How to Build a Profitable Side Business
The road to financial freedom can become significantly shorter if you manage to build a profitable side business.
Over the last few years, the amount of side businesses has skyrocketed. With the invention of the internet you can literally run a one-man digital business from anywhere in the world.
Combine that with web-design software becoming more and more simplified and you can practically start a blog, an e-commerce store or sell e-books within a week. On top of that there has also been a huge increase in companies that leverage the sharing economy like AirBnB and Uber that make it possible to rent out your home or drive someone from place to place to earn extra money.
Side businesses are considered the holy grail for millions of people who aspire financial freedom.
The start-up costs of a side business can be close to zero. You can start a business while you still have your day-job and the sky is practically the limit. There are countless examples of people earning five, six or sometimes even seven figures with an e-commerce business or blog.
As an entrepreneur I have more than some experience with side businesses. Building a profitable side business can be quite a challenge though. A lot of niches are saturated and it’s hard to get enough exposure to succeed.
In order to make your side business succeed you’ll need a seriously epic game plan. In this post I’ll provide you with all the necessary tips so that you can build your own profitable side business.
Decide what kind of business you don’t want
The first step is deciding what kind of side business you want. Or better yet, deciding what you don’t want. This step seems very straightforward but is overlooked incredibly often.
There are tons of people who end up doing things they don’t like. They copy someone else’s successful business idea or they read about a business idea on a blog or social network and directly decide to implement it.
The copying is often done without questioning whether the idea is actually suitable for them. Without questioning if the idea fits their way of life, their values and their interests.
If you work long days from Monday until Saturday and have three kids that fight for your attention at night, for god sake, do your kids a favor and don’t become an uber on your free Sunday’s.
If your sole and only goal is to be location independent and to run your business from underneath a palm tree ten years from now, don’t start a side business that requires your physical presence at some location. By the time it is profitable enough you'll be shackled to it.
The step of deciding what is suitable for you seems very simple but is often overlooked by people because they replicate business idea’s without questioning if the idea actually is cut out for them.
A business idea must fit your ideal way of life, your values and your interests. Not only is this important to make the business itself sustainable on the long run. It’s also greatly important to make it succeed. The more tailored a business is to your way of life, interests and values, the more likely it is to succeed.
So.. instead of listing the type of businesses that would suit you, do it the other way around.
List all the type of businesses that would not suit you and the reasons why. It is much easier for people to think of what they don’t like than the other way around.
Take a good look at your skills
True expertise in something is incredibly difficult to attain. It requires years of practice. True expertise is also one of the top ingredients to make your side business thrive.
After you know what kind of side business you want it is time to look at what kind of activities you are good at. Do you excel in marketing? Sales? Networking? Or programming?
As you are building a “side” business it is likely that you already have some professional skills from a day job. Identifying your skills is useful for two things. At first, it will give you the insight in which skills you can leverage. You can leverage your strengths to get a competitive advantage over your competitors.
If you’ve worked in marketing for twenty years straight, chances are big that you’ll be a lot better at it than the average blogger that is just starting out. Next to that, identifying your strong points is also useful to identify which areas of your business you might consider outsourcing.
I always refrain from outsourcing things too easily but there are just some things I am extremely bad at. Graphic design and editing for example are things I outsource. Learning these skills just takes too much time. Especially because I’m anything but creative which makes the learning curve nearly impossible. Doing the graphic design myself despite being bad at it makes me fall short compared to competitors.
Pick a niche, but do it carefully and thoughtfully
For the last few years, niche markets have been the number one source for side businesses.
The reason is simple. Mainstream is just way too crowded to be able to fight your way to the top.
Are you thinking of creating an e-commerce store that sells all kinds of different products? Do you know who does that as well? Amazon, AliExpress and thousands of others. Do you think that you can beat Amazon or AliExpress when it comes to pricing? Of course not. Do you think you can beat them by offering a broader set of products? Of course not. Branding then? I doubt it. Online marketing then? Nah….
As you can read in tons of other advices on building side businesses, the advice is simple. Niches are king. Why would you battle for scraps with giants if you can:
- Earn up to 200 dollars per hour being a professional mermaid.
- Earn thousands of dollars on a website where people can book dwarfs for lavish dwarf entertainment. (not the kind of dwarf entertainment you see in The Wolf of Wall Street movie though)
- Earn thousands of dollars running a fantasy football website.
There are tons of profitable niches out there where entry is simple and competition isn’t killing.
However, selecting a niche to become active in can oftentimes be quite a challenge. In selecting niche markets for my business I’ve had several so called learning opportunities (read: made mistakes) in my life.
I'll explain you everything I've learned about niche selection below.
Selecting a niche based on a trend
Unless you are an incredibly fast mover and you are very aware of trends passing and going, be careful to select your niche based on a trend.
Many people use platforms like Flippa to find inspiration for their niche. Flippa is a platform where you can sell your side business in the form of a website or an app.
Browsing Flippa can be very handy when you feel you are lacking inspiration while trying to find a suitable niche market. There are many websites with a huge potential on Flippa. Some of these websites are being sold because the owner needs cash fast or because he or she doesn’t have the time to maintain it anymore.
However, there are also many websites that are being sold because the owner is very aware of the fact that the business model is based on a trend that is soon passing. The owner is aware that profits will soon plummet and is trying to abandon ship before this happens. Trend based side businesses can be especially appealing because viral products can sell extremely well. When people see the revenues on these website their eyes turn into dollar signs.
Trend based products are often innovations that enter the market in times when competition is close to zero. The product goes viral and millions of people acquire the product within a few months. The combination of little supply and extremely high demand causes early movers in the market to cash big and hard. Then the trend passes and revenues plummet. An extremely good example of a trend based product is the fidget spinner. Within a few months after they went viral, hundreds of millions fidget spinners were sold. Now everyone has one and the trend is dead.
