How Much Can You Make With an Online Business?
While you may be thinking that an online business is the way to go, the question you’re probably wondering is, how much can you make with an online business? Not only how much can you make, but can you do it in a way that isn’t dodgy?
The short answer is yes, yes you can.
When it comes to online businesses, it seems like they’re all the rage, but the truth is they’ve been around for a quite a while. That being said, they’ve definitely gotten more and more trendy in the past few years.
We’ve all seen the ads on Facebook touting these six and seven figure businesses and the Instagramably fabulous lives of those who run them. All of this is, of course, made possible by these people’s wildly successful online businesses.
We don’t know about you, but we call BS on most of these claims. They’re playing into the idea of scarcity (with a dash of fear added in for good measure), and if you start to dig a little deeper, they’re ultimately just trying to sell you something. It could be a product, some crazy expensive coaching or, more likely than not, an online course of some kind.
The other thing that we find irritating about these claims is that they fail to mention how much money actually ends up in their pocket. It’s one thing to run a six-figure business but it’s quite another to have a six-figure income. One does not equal the other.
Where You Should Focus
Here at Small Business Boss, we get asked all the time how much money you can make with an online business.
We like to think of ourselves as practical possibility pushers, meaning we push the boundaries of what’s possible, particularly as it relates to normal and conventional matters. This is how you carve out a life and business that you truly want, and figuring out how to make it all happen can be truly thrilling.
That being said, we are alllll about the practical. Both of us were raised with the idea that you need to work hard, and be sensible.
We’ve been behind the scenes with plenty of online businesses, and we’ve pretty much seen it all at this point. What we’ve learned is that the flat-out easiest way to get cash in your hand in the world of online business is to focus on services.
Now, just so we’re all clear, an online business is one where your presence is mainly online. You don’t have to have a traditional office or a storefront. You conduct your business via email, phone, and video call, and you may have a website.
Services don’t exactly have the glitz and glamour reputation that other online businesses do. But if you want to be successful and make some real money (for fancy things like paying your bills), services are the way to go.
How Much Can You Actually Make?
As a solo business owner, making a six-figure income is totally possible. Both of us hit that number during our first year running our own businesses. Of course, this will depend quite a bit on your industry and pricing structure, but it absolutely can be done.
There’s a lot of money to be made by doing a services business right. And when done well, you’ll be the one taking home most of that money.
Let’s talk real numbers and look at some examples. We’ll start with someone starting out and new to the world of online business, then look at someone more experienced.
If You’re Just Starting Out
Pretend you’re a VA or some kind of similar non-specialized role. Your hourly wage is probably 15 to 40 dollars an hour. Now, there are some people in the VA world commanding up to $75 an hour because they are highly experienced. But for the purpose of this example, we’re not talking about those super high-end people.
Let’s say you’re charging $25 an hour, which is highly reasonable if you’re just getting your business off the ground. You’re planning on working a traditional 40 hour work week.
One thing you need to account for is not all the hours being billable. So you can aim for 30-35 hours of billable work each week.
We’re going to calculate your payout at 32 hours a week, for 50 weeks a year because you need some time off once in a while.
32 hours x $25 = $800/week
$800/week x 50 weeks = $40,000 a year
Now, $40,000 a year is a pretty great wage, especially when you factor in all the flexibility of being your own boss and working your hours when it suits you.
But, that’s clearly not six figures, is it?
Now, earlier we mentioned that there’s a range for being a VA. So let’s look at how incredibly powerful a minor price increase can be.
Let’s say you’ve been totally rocking it for several months now and have decided it’s time to increase your hourly rate. Raising prices is totally normal and expected, so if you were to bump your hourly rate up to $30 an hour and just keep doing exactly what you’ve been doing, you’ve now got yourself a raise up to $48,000 a year.
That’s a 20% salary increase — just by raising your rates by $5 an hour. If you keep that up and raise your prices two more times over the next 18 months to get you to the $40 hourly rate, you’ll be all the way up to $64,000 annually.
All without any fancy packaging. Just you offering great services.
If You’re a Seasoned Professional
Let’s say you’re a project manager, graphic designer or some other sort of professional. Your current rate is $75 an hour.
Even though you’ll probably choose to work less billable hours, for this example we’ll keep things consistent and use 32 hours a week as the benchmark.
32 hours x $75 = $2400/week
$2400/week x 50 weeks = $120,000 a year
Let’s say you want to shave those billable hours down to 25 a week. Even at 25 hours a week and your current rate of $75 an hour, you’re still pulling in $93, 750 a year!
If over time you were to phase in a price increase up to $100 an hour, which is not at all crazy for a specialized service as a contractor, you could be making $125,000 a year working 25 hours a week.
Even if you’re not super interested in math, these numbers don’t lie. It just goes to show that you CAN make a really great salary with an online business when you focus on services.
You don’t need a giant audience, you don’t need overhead and you don’t even need a website to start. Because the thing that most of these six and seven figure online success stories don’t tell you is how much money gets spent trying to make that money and how little actually goes back into their pockets.
If you’ve looked at all of this today and thought it all sounded nice, but you’ve got bigger dreams. Guess what? So do we! But if you want to make some serious money that goes directly back in your pocket, services are the best foundation for a sustainable and lucrative online business.