Introduction
The internet has greatly changed the nature of how business is created and grown. Today it is much easier than ever to create an online business however the ability to succeed in an online business for the long term is based on selecting the correct business model. The primary reason that many online businesses fails is not due to lack of effort but rather to selection of a business model that is not sustainable.
This article identifies many of the top online business models that have been shown to create long-term success in terms of growth potential and profitability as well as adaptability to changing conditions. Understanding these models will help you develop an online business with a long-term and stable future regardless of whether you have just started or have years of experience as an entrepreneur.
Why it is Important to Choose the Right Online Business Model?
The business model that you select for your online business will determine how you will create value for your business and how you will create revenue for your business. A successful online when it has a successful business model is one that can grow continually and can help mitigate the risks associated with operating in the current environment and enable you to adapt to the changing market conditions. You will have stable and sustainable growth and increased ability to adapt and respond to changing conditions through models that will provide you with recurring revenue, minimal operating expenses and strong relationships with your customers.
Common Characteristics Of Best Long Term Successful Online Business Models
- Scalable operations
- Predictable Revenue Streams
- Low Dependency on Physical Location
- Ability to Adapt to New Technologies and to New Trends
1. Subscription Model
For most businesses that conduct business online, the subscription-based model is a reliable model and creates consistent, recurring revenue from a user base. Users pay for access to products/services on a monthly or annual subscription basis.
Examples:
- SaaS (Software as a Service)
- Streaming Media
- Online Fitness or Learning Platforms
- Membership Sites
Long Term Benefits of Subscription Model:
- Recurring/Predictable Revenue
- Strong Customer Retention
- Easier to Plan for Financial Future
Because of stable revenue generation through a subscription model, it is considered one of the best options for developing an online business with longevity.
2. E-Commerce Model
As Consumer Preference Continues to Shift Towards Shopping Online, E-commerce is Growing. E-commerce is the process of selling both physical & digital goods/services via an online store.
Additionally, E-commerce can be split into four categories:
- Direct-to-Consumer Brands (DTC)
- Dropshipping
- Print on Demand & Dropship Printing
- Digital Product Sales
Long Term Viability:
- Ability to Reach a Global/Worldwide Customer Base
- Ability to Build a Strong and Recognizable Brand
- Diverse Options for Generating Revenue
In general, niche market E-commerce stores have a significantly better track record for success providing the brands with less competition and a higher level of customer loyalty than more significant brands competing in general markets.
3. Digital Products Provide Opportunity for Entrepreneurs
Many businesses have found success selling digital goods like eBooks, online courses, software and templates because the expenses related to producing them are very small, and distributing them can also be cheap.
Some of the things digital products provide to entrepreneurs are:
- High profit margins.
- No inventory to manage.
- Easy to scale your company.
Once digital products are created, they can be sold over and over again, for very little additional cost. For long-term business success, no other online business model can compare.
4. Affiliate Marketing Can Be An Excellent Source of Income
Affiliate marketing is when you promote another company’s products, and if someone purchases one of those products using a link to reach the company (referred to as a referral link), then you get a commission for that sale.
Examples of where affiliate marketing occurs:
- Blogs/niche websites.
- YouTube channels.
- Social media platforms.
Advantages of Affiliate Marketing:
- There are no products to create or manufacture.
- Start-up costs can be very low.
- It is easy to build and grow.
The three keys to success in affiliate marketing are:
- Building trust with your audience.
- Creating quality content to promote.
- Select products that meet customers’ needs.
5. Software as a Service (SaaS)
SaaS provides access to software hosted online, with users subscribing for the ability to use them rather than having to install or manage them themselves.
Examples:
- Management of projects
- Bookkeeping software
- Marketing automation software
Benefits:
- Recurring revenue
- Long-term customer retention
- Highly scalable
Despite higher development costs in the short term, SaaS is still one of the most successful online business models for long-term viability.
6. Online Education/Coaching
The demand for online education continues to expand. Entrepreneurs/professionals can monetize their skills through the development of courses, coaching and training.
Common categories:
- Business/entrepreneurship
- Technology/coding
- Personal growth
- Health/wellness
This model will build credibility/authority/honor while providing recurring income that will last over time.
7. Media/Content Creation
The monetization of attention in content-driven companies occurs through blogs, podcasts, YouTube channels and newsletters that garner an audience.
Sources of revenue generated through this business model include:
- Advertising revenue
- Sponsorship revenue
- Digital product sales
- Membership sales
Through consistent creation of content and developing a trusting relationship with your target audience, this model/busniness can become one of the best online business models for long-term viability.
8. Freelance and Service-Based Business Models
Online service businesses provide an array of skills such as writing, design, development, marketing or consulting.
Why They Work Long-Term:
- Low start-up cost
- High demand for remote services
- Easily scalable into agencies
A large number of freelancers become agencies or productize their services.
9. Marketplace Business Model
Marketplaces connect buyers and sellers in one location. i.e. freelance platforms, rental marketplaces, & digital asset marketplaces.
Benefits of Marketplace Business Models:
- Multiple streams of revenue
- Network effects
- Highly scaleable
Developing trust and creating quality control are crucial for future growth/profitability.
10. Community & Membership Business Models
These models are about creating a community of people with common interests, skills or purposes.
Ways to Monetize:
- Memberships
- Exclusive Content
- Events/Workshops
Communities provide engagement and have strong, lasting relationships with their customers.
Concluding Thoughts
Deciding which of the highest-quality online business models will help establish a long-term business will depend on your abilities, capabilities and goals. Sustainable online businesses are those that are built upon providing value, building trust, and responding to changes in their markets.
To create a sustainable model for your business, you should focus on models that produce repeatable revenue streams, allow for future growth and develop loyal customers. By applying the right strategy and consistently applying your efforts, an online business has potential for success and will experience long-term enhancements in the form of growth and quality.
