There are all kinds of side hustles and ways to make money outside of a job.
Each opportunity comes with pros and cons, and finding the right opportunity for yourself requires you to see how those pros and cons align with your own situation and your goals for the side hustle.
Now, some side hustles are great for making money quickly.
You could work as a delivery driver or a dog walker and start earning extra cash this week. If you need to make an extra $1,000 per month and you need to start earning quickly, this is probably the type of side hustle that you’ll want.
In contrast, other opportunities may allow you to make a smaller amount of money passively.
You’re not going to replace a full-time income, but it’s easy money. There are several passive income apps that would fall into this category.
Some side hustles provide a great deal of flexibility and allow you to work whenever and wherever you want, as much or as little as you want. That’s the beautiful part about side hustling.
But if you’re looking for long-term potential or high income potential, building an asset like a business is most likely your best option.
Online businesses, in particular, can be an ideal sort of appreciating asset because of low startup costs, the ability to work from anywhere, and the possibility of selling your business to someone anywhere in the world.
When your side hustle involves building a business, you’re not 100% focused on making money right now. Instead, you’re also focused on growing something for the future and building an asset.
Down the road, your business could become an income-producing asset that earns significant money with little effort on your part, and you could also sell the business for a lump sum when you’re ready to cash out.
If you need to make money this week, becoming a delivery driver for DoorDash or Postmates or turning to various gig job apps may be a great option, but you’re not going to be building an asset that you can monetize or sell down the line.
If you’re in a position where you can focus on long-term potential or if you’re looking for something that might allow you to generate a full-time income at some point in the future, you might want to put your efforts into building an income producing asset like an online business.
Building an Asset
Building an online business takes time. A lot of online businesses like blogs, e-commerce websites, and YouTube channels aren’t likely to make much money right away.
You may need to put 6-12 months (or longer) of work into the business before you start to make money. You’re not making much money for your effort at first, but you’re doing it with the hope of a future payout.
After a while, however, your business gains some momentum.
Traffic increases, you don’t need to spend as much time trying to get visitors, new monetization opportunities arise, and income increases quickly. At that point, your hard work has paid off.
As an online business owner, you also have two options that aren’t always easily available with some other types of side hustles:
1. Outsource the work to other people and allow your business to run somewhat passively. You’ll probably still need to be involved, but you can hire others to do a lot of the daily work and turn your business into an asset that makes money mostly on autopilot.
2. Sell your business when you’re ready to cash out and move on to something else. There are plenty of people and companies looking to buy online businesses and you may be able to get a few years’ worth of profit if you’re willing to sell.
Why Sell an Online Business?
I started my first online business (a blog) in 2007 and I’ve sold several websites and online businesses over the years. One of the questions that I get asked a lot is, “why would you sell a profitable online business?”
Sure, getting 3x annual profits to sell a business is a nice lump sum, but wouldn’t it be better to hold on to the business and continue to make money for years to come?
To answer that question, there are several reasons why you might want to sell a profitable online business.
1. Time Limitations
While it’s true that you can outsource a lot of the work involved with running an online business, you’re still going to need to be involved to some extent unless you have someone very competent that you completely trust to run the business.
In other words, even if you’re outsourcing the majority of the work, the business is likely to require some of your time and attention.
We all have a limited amount of time available, and focus also becomes an issue.
If you’re trying to do several things (like running multiple businesses or working a full-time job with a few websites on the side) sometimes it’s more effective to sell and have one less thing to deal with.
For me, time has been the biggest contributing factor in deciding when to sell online businesses.
Just because a business is making money doesn’t necessarily mean it’s the best use of your time. If you sell, maybe you’ll be able to use that time for a different business that will be even more profitable.
2. Lack of Interest
When you started your website or online business you, were probably really interested in the niche or industry.
But, maybe of the course of a few years, you’re no longer interested in the topic or you no longer enjoy running the business.
It’s perfectly normal that our interests change over time. I prefer to work on things that I enjoy, so if my interests change, I may look to sell.
3. Sell High
Most businesses have a limited life cycle, and this is especially true with online businesses.
If your business is doing well and it has a lot of value today, there’s no guarantee the value will remain or that it will increase. You could see the value of the business drop significantly.
If you’ve been around the online marketing world for a while, you may be familiar with Digg.com.
Digg was an incredibly popular social media site more than a decade ago. In 2008, Digg was involved in talks with Google about an acquisition for a reported $200 million, but the deal never happened. Digg lost popularity and was sold in 2012 for $500,000.
That sort of thing also happens on a smaller scale with websites that aren’t in the spotlight. You may decide that you want to sell now rather than waiting to see what happens in the future.
Knowing when to sell is not an easy decision and there are risks either way.
Sell too soon and you risk missing out on higher income potential. Sell too late and you risk losing value and selling for less. You’ll need to consider the current value of your business and decide which risk outweighs the other.
4. Maxed Potential
If you feel like you’ve done everything you can and taken the site as far as you’re capable, it may be time to sell.
In this situation, the income from the site and the value of the business is not likely to increase very much in the future, and there is a greater chance that it could decrease.
Trends can be very powerful when you go to sell. Ideally, you want to be selling a business that is trending up.
Trying to sell a business that is trending down will be more difficult and it may impact the valuation of your business and what buyers are willing to pay.
