Owning an online business is one of the ultimate steps towards location independence. Being able to work from where you wish is not just a luxury, it’s crucial to asserting your independence.
We are not just talking about independence from a particular place or way of life. Most online businesses give you the option to incorporate in business friendly countries with tax-efficient structures. That’s independence on a whole new level.
I’ve stated this rather simply so let me reiterate for emphasis…
Running an online business gives you a level of freedom that is unimaginable to most.
From Adam Richardson.
I’m not going to tell you that this is the easiest thing in the world…but I will tell you from personal experience it can be learned surprisingly quickly.
“How can I make a living online?” is a question that Q Wealth readers and members ask all the time. It’s a tough question to answer in an email reply and one that we are going to start addressing much more this year.
To start things off I reached out for help in approaching this subject to someone who is actively teaching other people how to make a living online, specifically how to succeed in ecommerce.
His name is Billy Murphy.
Billy is a former professional poker player who launched the hugely successful poker training site BlueFirePoker.com in 2009.
In 2011, he started launching and acquiring E-commerce stores. Quickly scaling from 1 to 20(!) online businesses.
He’s since launched an E-commerce training site to help people who want to own their own store.
He also blogs at ForeverJobless.com and is launching a podcast today that I’ve been looking forward to since he first announced it.
A personal aside. I own, have owned or am a part of several online businesses. But I credit Billy, and his writing at ForeverJobless.com with giving me the push to invest in my first ecommerce store selling physical products.
I asked Billy a few of the most common question that I get about getting started in ecommerce or taking your existing business to the next level.
Here is what he has to say:
Adam: Billy, people ask me all the time, “Is it too late to get in on ecommerce, it seems like there is a store for everything?”
Billy: Definitely not.
While there is a store for just about everything, there’s almost always a gap in any market that can be filled.
For example, one of the stores I started sold a french pastry dessert. There were definitely people selling this already, but not top pastry chefs online. So, I was able to get a top pastry chef to supply me and ship his product to my customers. There were other stores selling the same thing, but I filled the quality gap.
Also, a lot of people are selling the same exact thing.
What I mean by that is, there’s often a lot of drop ship stores in a niche, but sometimes very few unique products. Often there may be a good opportunity to create your own brand, that stands out in the crowd.
This can be done either by getting it manufactured yourself in China or somewhere else, and trying to create a better brand than what’s out there, but it can also be as easy as whitelabling someone else’s brand.
What that means is you basically take someone else’s product and rebrand it with your own name, logo, and pictures.
The lowest margins are in drop shipping. The highest are obviously in manufacturing your own product.
A good middle ground if you don’t want to spend the money and jump through the hurdles of creating your own from scratch, but still want higher margins and a better chance at standing out would be whitelabeling.
Adam: You’ve talked on you blog about buying an existing business and that’s what I did. But is that your general recommendation? Should people start from scratch or buy an existing business?
Billy: It depends on your goals.
If you have a decent amount of money to invest in a project, buying a business is a good way to create cashflow quickly since you’re basically buying existing cashflow, and a lot of online businesses sell very cheap relative to the income they produce.
If you didn’t want to spend as much money to get started, and didn’t mind starting from scratch, that route is fine as well.
I’ve done both— bought a number of businesses plus started many from scratch.
Adam: Another question I see a lot. Can you run a profitable online business if you already have a full-time job? Or what if you no longer work but want to travel a lot?
Billy: Yes to both.
I have several friends who have jobs, but also have side businesses that run relatively passive that they make money on each month. A lot of the times they end up leaving their jobs once the business makes so much that the job is not enticing anymore.
I travel a lot, and run several online businesses.
I have a friend who goes on 3-4 week vacations every other month and runs several online businesses as well. With online business, it really doesn’t matter when you’re “working” on the business. One of the major perks of having an online business is the fact that you can work on it when you want, outsource the rest, and do with your time as you please.
Whether you’re working, traveling, or sleeping, your business can still make you money.
Adam: Yet another common question or rather, common fear. Do you need programming or specialty knowledge to do this?
Billy: Definitely not. I am the least technical person I know. I hire out anything technical to people who are good at it.
Adam: It seems like you have a sort of mathematical approach to business…is there such thing as a general formula that can be applied to ecommerce businesses.
Billy: A very basic formula I would use if starting an e-commerce store from scratch would be calculating the traffic I expected for a number of keywords, and factoring in the estimated conversion rate and margins.
If I took a group of the main 10 keywords, and knew there were 50,000 people searching these.
I’d take 50,000 and multiply by the spot I thought I could rank in Google for each keyword, and then multiply the % of people who would click through to my site based on that.(example: ranking #1 in google you can expect roughly 40% of the traffic to go to your site, where #10 is closer to 1 or 2%.)
Then I’d take the combination of the estimated traffic and multiply the estimated conversion rate(1% is a conservative number), times the margin of the product.
That would give me an estimated income from SEO alone.(this is what I did with drop shipping stores since the margins weren’t big enough to buy traffic)
If you had bigger margins you could run similar numbers when buying traffic, you’d just add in your estimated costs.
Example of how it would look:
after calculating estimated traffic from searches: 5,000 visits
1% conversion rate= 50 sales
50 x $100 = $5,000
So you could estimate that if/when you get ranked where you think you can get to, you’d make $5,000/month in that example store.
There’s obviously much more complex math we could do if we wanted, but for when I was just doing SEO on stores, this is the type of math I would do to at least give me a starting idea of the potential of a niche.
Adam: Great, so where are the “big wins” as far as what to focus on or spend time on when running an ecommerce store.
Billy: The biggest thing is focusing on a product people actually want to buy.
A lot of people just try to sell the same exact thing someone else is selling in the same exact way. Offer something of value other people aren’t doing. This will help you stand out, and make more sales.
Adam: Ha, sell what people want…seems logical. But I also know enough online business owners who are doing exactly what you warn against. It’s not that they don’t have things that people want, it’s that they are doing things the same way as 20 other stores are. You can really stack the odds in your favor by finding a way to add value or stand out.
So lets look ahead for people that may be starting fresh. Where is ecommerce heading?
Billy: I believe it’s heading away from so much drop shipping, and more towards people creating brands. Amazon is becoming so large that a lot of people are worried about having to compete with them.
They’re thinking the wrong way about it.
They should think of Amazon as a great lead generator if they have their own product. Instead of avoiding Amazon, make them a huge marketing source for you. (note from Adam: what Billy is talking about here is a really exciting development in marketing products online that we will write more about later.)
Adam: Are online businesses appreciating in value so that you can also look at it as an investment with the benefit of cash flow?
Billy: I don’t know if the pricing of online businesses in general have changed much. They’re still priced relatively low so that you can buy something that can make you consistent cashflow without a huge outlay of capital. The market for profitable online businesses is a strong one though, so that could drive the average price up.
Adam: My thanks to Billy for his time. Obviously this is a huge topic that could fill several books. Being that neither of us is looking to write those books, writing becomes sort of a frustrating medium to try and convey the scope of information that needs to come across.
That is why Billy decided to start his podcast where he has the freedom to sit down and record an hours worth of thoughts and lessons, or conversations with other online entrepreneurs.
Find more from Billy at ForeverJobless.com.