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WEB/DIGITAL What I love about online businesses

lucas

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Oct 7, 2007
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Usually you can only get truly, TRULY passive income in the paper sector -- dividends or capital gains on negotiable instruments. Which is all well and good. But the richest people in the world got there by building businesses. Even Buffett built a business around buying other insurance businesses.

But there's always the hassle of running the business... maintaining the physical location and staff of employees. Yes, if you build your business right you can have someone else run the whole thing. But you have to have a lot of trust in your CEO, and if I was in that position I would still be checking up on things pretty often.

But online business allows you to have the best of both worlds. The business aspect provides you income that grows proportionally to the amount of value you can create times the amount of leverage you can utilize, instead of just "interest". But the passive part of it acts more like the paper market, in that you can in many cases rely totally on the system itself and not have any employees at all! A business where you can "set it and forget it" -- now THAT is true passive income.

And it's sweeter than honey. =)
 

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JScott

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What types of online business are you talking about? In my experience, as an online business grows, it begins to approximate a B&M business in terms of how many people and how much money it needs.

Certainly, you can run a small Internet business with virtually no work and all passive income (less than $1M per year), but if you want to make serious money, you either need to devote serious time yourself and/or build a serious business.

By the way, I'm not saying you can't make a lot of money on the web without building a business, but that generally occurs when you have a specific skill that requires you to be a major component of the business (thus not passive income). An example of this would be someone I know who is making over $1M per MONTH in affiliate marketing...he could never outsource this work or hire a staff to do it for him, as he's the brains behind the operation. He's not making passive income, and in his business he never will (though I'm guessing he really doesn't care :)).
 
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lucas

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Oct 7, 2007
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I guess the point I'm trying to make is that when your business is totally online, you can have computers (whether the server or your client's browser) do virtually all (if not all) of the work that needs to be done. Yeah, this is kind of a gray area as some types of online businesses (ecommerce with physical products for example) still require human action for things like shipping. But the possibility is there to build a 100% passive income business that requires no human interaction whatsoever.

With a traditional B&M business, you still have to have SOMEBODY show up in the morning with the keys to open the doors, etc.

But on the internet, it is POSSIBLE to have a business that makes you very wealthy without having a single employee... even yourself.
 

Jorge

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Oct 5, 2007
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Well...the guy behind plentyoffish.com runs the entire site alone and his girlfriend handles the customer support.

Last time I checked he was making about 10k a day :p
 

JScott

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Well...the guy behind plentyoffish.com runs the entire site alone and his girlfriend handles the customer support.

Last time I checked he was making about 10k a day :p
But, if he and his girlfriend are running the site, it's not passive income. And that was my point. If she is the only person doing customer support, it would be difficult for her to take a week vacation without pissing off some customers...that's not an ideal situation for her (in my opinion).

Also, I wouldn't call $10,000/day a big business. There are plenty of B&M type businesses that can make $10,000/day (~$3.5M/year) with just a handful of employees (perhaps not just two, but not too many more), but to have a large business (on the order of hundreds of millions or billions in revenue), an online business will start to approximate a B&M business in terms of employees and overhead.

As an example, eBay runs website that maintains no inventory, and they have over 10,000 employees to keep the business running (of which about 60% are required for day-to-day operations).

If you're happy starting a small business, and working on it yourself, online is that way to do that with the least overhead and startup costs. But, it won't scale that way, and it probably won't be very passive.
 

Jorge

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Oct 5, 2007
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Oh, sorry, I didnt got your point. If its about passive income, sure, its not passive at all because he must work all day at it.

I cant think an example of a e-business with big passive income, I think the main benefit from an online business is the relation between investment and return. Specially if you can develop and then sell (like youtube guys or a lot others)

Anyways, at least in my country theres almost no chances of making a business that profits 10k a day. Hell with 10k a month I would be happy :p
 

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