Spending time to grow an online business can be a great way to build an appreciating asset. However, there is a cap for how much an asset can appreciate, and the idea here is to sell before you hit your cap and decline.
Types of Online Business and the Impact on Selling
Not every online business is going to be treated the same when it comes to the process of buying or selling.
Some types of businesses appeal more to buyers, and obviously, this can impact the price you get for the business as well as the amount of time that it takes to find a buyer.
Let’s take a quick look at some common types of online businesses and see how good or bad they tend to be in terms of trying to sell.
Niche Websites (good for selling)
A niche website is simply a site that is very tightly focused on a specific topic. For example, you could have a niche website about camping, running, wedding photography, or any other specific topic.
Most niche websites are monetized with affiliate programs and/or display ads, but there are other possibilities as well.
Here’s a perfect example of a niche website: this particular Amazon Affiliate website focuses on kitchen sinks (talk about niche!)
This is a popular type of online business because you can start a site on just about any topic of your choice. There are a lot of hobbies that make money, and you may be able to run a profitable website based on a topic that you enjoy.
Niche websites tend to be ideal for selling because a buyer can step right in and continue running the site with no problem.
The writing can be outsourced to freelancers so the buyer doesn’t need to know very much about the topic of the site.
Another factor that’s also important for buyers is that niche websites tend to be low maintenance and are somewhat passive.
Blogs & Authority Websites (Good For Selling)
A blog is very similar to a niche website, but sometimes blogs publish content that’s not quite as hyper-focused as compared to a niche site.
Blogs also tend to build more of a connection with readers. Niche websites will generally attract the vast majority of their traffic from Google searches, but blogs tend to build more of a loyal following that results in repeat visitors.
The terms “blog” and “authority website” can all be used basically interchangeably (unless you’re talking about a personal blog).
These types of sites are also very good for selling. Most of the work involved with running a blog, including the writing, can be outsourced, which makes it easier for buyers and investors.
Blogs can also be very appealing because they can have some influence that opens up a lot of possibilities for making money in the future.
E-commerce (Good For Selling)
An e-commerce business is also a good option if you’re looking for a type of business that you could sell at some point in the future.
However, selling a business that involves physical inventory is more complex than selling a business that is 100% digital.
Regardless, e-commerce stores sell all the time. You can take a quick look on websites like Flippa to find plenty of examples:
In some cases, there will be an agreement for the buyer to purchase the remaining inventory as a separate transaction. This is done to keep the transaction and the sustainability of the business in the best interest of both parties.
For example, if the price agreed upon for the business includes inventory, the seller may stop ordering new inventory since they’re not going to get a return on it.
If the process of completing the sale takes a couple of months and the buyer takes over, the inventory may be depleted because the seller didn’t continue to run the business as they would have otherwise.
Amazon FBA (Good For Selling)
Throughout the past few years, there has been a big increase in the demand for e-commerce businesses that sell through Amazon’s FBA program.
These businesses can be ideal for buyers because the majority of the work is outsourced and they can be scaled up very efficiently.
However, selling on Amazon also comes with some risks. Amazon could shut down a seller account at any time, or make other changes like increasing fees.
A business may be worth more if it sells through its own website or other e-commerce sites rather than relying exclusively on Amazon.
SaaS (Great For Selling)
Software as a service (SaaS) businesses are ideal for selling because buyers love the recurring monthly or annual revenue that is generated through the subscription-based model. It provides added stability and predictability, and that can increase the value of a business.
Personalized Blog (Hard To Sell)
If your blog or website is highly personal to you, it could negatively impact your ability to sell. Buyers may be concerned about what will happen to the business when you exit.
This doesn’t mean creating a personal blog isn’t an effective way to build an asset that makes money. Just know that it might be tough to sell down the line.
If your blog or website is currently personalized and you have some interest in selling later on, you can start to take steps to slowly decrease the personal aspects of the site.
That could involve hiring some freelance writers to get a greater variety in contributors to the site, or simply changing the branding of the site to be less about you personally.
Podcast (Hard To Sell)
Selling a podcast can be a little bit different than selling another type of online business, assuming you (the owner) are also the host of the podcast.
The success of a podcast is heavily influenced by the host, so buyers are likely to be hesitant to buy if you’re looking to completely exit the business.
But that doesn’t mean that you don’t have any options if you want to sell.
The first option would be to come to an agreement with the buyer that involves you staying on as an employee or freelancer to host the show. You may not have all of the other responsibilities, but you would still be the face (voice) of the podcast.
Another option would be to bring on the buyer as a co-host and plan a slower exit.
For example, if you currently host the podcast solo, you could bring in the buyer or someone that the buyer has hired as a co-host, with an agreement that you will continue to co-host the show for a set period of time (like 1 year).
That would allow the show to make a slower transition that wouldn’t have an abrupt impact.
Is Building An Asset Through Online Business Right for You?
There are plenty of reasons to start an online business and work towards building an appreciating asset, but that doesn’t necessarily mean that it’s the right approach for you.
You’ll have to consider your own personal situation and the goals for your side hustle. But if you do have an interest in long-term profitability or the possibility of selling in the future, an online business could be a great approach.
Best of luck in your side hustle journey!
This article was originally published at ThisOnlineWorld.com.