Top 3 Businesses to Start in 2021 for Extra Income š°
Are you looking for ways to earn extra money on the side? With the economy off to a rough start this year and layoffs happening left and right, it's important to establish multiple streams of income to protect yourself financially. In this article, I'll be sharing my top three businesses to start in 2021 that meet specific criteria for beginners: moderately low starting capital and risk, scalability, leveraging technology, and not too easy to start. These businesses have the potential to make you six figures and beyond, and can teach you valuable skills on the job that you can retain and leverage later on in life.
Table of Contents
- Freelancing: The Best Business for Total Beginners
- Selling Products: E-Commerce, Drop Shipping, and Private Label
- Selling Digital Products: The Holy Grail of E-Commerce
- Creating Content: Making Money by Writing and Creating Content
- Bonus: Other Business Ideas to Consider
- Pros and Cons of Each Business Model
- Highlights
- FAQ
Freelancing: The Best Business for Total Beginners š»
If you're a total beginner in the business space and have no money to invest whatsoever, freelancing is the best business for you. Everyone has a skill or hobby that they can charge money for. You might not think that you have any marketable skills to offer, but trust me, you do. For example, my friend Caitlyn loved reading blog posts and papers and often helped her friends with their work. To make some extra money, she decided to offer her services as a professional proofreader. In the beginning, she proofread for her friends, but eventually she posted a couple of jobs on Fiverr and Upwork, and from there she built up a reputation as a reliable proofreader and made several thousands of dollars a month on the side.
If you just sit down and think about what you're knowledgeable about, you can easily find a skill you can charge for. Today, I have friends who freelance editing podcasts, editing videos, doing graphic design, coaching, writing, and more. The more specific you can get with your skill, the better. For example, if you enjoy writing, you can specialize in freelance writing for business publications.
You're probably thinking to yourself, "Freelancing is just like a regular job where you're trading time for money," and you're correct, but only at first. After you've developed a reputation as a freelancer, you can start hiring people to help you with the work and create an agency. For example, my friend JK started out by doing freelance writing for Twitter and then later created his own Twitter agency. He would charge clients about $3,000 a month and then hire a $500 a month employee to do the work under his supervision. In my earlier example, Caitlyn eventually went on to start a proofreading agency and a digital course to make over a million dollars per year.
Overall, freelancing is free to start but it's not as easy to scale as some of the other business models I'm going to talk about. However, it's a great starting point that requires no money to start.
Selling Products: E-Commerce, Drop Shipping, and Private Label šļø
The next step up after freelancing is to actually sell a product. The idea here is that you can create a product once and then sell the exact same thing multiple times to multiple people. Selling a product is by far the best way to leverage your time because you only have to do the work once.
There are many flavors of e-commerce, such as drop shipping, selling other people's products with inventory, and private label. Drop shipping is where you have an arrangement with the supplier such that you take orders and the supplier stores and ships the inventory on your behalf. Under this arrangement, you do not have to spend any money upfront for inventory. You just collect money, pass along your customer's information to the drop shipping supplier, who ships it to the end customer. The main downside to this business model is that the margins are low, at between 10 and 30%, and at these margins, you can't really afford to advertise, and you make very little per sale as a result. Drop shipping is a very slow way to make significant profits. The upside, though, is that it requires very little capital, and it's highly scalable since you don't have to worry about buying or storing the product upfront.
On the other end of the e-commerce spectrum is selling private label products. Private label products are products that a factory makes just for you under your own brand, and they are the highest margin products that you can sell online. The main downside of private label is that it costs more money upfront to start. I would estimate that you should be willing to invest at least $3,000 to sell a private label product. Both drop shipping and private label are highly scalable, and the beauty is that a machine will take orders for you 24/7, and you can have either Amazon or a 3PL store and fulfill your orders for you.
Selling Digital Products: The Holy Grail of E-Commerce š»
Digital products include ebooks, memberships, online courses, basically any product that can be shipped over the internet. The main advantage of digital over physical is that nothing physical needs to be shipped at all. There's no inventory, and when someone places an order, a machine magically sends the information to the end customer. In many respects, selling digital products is the holy grail of e-commerce. You can never run out of stock, and the business model is infinitely scalable.
One of my friends, Aaron Chase, sells a digital meal plan service where she charges just $5 a month, but she has thousands of digital customers, which allows her to make a lot of money sending the same exact meal plans to everyone. Another one of my friends, Chase Diamond, sells a paid email newsletter. He just has to write a single email, and many people pay him for the exact same content.
