Online business success is now more possible than ever . . . But only if you learn how to avoid the snake oil
If you’re ready to start an online business, you have lots of decisions to make. The most important one is not only choosing the type of business you want to pursue, but learning how to avoid the internet gurus promising overnight success.
Episode 37 - Online business success is now more possible than ever, but only if you learn how to avoid the snake oil
Transcript:
Are you looking for another way to make a living? If so, you’re in good company. Most surveys conclude that about seventy percent of the workforce is looking for a career change.
And if you’re one of those who is ready to leave your job and start your own business, you have lots of choices, which is another way of saying, you have lots of decisions to make, both professionally and personally. Maybe you’re thinking about buying a franchise or starting a new business from scratch. And there’s always that number one choice expressed by the majority of those looking for a new source of income—launching an online business.
And why not?
You’ve seen the ads, you’ve read the sales pitch. All you have to do is throw together a website, establish a sales funnel with your book, training course, or other digital product, and then sit back and let the money roll in.
So how realistic are these promises? Can you really make big money online – at least enough to equal the income you’re currently making while working for someone else?
Hey, welcome back. This is Roger Reid with another episode of Success Point 360.
If you listen to all the hype that’s being promoted by a large segment of online marketers, making a fortune on the internet sounds easy. They’ll typically talk about a huge pool of people out there that are just waiting to pay you for your skills and experience—information that you’ll sell in the form of a book, or a training video, or distributed by means of a podcast.
But before you buy into one of these online startup packages, or spend a ton of money to attend a seminar on how to become rich and famous, let’s talk about how credible and practical these programs really are.
The first question you need to ask is, what are they going to teach you?
The typical answers are usually along the line of, oh, they teach marketing, or how to write ad copy, or the most effective way to build a landing page. But those things are generic, and they can be applied to just about any kind of business you go into.
The answer that’s important – the one that will determine your odds of success – is more about the type of business you want to create –the internal structure, the way it’s perceived by potential customers…… and how much of your new business is going to depend upon your personal visibility.
Let’s start by breaking this down into three broad categories: Replication, e-Commerce, and personal branding.
Replication is a “business” model based on learning how to do the very same thing that the sponsor, host, or business guru is doing and then offering the same program to someone else. For example, the big subject for replication today is podcasting. Buy my book, attend my seminar, or join my inner circle and learn how to become a successful podcaster.
The pitch is often based on the three universal motivators—easy, fun, and profitable—and it usually goes something like this . . .
“Everything you see here today, including the exact methods I used to make my personal fortune will be revealed to you, and all you have to do is duplicate everything I’ve done. Clone my business model and you can’t fail, because it’s tested and proven. It worked for me and that means it will work for you.”
And down the rabbit hole we go.
Listen closely: A business program based on pure replication is a red flag. For example, let’s say you pay someone a thousand dollars to learn how to launch a podcast, so you can sell a program to teach others how to launch a podcast. And you don’t even need to create the program material because it’s provided for you in the original material that you paid a thousand dollars for.
In their most abusive form, these offers are pure fantasy, and they’re usually based on promises of big money in a very short time window. The typical commercial, especially if it’s on late-night television or in print advertising, will feature a thirty-something male leaning against his hundred thousand dollars sports car, parked in the foreground of a huge mansion. The implication is clear: It’s all his, and he bought it from the profits he made by following a business plan he designed and implemented—the same plan you can buy for only a couple of hundred bucks, or a thousand dollars, or ten thousand . . . because the more you pay, the more it’s got to be worth, right?
The final part of the pitch usually suggests—or outright promises—that you’ll be able to put your new business on auto-pilot, allowing you to live anywhere you choose, and never needing to “work” more than a few hours a week.
What are the chances of a business based on pure replication becoming financially successful?
Close to zero.
There’s a reason replication-based businesses are often called Ponzi or pyramid schemes—and in their purest form, they can be outright illegal. Here’s why:
You run out of people to sell to.