Unless you are very confident that you can anticipate trends or that you’re able to adapt incredibly quickly, don’t waste your time on a trend-based niche. The trend will likely have passed by the time that you are able to launch your business.
Selecting a niche where there is no earning potential
A classic mistake is selecting a niche where there is no earning potential. This often happens when people start a blog a website from some hobby or interest and move the figuring out how to earn money off it to a later stage.
Only later they find out that there is no product or service that matches what they blog about. Or there is a product but it isn’t sold by any supplier that does business with affiliates.
I made this mistake once by starting an informative website about bodyguards. I was just very interested in bodyguards at that time. A year later, the website gotten into the number 1 position for nearly all prominent keywords in my native language.
I was happy about the traffic but then the follow-up question came. How am I going to monetize it? The niche itself was small and the amount of visitors was too low to earn a decent amount of money off advertising.
I started exploring additional ways to earn money and came up with nothing. Bodyguard educators were taking in so little people that becoming an affiliate for them was no use.
I tried affiliate sales for related products but that didn’t lift off either. I tried everything and came to the conclusion that I was just in the wrong niche.
Don’t ignore your interests and passions
Several years ago the “follow your passion” mojo was incredibly popular.
However, the last few years people are somewhat more skeptical about the follow your passion advice when it comes to building a business.
They call it delusional and opt for focusing on profitability and viability of the business model rather than passion. I myself think that the truth is somewhere in the middle.
Can you build a successful side business doing something you don’t like? Probably.. but it isn’t easy.
Should you only pursue things you are extremely passionate about all the time? No.
Building a successful side business is a bit of both. Conditioning yourself that you should only do things you feel absolutely passionate about is setting yourself up for failure.
It makes you spoiled and takes away a huge amount of potentially successful business ideas. In every business there are activities that aren’t the greatest of fun. But they simply need to be done. For some (like me) it’s networking, for others it’s marketing and for others it’s writing. If you encounter something that’s really dreadful you can always consider outsourcing it.
However, completely ignoring your interests and passions isn’t a good idea either. Passion is extremely useful for two things.
First and foremost it is the fuel that drives your motivation.
It’s what makes working on your side business more of a hobby than an obligation. It’s what makes you able to work on your side business for years to come and helps you through the tough times.
The second useful thing about passion is that it gives you the competitive edge you need to thrive. It creates the will to become the expert in your field of work and gives your content the extra spark that it needs to become top content out there.
Some years ago I was doing freelance work as a webdesigner and optimization consultant. A coworker of mine ran a side business in selling Asian beauty products. She asked me if I could optimize her website and make it rank better for some of her most important keywords.
I told her I could do a lot for her, except one thing: blogging and guest blogging.
I just didn’t have the interest, passion nor knowledge about Asian beauty products to write appealing content about it. I told her that the perfect person to do this would be her since she was extremely passionate about her products.
So, when it comes to passion and interests. Don’t ignore them in choosing what and how to build your side business but don’t let them lead you completely either.
Don’t quit too easily
As I’ve mentioned a ton of times before, building a successful side business isn’t easy. Better yet, it’s extremely challenging.
And those who claim to know some secret trick are 99% of the times struggling wantrepeneurs trying to persuade you to buy some kind of “secret sauce” that will only benefit them and not you.
If we look back at the 90’s and perhaps even further back, we look back at a time where knowledge wasn’t one search query on Google away. We look back at a time where people had certain knowledge that made them more likely to succeed than others.
This knowledge would come in the form of how to craft something or how to do something much more efficient than others. Currently however, knowledge is everywhere and for everyone to be attained.
Want to know how to do something? Google it or find a how-to tutorial on Youtube.
This means that knowledge only, not sets you apart from your competition anymore. Thanks to Youtube, millions of people know how to craft a canoe or how to build a blog. Thanks to this blogposts that you are reading, you will know what to do and what not to do when it comes to building a side business.
So what does set you apart from the competition? Let me give you a hint. It starts with the letter “d” and ends with “etermination”. The actor Will Smith once famously said and I quote:
“If we each get on a treadmill right now, one of two things is going to happen… either you’re going off the treadmill first or I’m going to die. Period.”
You should look at your side business the same way. You’re either going to succeed or die trying.
So many people start a side business expecting fast and great riches.
When reality doesn’t live up to their expectations they throw in the towel. The tell their selves a cocktail of reasons why it isn’t going to work. Bad niche, too much competition, lack of time or just not their thing.
It’s simple and clear. Building a profitable side business takes time so don’t give up too easily.
Don’t do it just for the money
Earning extra money so you can become financially independent or reach an other financial goal is evidently one of the benefits of building a side business.
However, just doing it for the money is often not going to cut it.
Money is a decent motivator but also a shallow one also. A motivator that prevents you from building a serious business that is designed to benefit people and not only your bank account.
You should look at your side business from a broader perspective. What do you want to achieve in life? How can you, and do you want to help other people?
This way of looking at your business what makes it thrive. It’s what releases the sparks in your mind to overcome every obstacle in your way. Imagine that you’re one of the millionaire investors of Dragon’s Den and there are two people in front of you with the same product.
You need to choose and invest in the person of whom you think will be the likeliest to succeed.
One of the entrepreneurs is simple. He/she just does it for the money. The second entrepreneur has exactly the same business idea but has an ideology behind it. An incredibly strong belief that their product will change the world. Who do you think is more likely to succeed?
You don’t necessarily need an idea that reshapes the entire world. But having the belief that your business will somehow benefit people in some way is crucial to your success. Implement these tips and tricks and you’ll be one step closer to building that profitable side business!
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