It was 10:30am on a sunny California morning as I gently pulled back the covers and stretched my little toesy-woesies.
“Ahh, another day in paradise.”
I sauntered over to my 13″ aluminum Macbook Pro and shook the trackpad to life. The bouncing Daniel head I use as a screensaver disappeared and I was now on my desktop.
I cracked my knuckles and smiled.
“Let’s see how much moolah I made while I was asleep.”
I logged into Paypal and found…
Ha. Wouldn’t you like to know 🙂
Let me go ahead and stop you right there.
If you’re like 99% of people who dream of one day starting a business online, it can admittedly be pretty daunting. There’s all this talk about building online businesses…but for the most part, the experts forget to leave out the simple details…and this makes most of the concepts very NEBULOUS at best.
I was talking to my friend Daniela today, who is starting a YouTube channel, and I realized something…
When it’s all said and done, most beginners have the same basic question: “How do I actually make money?”
How is it possible to do/create something in the “imaginary” internet space and have it transform into real money that buys things like groceries?
Just TWO WEEKS of invoices from my PayPal account. About $9,600. That’s more than I made in FOUR MONTHS at my old restaurant job. How did I make this happen?
Today, I’ll take a minute to break down the exact attitude you need to cultivate before starting an online business — then I’ll show you the simple ways that most online entrepreneurs use to make revenue.
FIRST: Check Your Attitude
One of the biggest problems that beginners have when trying to make money online is….THEY’RE TRYING TO MAKE MONEY ONLINE.
I did that and wrote about it in the classic: “Painful, embarrassing shit I’ve done trying to make money online” post. You laughed at me 🙁
Here’s the problem with that: the Internet is not some faceless, amorphous entity that you can just extract revenue from if you hit it with a pickaxe enough times.
This ain’t the Colorado gold rush, homie.
The Internet isn’t made up of code, or even the computers that create that code.
The Internet is made up of (wait for it…)
It’s made up of you.
You, reading this right now.
Without you, there’s no purpose for this blog, or the computer you’re reading it on.
So if you want to make money on the Internet, remember that it’s not actually the Internet making you money.
It’s the PEOPLE reading your work, listening to your voice or watching your show. The Internet is simply the way that you communicate with them.
Most people ask, “How can I make money with this blog/podcast/YouTube channel.”
That’s not the right question. The right question is, “How can I grow an audience of people that love my work, who would eventually consider buying something from me?”
What does this mean?
The Internet really isn’t anything special. You can make money the exact same ways online that you can offline. The main advantage of the web is simply volume. For instance, every time I post something on this blog, it’s like speaking to a completely packed, 7,000 person auditorium. Just like IRL (in real life), some people are super engaged, others aren’t. Some people are sleeping in the back. But it’s that scalability that makes an internet platform especially powerful. There’s nothing intrinsically special about the Internet itself.
Your primary focus should be on building an audience first, genuinely helping them, then monetizing later. Without that, nothing matters. Actually building that audience is another post for another day, and there are already many places online to get started.
7 Different Methods For Making Money Online
I always chuckle when I explain the first part to people (about how there’s nothing inherently special about working online, and that they should focus on building an audience first….) and they still ask the inevitable, “So how does this make money?”
Well, I guess there’s no use in avoiding the question. So let’s talk about it.
Once you build an audience on any platform (blog, podcast, video, etc) you can create products that they want or provide them with things the’ve already been asking for.
Here are the 7 best methods for making money online.
Method #1: Making information products to help people build a skill or get through a specific sticking point
Maybe you’re an organic chef that helps people cook healthier meals at a lower cost. Could you make an recipe ebook, or even a video course on preparing healthy meals? If so, your audience might buy it.
Look at what Will and Kyle have done at StartupBros. After realizing that their blog posts on building an importing business were extremely popular, they decided to create a digital course to help people start their own import business.
They were simply filling market demand.
Method #2: Selling physical products that solve a problem or are just plain fun
Why not open up an eCommerce store or learn how to dropship something? There are plenty of holes in the market waiting to be filled. Neville has a great breakdown of how to create a dropshipping business.
Or you could always MAKE a physical product that you know your audience needs — like Maneesh at Pavlok.