I’ll give you an example. There are lots of people who believed they could build a financially successful business by recruiting others to do exactly the same thing they were doing by using the multi-level business model. It was – and still is – a very common business template in which projected cash flow is based on selling products like soap, cosmetics, books, or vitamin supplements. But the product was very seldom the reason to become involved with the company. It was the “magic” of recruitment—finding others to become part of the same organization under your downline, and then profiting from their efforts, and in turn, from the efforts of those who they recruit.
The central concept of multi-level has always been about building a large group of people who in theory, will be doing the actual retail selling, while you sit back and reap the financial rewards of being a great “manager.”
What’s the typical result?
Eventually, these “businesses” run out of people who can be convinced to join the organization. But not before each new “member” has bought the sample kit, literature, and the duplication rights to use the company’s intellectual property.
So regardless of the quality or type of product being sold, the real customer often turns out to be the new recruit, who must purchase the start-up kit and required upfront inventory.
(And in full disclosure, I want to make it clear that there are a very limited number of MLM businesses that have been successful. For example, Mary kay, Avon, and Tupperware base the financial success of their representatives on actual retail sales to consumers, while compensation via recruitment is a secondary consideration. And that makes a world of difference when compared to the typical multi-level structured business.)
Let’s move on and look at the second category of online business, called E-Commerce.
This model uses the internet as a tool to sell a product or service. Just about anything sold from a brick-and-mortar business can be sold on the internet. For example, some of the more successful entrepreneurs using this model have sold gardening equipment, toys, hobby and craft supplies, silk flowers, pottery, kitchen utensils, jewelry, or the latest gadgets from Aliexpress or DHGate. And I’ll include the web address for both of those in the show notes, so you can check them out, later.
The distinctive element in e-commerce is the fact that you remain behind the scenes. Buyers may never know who you are, and in most cases, they don’t care. Potential customers come to your site to buy products because of convenience, price, in-stock inventory, product quality, and the guarantee and return policy.
Just keep in mind that if you decide to go this route, you are the owner of an online store, and like any business, you’re expected to keep your store clean, safe, easy to navigate, well-stocked, and a pleasure to visit.
What’s the probability of financial success with an e-commerce business? Here’s a simple test: If you plan to sell a product that is currently sold through traditional retail channels and has high consumer demand, you’ve got an excellent likelihood of profit. If you’re selling digital entertainment, educational materials, or practical advice, the closer you can target a particular niche market in which buyers exhibit a high emotional response to buying and owning what you sell, the better you’ll do.
For example, “preppers” (survivalists) buy freeze-dried food, water purifiers, weapons, protective equipment, off-grid energy sources, short-wave radios, and the list goes on. And here’s what important: They don’t necessarily view the cost of these items as an expense, as much as they look forward to how valuable they’ll be when the “big one” hits. They’re driven by the emotional need to survive, and because of it, they buy equipment, information, and attend in-person training designed to teach para-military tactics and survival.
The third category of online business is called personal branding—It’s a catch-all for online marketing activity intended to build notoriety, popularity, and credibility for a specific individual. In the personal branding business model, the product is you.
Your presence is front and center on every landing page, website, and email. The suggestion is clear: Your opinion has value—because of your experience and influence. And of those two things, always remember that influence is the more powerful motivator. Influence is created from social proof. The more you’re liked—the more followers you have—the more likely others will also want to follow and pay attention to what you have to say. In short, it’s a popularity contest, and the more admired you become, the more influential you can be.
The format and theme of personal branding comes in many variations, but the most popular is to be acknowledged as an expert in a specific field or being recognized as a philosophical or psychological guru. This includes people like writers, pop-psychologists, fashion and cosmetic influencers, career coaches, health and fitness instructors, painters, photographers, and just about any other occupation in which a specific individual is sought out for their opinion, advice, and guidance –and coincidently, the products that they sell, endorse, or recommend.
