Starting a business is one of the best ways to achieve financial freedom. These days, the internet has removed one of the biggest barriers to starting and running a successful enterprise. For example, it is possible to start and run a major global organization without having a physical location.
Online businesses have been growing for a long time but the trend intensified during the Covid-19 pandemic as most people stayed, worked, and studied from home. At the time, most people used to shop online on platforms like Amazon, Etsy, and eBay.
There are many types of online businesses that you can start and reach a global audience. You can start an e-commerce company where you sell various items like clothes or art work. One way of doing this is to use a platform like Shopify or Wix to create a store.
Dropshipping is another way of making money online. This is where you sell things that you don’t have an inventory of. You will only fulfill the item when a customer makes a purchase.
There are other types of digital businesses you can run, including a book store, online courses, a piece of software, and a cybersecurity tool. Or you can start a career in trading, trying to make profits in the financial markets.
This article will explore the concept of starting a day trading business.
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Benefits of an online business
There are several benefits of starting an online business compared to a brick and mortar one. Some of these advantages are:
- Easy to start – It is easy to start an online business compared to a physical one. In most cases, all you need is a website and you are ready to go. With physical companies, you need so many items like a store and permits.
- Wide audience – A digital business has a wide audience globally. In this case, you can reach millions of people from around the world. It is difficult to do this with a physical store.
- Scalable – A digital business is more scalable than a physical one. In this, you can offer hundreds or even thousands of services in a single platform and reach millions of customers.
- Marketing is easy – Marketing an online company is easier than a brick and mortar operation.
There are other benefits of starting a digital business. For example, it is easy to automate these companies, they are highly flexible, and they are more environmentally friendly.
Models of digital businesses
There are many types of digital businesses you can start in the market. These companies come with different models. First, there is the e-commerce model, where you start an online platform to sell real products and deliver them. The challenge of this model is that you need to have a good logistics approach.
Second, you can use a freemium model, where you offer most of your products for free and then provide more advanced ones for a fee. Many software companies like Evernote, Truecaller, TradingView, and Dropbox are freemium platforms.
Third, you can create an advert supported model, where you rely on companies to advertise on your website. Some companies that rely on this model are news platforms like Politico and Coindesk.
Further, you can also use a subscription model where you charge your customers a monthly, quarterly, or annual fee. This model is used by companies like Wall Street Journal, New York Times (NYT), and Bloomberg.
Best digital businesses you can start
With this in mind, here are some of the best digital businesses you can start and make a living.
Day trading/prop trading
Day trading is one of the best digital businesses that you can start. It involves buying and selling financial assets like stocks, crypto, forex, commodities, and bonds.
As a day trader, your work is to analyze whether an asset will go up or down. If you expect it to rise, you should place a buy trade and a sell trade if you expect it to go down.
There are two main ways of becoming a day trader. First, you can become a retail trader where you use a broker like Robinhood, Schwab, and Fidelity to open and execute trades.
Second, you can become a proprietary trader where you trade with a company’s cash and then share the profits. Some of the top prop trading companies are Day Trade the World (DTTW) and FTMO.
Related » Retail vs Prop Trader
There are many benefits of day trading.
- You can start making money immediately,
- There is no competition. The financial market works well when there are many participants.
- You can make money at all time.
- There are many approaches to mitigate risks in the market.
- You can be a part-time trader and have a 9-5 job.
Cons of day trading
- It is a risky approach and you can lose money within a few days.
- It also needs a lot of education for one to succeed.
E-commerce/dropshipping
E-commerce is another digital business you can start. There are three main ways you can do this. First, you can start your own independent e-commerce platform where you source for inventory, list it on your site, and handle the logistics.
Second, you can leverage existing platforms like Amazon and eBay to sell your products. Finally, you can use the dropshipping approach, where you deliver things that you don’t have. In this case, you will only do the delivery when a customer makes an order.
Pros
- You can build a big corporation from scratch.
- You don’t need a lot of inventory to start.
- You don’t need to have a big working space.
Cons
- It is a highly competitive approach.
- Marketing costs can be significant.
- Returns are also common.
Digital marketing
The other digital business you can start is in the digital marketing space. This is an approach where you work to improve the visibility of other companies.
Some of the top digital marketing businesses you can start are Search Engine Optimization (SEO), email marketing, content marketing, and strategy management.
Pros
- You can work for global companies.
- You can use your marketing skills to build your brand.
- It has low starting costs.
Cons
- You need a good portfolio when starting out.