Look at the early rendering of packaging for the device above. Awesome.
Method #3: Creating events or experiences
Why not create a gathering of people and do an activity together?
The seminar model has been around for years in the personal development world, but that’s not the only option for monetizing experiences.
And I often find that these types of products really make you feel the best — both to sell and buy.
For instance, my friends Matt and Jared took their blog Under30CEO and pivoted the business model to build a travel company called Under30Experiences where they take young people on “adult spring break” all over the world. Really cool stuff — and something that’s sorely missing in the market.
Here’s a cool video that explains the trips in detail.
I went to Nicaragua in December and I’m headed to Costa Rica in November. You should join me 🙂
Method #4: Services/Consulting
You are your biggest resource — and people who follow you for all the great free stuff you provide will be happy to learn more from you. Especially if the information you’ve provided them for free in the past has already helped them.
In my Mentorship Program, I help a group of 10 people launch or grow their business. It’s a lot of one-on-one time, but members really appreciate the personal touch.
What knowledge do you have inside your head that people would pay you to tell them? Hint: Most of us have SOMETHING. If you’re currently employed, there’s some piece of knowledge in there that a boss pays you to apply every day. What is it? When I first started my own biz, I realized that college admissions test prep was my untapped knowledge source, and I took my hourly rate from $18 to over $1,000 in some cases.
Method #5: Ads
As your audience and traffic grows, you can monetize it by placing ads on your platform. Big blogs like Lifehack get SO much traffic that monetizing with ad revenue is a no brainer. It takes a lot of traffic to consistently make money from ads, but they can be part of a comprehensive monetization plan. For instance, vendors like Karmaloop combine products (clothing) with advertisements to generate more revenue. This works on Podcasts and YouTube channels as well. Just like in traditional TV and radio, owners can get paid to run ads for companies that want to access their audience.
Method #6: Affiliate promotions/partnerships
Don’t have a product to sell? Don’t have a service to offer? Don’t have enough traffic to generate revenue from ads? You can STILL connect your audience with products/services that they need and make a tidy profit. For instance, look at Pat Flynn’s revenue report for May 2014. You’ll see that of all his revenue sources, over $38,000 of the $83,000 he made came from his partnership with Bluehost, a web hosting provider. The deal is simple: Since Pat likes and uses Bluehost for his sites, he recommends it to his audience. If his audience decides to buy the hosting service through the link he provides, Pat gets $65 from Bluehost as a “thank you” for the referral. The person buying the service is not charged anything extra.
Method #7: Hybrid
Once you get one of the above models flowing and you’re able to create consistent, predictable success, it’s much easier to branch out into other revenue streams so that you’re not so dependent on one source. For instance, a lot of YouTubers start by monetizing their videos, then create merchandise and other products for fans. SMOSH is a great example. What started as a comedy duo putting out simple videos on YouTube became a small comedy empire. One look at their site shows monetization from:
- Advertisement (Best Buy, Break.com, etc)
- Clothing and accessories
- Affiliate promotions
- Mobile apps
- A physical magazine (I saw this at Wal-Mart)
- And their original source…video views
There’s probably a ton of other stuff going on behind the scenes that I don’t even see right now. Those are just the VISIBLE ways I can see SMOSH making revenue. ******* So those are some of the many possible ways that entrepreneurs makes money online. What are the big takeaways? First and foremost, remember: There’s really nothing special about making money online. People are doing the same things online that they’ve been doing for years offline. The biggest difference is simply the SCALE at which the business can be done. Most importantly, remember: Your ability to create revenue from a content platform (such as a blog, Podcast, YouTube channel, etc) is almost entirely dependent on the relationship that you have with your audience. Build that first. Help people and build that trust. It takes time, so don’t get discouraged. Shit, look how long it took me. I should make a detailed post on audience building, shouldn’t I? I wanted to give you an overview of monetization first, since so many people have questions. I’ll tackle the audience building guide another day.
What burning questions do you have?
What’s still bugging you about online business? What else do you want to know that I didn’t answer? Leave a comment and I’ll answer it 🙂 DD ******* Want weekly insights on building a business you care about and living a happier life? Just join the tribe. (It’s free).