In this model, your website, video, podcast, or blogging articles are marketing campaigns—content that’s specifically designed to inform the market about your expertise and skill. You may show others how to solve a problem, improve a situation, or make a desirable change—usually done by demonstrating the effectiveness of the product you’re selling or endorsing, or by providing basic information about a subject, then offering a more extensive and detailed level of help delivered in the form of a book, a video, or a downloadable text file.
The key to building a large following of loyal and devoted fans is to create a sense of what I call, “the everyday celebrity.” That means being perceived as trustworthy, sincere, and wanting to help others. All three elements are essential in building a large platform.
The goal is to have your audience relate to you as someone “just like them.” Yes, they’ll praise you and shower you with compliments, and some will even write gushing testimonials to confirm what a difference you’ve made in their lives. And yet, even with all the accolades, you must remain humble, expressing how grateful you are to be able to help others with their concerns and problems.
I can’t stress this enough. Because the line between self-assurance and arrogance is very thin. And if you ever cross it by suggesting you’re better than your audience, or that you’ve achieved such a lofty status that you no longer relate to their wants and needs, you’ll find yourself being ridiculed and demonized—in effect, you’ll have committed influencer suicide.
Let’s wrap this up with a few final thoughts . . .
Regardless of whether you open a brick-and-mortar shop or go exclusively online, business success is still about the work. It’s about putting in the effort, and dealing with demanding and often unreasonable customers, and then getting up the next morning, and doing it all over again. Granted, an online business may reduce or even eliminate the actual face-to-face time you spend with your customer base, but the internet is not magic. It’s a tool. And like any tool that’s designed to increase productivity, the internet can help make your business successful. Just make sure the product or service you offer for sale has an easy to recognize value that is separate and apart from the method used to market it.
And while you’re in the process of analyzing what kind of business you want to start, always consider the picks and shovels behind any business niche you’re considering. In the California gold rush, those who consistently made the most money were not miners – they were the shop keepers and equipment suppliers—the ones selling picks and shovels, wagons and horses, and disposable items like clothing and food.
So here’s the question you want to ask yourself: Could you make more money, grow your business faster, and have less competition, if you were somewhere in the supply chain, as opposed to selling directly to the consumer? Instead of selling a program on how to start a podcast, how about offering hosting or transcription services? Or what about a service that pairs podcasts with available guests?
And finally, don’t be hesitant to consider a more conventional business within an industry that’s been historically successful. For example, it’s not unusual for a McDonald’s franchise owner to become a millionaire. I know there’s nothing sexy about selling hamburgers, but if financial independence and security is high on your list, you want to think rationally, and to get realistic about what’s possible, and that also means dumping the fantasies about overnight wealth that’s supposedly available to anyone with a computer and an internet connection.
Being successful at what you do always comes down to providing real value to customers. I don’t care whether you’re selling baseball cards or Cadillacs, those who decide to do business with you must feel like they’re being treated honestly, they’ve received more value than they paid for, and if given the opportunity to make the choice all over again, they would do the same thing – which is another way of saying they will refer you with a positive recommendation.
That’s the way you build a following, a market, and a business.
Hey, that’s it for this episode. As usual, if you have a question or comment, you can leave me a voice message on the website, www.successpoint360.com – just click on the voicemail link in the main header. You can also shoot me an email at roger@rogerreid.com.
Thanks for listening, and I’ll see you next time.
© 2021, Roger A. Reid
For more information about the author, his work, or to subscribe to this podcast, visit www.SuccessPoint360.com
ADDITIONAL NOTES:
Two companies mentioned as sources for products:
Aliexpress.com
DHGate.com
Typical MLM Business Income
- As far as actual income, a 2018 poll conducted with over a thousand MLM sellers, reported sixty percent earned an average of less than $100 in sales over a five-year period, and twenty percent never made a single sale. (From an article by Michelle Singletary in the Washington Post – “Why multilevel marketing won’t’ make you rich, October 2918.)
- Nearly half (47%) of MLM participants reported that they lost money. One in four participants reported that they broke even (made no money). One in four (25%) reported making a profit. (From AARP: Study of MLM Marketing -2018)
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