- It is a highly competitive industry to be in.
- Technological changes can impact your business.
Content creator
Content creation is one of the fastest-growing approaches to digital businesses. The industry has grown so fast as most people spend their time on the internet.
There are several approaches to content creation, including blogging, YouTube videos, video streaming, podcasting, and influencing.
Pros
- It can be a highly profitable business.
- It is also a fun approach, especially when you are doing what you love.
- It is cheap to start. In most cases, all you need is a computer and a smartphone.
Cons
- It is a highly competitive industry.
- You need a lot of experience in your niche (often true).
- You don’t control the platform. As such, you can be hit by an algorithm change.
Online courses
The other approach is to offer online courses to your customers. There are different approaches to do this. You can create a course and sell it on your website. Alternatively, you can create a course and sell it on platforms like Udemy and Coursera. You can also create a course and offer it on YouTube and also offer online coaching.
The benefit of this approach is that it is easy to start, especially when you are skilled in a certain field. Also, it is a high-margin business since your only costs will be course creation, marketing and payment processing. You can also do it at home.
On the other hand, the main con is that it is a highly competitive industry. By the time you start, there are many people who started offering these services a long time ago.
Fundamentals for running a digital business
Starting a digital business is easier than creating a physical one. However, you need to know a few fundamental issues when starting. Some of these fundamental issues to consider are:
Start from what you like and are experienced in
One of the most important fundamentals of starting any business is that you should only focus on what you know and you are experienced in. For example, it would not make sense for an inexperienced person to start a cosmetics e-commerce business.
Since this is something you will be doing for a long time, it needs to be something you love and are really interested in. Fortunately, everyone has something that they are passionate about.
After doing this, you need to look at the potential market and how best to reach it. In most cases, it is recommended to start a niche business. For example, starting a company like Amazon is the wrong idea since Amazon already exists. Instead, you can start an e-commerce company that sells a single niche product.
All this also applies to day trading and investment. You need to start the two if you have a lot of interest in finance. In most cases, you will not be a successful trader if you don’t have enough experience/passion in it.
Have a clear plan to succeed
The other fundamental step is to have a good working plan about your approach. A common mistake that many people make is to start without a good plan. Once you generate a business idea, the next stage is where you create and perfect your strategy.
We recommend that you come up at the beginning with a one-page business plan that answers a few basic questions. Some of these questions are what, why, when, and how. On what, you should describe the business you want to start.
On why, you should explain the reasons why you are starting the company. Additionally, on when, you should come up with proper timeframes on when you will achieve certain milestones.
Finally, it is important for you to answer the how question, which looks at the process of achieving your goals. In this, your goals should follow the SMART approach, which we have covered here.
Legal business structure and compliance
The next key thing you need to know about is the need to register your business and ensure compliance. In most cases, you might want to set a sole proprietorship, if you are just starting and testing the waters.
Then, as you grow, you should move to a limited liability company (LLC). An LLC is a better approach for growing companies because they move the liability from you to the company.
In this case, you, as an individual, are not liable for the company’s debts. Also, it is easy to raise capital when you have an LLC.
Also, in this stage, you should ensure that you register the company for tax purposes. It is recommended that you consult a tax professional about this.
Business taxes
As mentioned, taxes are an important part of a company. You should work to understand how taxes are charged in your country.
In the US, you should understand federal, local, and state taxes. Consulting with an expert will help you know how this taxation works. It will also help you to find legal ways to lower your tax bill. You can also use a tax calculator to estimate your tax liabilities.
Scalability and future planning
You should also consider ways that you will scale your business operations. For example, if you are running an e-commerce platform, you should find out how to scale in terms of warehouses.
Related » Are you having trouble scaling your business?
Similarly, if you are using a free cloud storage platform, you should research the best premium ones. Some of the best cloud providers are Amazon, Google and Microsoft. In the same breadth, you should learn how to adapt for future changes in your industry.
Choose the right tools and platforms
You will mostly use tools that have already been developed when running your own online business. For example, if you want to build an e-commerce platform, there is no need to build a website from scratch. Instead, you should select some of the top platforms like Wix, Shopify, and SquareSpace.
This also applies to your trading activity. There are so many different software available, each with its own quirks. It’s a matter of figuring out which one is right for your needs.
In this regard, we invite you to take a look at our proprietary trading software.
You will also need to select your payment processor. Some of the most popular companies to use are Square, Stripe, and PayPal. Other tools to consider are marketing, cloud computing, cybersecurity, and database management.
