK business choice for its low startup costs and wide market reach. Many readers prefer the convenience of ordering books from home and having them delivered. This preference is reflected in the 5.5% year-on-year growth of online book sales in the UK in 2022. This trend has led to increased profits for well-run online bookstores. Online bookstores have an average profit margin that ranges from 20% to 40%.
Online bookstores earn between $40,000 to $100,000 per year, though some successful ones can earn much more. A niche online bookstore, Mouse Book Club, makes $120,000 per year. Starting an online bookstore offers flexibility in business models. Owners can sell new books, used books, or even rare and collectible editions. This variety allows entrepreneurs to find their niche and stand out in the market.
8. Online Business Consulting Services
Online Business Consulting Services is a great online business because of the growing number of businesses in the UK. In 2023, there were 5.9 million businesses in the UK according to Gov.uk. A study by Forrester Research found that 72% of UK businesses plan to spend more on consulting in the next 2 years. This creates a demand for consultants to help businesses improve operations. Consultancy found that over 30% of UK consultants have international backgrounds. This provides a competitive advantage for UK-based consultants entering the online market.
According to Management Consulted, the average UK consultant salary is $85,000. For post-MBA consultants, the average salary is $110,398, per Management Consulted. But agency earnings can be much higher than individual salaries. The MCA report shows that 28% of UK consulting fees come from abroad. This suggests potential for international clients.
9. Blogging
Blogging taps into a large and engaged audience in the UK. Data shows that:
- 40% of UK bloggers have an audience of 1,000-10,000 visitors.
- 10% of UK bloggers have over 50,000 visitors.
- As of 2023, the UK has over 60 million blog readers.
This indicates a significant readership base for bloggers to tap into. Blogging is also an appealing choice because of its low startup costs. Bloggers can get started with a minimal investment of $50-$100. According to a survey by ConvertKit, 63% of bloggers spend less than $100 on their blogs each month. This includes domain registration and basic hosting services.
According to Glassdoor, professional bloggers in the UK can earn between $26,000 to $60,000 per year. However, the most successful bloggers can make 6-figure incomes.
10. Online Coaching Business
Online coaching is a lucrative venture in the UK because of its low startup costs and high demand for personalized advice. The UK’s supportive ecosystem for entrepreneurs has led to a surge in new startups. Around 753,168 new businesses were founded between 2021 and 2022. This influx of new entrepreneurs has created a market for business coaching services. According to the Chartered Institute of Personnel and Development, 84% of UK organizations use coaching as a development tool.
The International Coach Federation states that the average yearly income for coaches in Western Europe is $51,100. Life coaches, for example, can earn between $100-$150 per hour. Whereas executive coaches with over 10 years of experience can charge $330 per hour and up. Coach X, a content creator with a monetized YouTube channel and online courses, earns $120-130k annually. He also makes an additional $10k from book sales.
Conclusion: Which Online Business Model is the Most Profitable?
Local lead generation is the most profitable online business in the UK due to its high return on investment and targeted approach. A local lead generation business can earn $500-$2,000+ per month for each lead generation website. This is more profitable than other online businesses like dropshipping or affiliate marketing. Dropshipping often has thin profit margins and requires constant inventory management. Affiliate marketing can be competitive and relies on driving large volumes of traffic. In contrast, local lead generation allows you to focus on a specific geographic area and industry niche.
Local lead generation solves many challenges faced by other online businesses. It doesn’t require holding inventory or dealing with shipping logistics. You target specific local businesses and industries with less competition than national or global markets. Local lead generation also provides more stable, recurring income compared to the fluctuations common in e-commerce or affiliate marketing. Focusing on local markets can help you build better client relationships. It can also add more value.
Local lead generation means making websites to attract local service seekers. These sites capture leads and sell them on to local businesses. You can earn $20-$50 per lead, which adds up to $500-$2,000 per month for each site. High-value services like roof repair or landscaping can bring in higher commissions. The earning potential increases as you build more lead generation sites. Successful local lead generation businesses earn over $50,000 per month from multiple sites. Local lead generation business model offers significant growth potential for entrepreneurs willing to invest time in building and ranking local websites.