The main disadvantage of selling digital products is that you must build a reputation first in order to generate any sales. For example, I sell an online course called "Create a Profitable Online Store" that teaches e-commerce to over 5,000 students. If I were to list that course online without an audience or a following, I would never be able to sell a single copy. But because I've developed a reputation and a following through this YouTube channel and my blog, which gets over 300,000 visits per month, and my podcast, people are willing to pay me to learn how to sell online. As a result, even though selling digital products sounds easy, you have to create content and slowly build up an email list or a subscriber list in order to generate any sales. This is in direct contrast to a physical product that doesn't really require any audience to generate sales. For example, people will often buy jewelry or clothing from anyone, regardless of their reputation, but no one will pay for a course or an ebook without at least knowing a little bit about the author.
Creating Content: Making Money by Writing and Creating Content š
Creating content is one of my favorite business models of all. Did you know that I make well over a million dollars by writing content over at my blog, MyWifeQuitHerJob.com? In fact, this YouTube channel that you're watching will generate me a healthy six-figure income just from advertising alone. In addition, my podcast makes me over $100,000 a year as well.
If you're willing to slog it out and create content on a regular basis, then you can make money in a variety of ways that do not involve selling your own product. For example, you can sell advertising. You're all watching this video right now. Every time you watch an ad, I get a cut of the profit, and ads alone make me over $100,000 on this channel. You can also do affiliate marketing. Affiliate marketing is where you recommend tools that you love. If someone clicks on your link and makes a purchase, you get a cut of the sale. I've recommended numerous tools that I use on this channel over the years, and some of these tools pay out over $100 per sale. Other ways to make money with content include sponsored content, membership sites, and group coaching. Once you become popular, companies will literally throw money at you to talk about them in your content.
While I consider creating content one of the best businesses to start this year, there are several drawbacks. First off, making money with content takes a long time to execute. My blog over at MyWifeQuitHerJob.com did not make any money at all until year two, but after that, it hit six figures after three years and seven figures very soon after that. This YouTube channel made no money at all for the first year, but then started making six figures per year at year three. My podcast didn't start making any money at all until year 2.5. Overall, the most important character trait to succeed in a content creation business is perseverance and patience. If you're willing to slog it out for several years, you will eventually make money.
Bonus: Other Business Ideas to Consider š”
While the businesses I've mentioned so far are my top three picks, there are many other business ideas to consider. For example, you can start a coaching business, a consulting business, a service-based business, or a rental business. The key is to find a business that leverages your unique skills and interests and has the potential to make you money.
Pros and Cons of Each Business Model š¤
Here's a quick rundown of the pros and cons of each business model:
- Freelancing: Pros - Free to start, low risk, can be highly profitable. Cons - Not as easy to scale as other business models.
- Selling Products: Pros - Highly scalable, leverages technology, can be highly profitable. Cons - Requires more upfront capital than freelancing, can be competitive.
- Selling Digital Products: Pros - Infinitely scalable, leverages technology, can be highly profitable. Cons - Requires building a reputation and an audience first.
- Creating Content: Pros - Can be highly profitable, leverages your unique skills and interests. Cons - Takes a long time to execute, requires building a reputation and an audience first.
Highlights āØ
- Freelancing is the best business for total beginners.
- Selling products is the best way to leverage your time.
- Selling digital products is the holy grail of e-commerce.
- Creating content can be highly profitable but takes time to execute.
- Other business ideas to consider include coaching, consulting, service-based, and rental businesses.
FAQ ā
Q: How much money can I make freelancing?
A: It depends on your skill and the demand for that skill. Some freelancers make a few hundred dollars a month, while others make six figures or more.
Q: How much money do I need to start an e-commerce business?
A: It depends on the business model. Drop shipping requires very little upfront capital, while private label requires more.
Q: How long does it take to make money with content?
A: It depends on how quickly you can build a reputation and an audience. It can take anywhere from a few months to a few years.
Q: What are the best tools for affiliate marketing?
A: Some of the best tools for affiliate marketing include Amazon Associates, ShareASale, and Commission Junction.
Q: How do I build an audience for my content?
A: You can build an audience by creating high-quality content on a regular basis, promoting your content on social media, and networking with other content creators in your niche.
Resources š
- MyWifeQuitHerJob.com
- BumblebeeLinens.com
- KidInCharge.com
- Rab.com
- Create a Profitable Online Store Course
In conclusion, there are many businesses you can start to earn extra income on the side. Whether you choose freelancing, selling products, selling digital products, creating content, or another business idea, the key is to find a business that leverages your unique skills and interests and has the potential to make you money. Remember, perseverance and patience are key to success in any business. Good luck!
