Starting an Online Business: Business Model and Idea Generation

At the beginning of this class, Web Business 1, I thought that creating an online business would consist of making or acquiring something to sell, then creating a website to sell it.  The end.  In just the first week and a half my vision has expanded, and I have come to realize that the world of online commerce is much more vast than online versions of brick and mortar stores. Who knew there was so much out there?

More than just virtual brick and mortar

Sure, one can use a merchant or manufacture model for their online business, but that is just one of many options.  For instance, an affiliate model seems to “sell” items on the web. In reality, when the customer clicks to purchase an item, they “click through” to the real online merchant.  The affiliate is then paid a percentage of the cost of the items sold.

Even further from the traditional “store” form of revenue generation is the subscription model.  In this scenario, subscribers pay a periodic fee to be able to access content on the website.  Another unique model is the infomediary model, where the product being sold is actually information about the users visiting the website.  In the advertising model, website owners may sell ad space that users are exposed to when they visit to access other information.

Even more exciting, new business models are being created all the time as multiple models are merged together in unique ways, or new ways of making money are discovered.  Whatever model a person uses, it is clear that there are many different types of businesses that can be created on the Internet.

How to choose?

This may lead to a problem.  How to decide what business model or product idea to use?  It may be difficult to come up with an idea, or the problem may be narrowing down many ideas into just one.  There are many different approaches to coming up with business ideas.

One useful idea is to look at the world around you.  What problems do you see that you could solve?  Is there a service that is missing that you could fulfill?  Think of what the user wants, and how you can provide it to them.  If you can find a business space that needs filling, you are more likely to be successful than if you choose a product that no one is interested in, or if you jump into a market that is oversaturated already.

Another good idea is to look at your own strengths.  What do you have knowledge of, and what are you passionate about?  What skill sets do you have? Could you turn them into a business?  Creating a business that utilizes your interests and skills will increase your likelihood of success.

Predicting success

While it isn’t always possible to predict success, it is important to carefully weigh several factors before jumping in.

  • Will your business idea be in demand?
  • Is the market already oversaturated?
  • How much time and money will you need to invest?
  • What problems might you run into as you begin your business?

In future posts, I will talk more about these questions, but for today I will touch on demand and competition.

Demand and Competition

The level of demand and competition will likely have a direct effect on the success of your business. How can you know whether a product is in demand or not?  How can you know if the competition is fierce or not?  One tool you can use is Google Adwords.  Using Adwords, you can see what words people are searching for on the web, as well as what words other companies are using to advertise with. This can give you an idea of how difficult it will be to get your business noticed, and whether anyone will be looking anyway.


Here are some great articles where you can find out more.


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