5 Reasons an Online Business Beats Brick and Mortar

online businessA couple years ago a buddy of mine had a backyard birthday party for his son and a few of us were sitting at a table knocking down beers and talking about how quickly time flies by.

Inevitably, the conversation turned to work and everyone started complaining about how much they hated their job and wished they could quit.  Right there at the party we started brainstorming business ideas and thinking of ways to escape the rat race.

One guy wanted to start a hot dog stand.  Another wanted to buy a truck and ship furniture up from North Carolina to New Jersey.  Someone else suggested we all start a home inspection business together.

Lots of ideas were bouncing around that day but little action was taken on them.  In fact only two of us have made any attempts at all to give entrepreneurship a go.  I had already been dabbling in building websites so I stayed on that path but got a lot more serious about it.  Meanwhile my buddy Paul started a small IT servicing business and he’s now learning the programming needed to develop apps for the iPhone and Android.

It’s not surprising that the two people who took action did so in the online world.  There are a number of advantages to starting an online business instead of a traditional brick and mortar business.

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Low Start-Up Costs

You can register your own domain name for less than $10 a year.  Webhosting on a shared server through Bluehost costs just $6.95 a month.  So for less than $100 a year you can launch your own website and start building an online business.

Will your expenses always be only $70?  Probably not.  Depending on your business needs you might want to invest in an online newsletter service, a premium theme, and online advertising.  You can outsource writers to create new content and a graphic designer to create a cool logo for your site.

But these are all optional when you’re first starting out.  You can start out on a shoestring budget and then invest your earnings back into the business as you find your niche and grow.

Limited Overhead

When you first launch a new business you can expect cash flow to be tight for awhile. Keeping expenses to a minimum is vital if you’re going to establish a foothold to support your business.

An online business doesn’t require any rent, water bills, insurance, or other bills associated with a physical location.  In fact, many online businesses are little more than one guy with a laptop.

Lots of Options

There are many different ways to earn a living online.  You can be a blogger, a freelance writer, or a graphic designer.  You can create and sell your own digital products or you can be an affiliate and earn a commission selling other people’s stuff.  You can start an online store and sell physical products without the need for a physical storefront.

Or you can combine multiple methods into your business plan.  Why not be a blogger who makes money as an affiliate but also creates his own products and makes money on the side as a freelancer?

Grow at Your Own Pace

The low cost of starting an online business makes it the perfect option for someone who wants to build a business on the side.  The internet is open 24/7 and you can take advantage of that flexibility to build your business around your own schedule.

Most people don’t just up and quit their jobs to start a business.  Instead, they work on building the business on nights and weekends.  With hard work and a bit of luck they’re soon able to quit their day job to focus solely on their own business.

The flexibility of an online business is a clear advantage here.  You can be creating content and responding to emails at two o’clock in the morning if you want.

High Profit Potential

An online business isn’t limited to the local market.  If you sell products and services online the entire world is your market and earning potential is virtually unlimited.

Also, think about the difference between physical and digital products.  If you build a website selling handbags you have to keep a careful eye on your expenses.  You need to know exactly how much each handbag costs to manufacture and ship to the consumer so you know how much you need to charge to turn a profit.

With a digital product like an ebook or an online course, you can sell millions for the same price it cost to sell one.  That means the more digital products you sell the higher profit margins you’ll earn on each one.

What Do You Think?

I’ve just given you the reasons why I decided to start an online business instead of a brick and mortar business.  The low start-up costs and the flexibility to build at my own pace made it a no brainer for me.

But what about you?

If you’re thinking of starting your own business which would you prefer?  Online or brick and mortar?  Why?

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Mike is a freelance writer and blogger who specializes in finance and parenting topics. He is a dedicated husband and father of three who is obsessed with creating multiple streams of income and building wealth so he can achieve true financial freedom for his family. Like what you're reading? Subscribe to our free RSS feed and follow us on Twitter.

Comments

  1. says

    I have a few brick and motor business owners in my family and one commonality I’ve found is that, “reaction” is the basis of their business models. As a designer, I too react to an order in my email or fiverr que, but there is that 25% of my income that happens automatically, whereas everyday/all day they’re reacting to a buyer’s order. With a brick and motor business, the end game is to have other people work for you so you can live out your days on the beach, but with an online business you can work from a beach and have a large amount of your income happen as a result of automation.

  2. says

    Great article Mike! You are right on! The internet has made it possible for anyone with an internet connection and a few bucks to start their own business which was unheard of 20 years ago.

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