With the unemployment rate at 9.1 percent as of August 2011, Americans are scrambling to find new opportunities to make a living. Not surprisingly, the number of people starting their own businesses is at a 14-year high. A large number of these businesses fall in the category of home-based businesses. In fact, it is predicted that there will be almost two million new home-based businesses added by the year 2015, making this an extremely important segment for economic recovery in the United States.
However, the term home-based business is a very broad term. A home-based business is a business whose primary office is in the owner’s home. The business can be any size or any type as long as the office itself is located in the home. A lot of home-based businesses consist of businesses that are categorized as consulting practices, multi-level marketing businesses, or virtual assistants.
One option for a home-based business that many people should consider is an e-commerce business. These types of businesses can be set up so they are relatively easy to run, and they represent a potential source of passive income.
In the case of businesses, such as consulting practices or virtual assistants, the business owner is compensated based on the services they provide their customers. As a result, they are limited in their income potential by the number of clients they can close, and the number of hours they can actually deliver a service. Income from these types of business is active income.
With the right supplier, technology and marketing strategy, an e-commerce business can be set up in such a way where the business can make money whether or not the owner is awake. The right supplier can be set up so that they receive orders from a e-commerce site and ship directly to the customer, without the website owner ever touching the product. This type of supplier is called a drop shipper.
The right technology can automate the payment and order fulfillment process. Finally, marketing for an e-commerce site can be almost exclusively done through a combination of search engine optimization, search engine marketing (eg. Google Adwords), pay-per-click (eg. Facebook, LinkedIn), and affiliate marketing (eg. Clickbank). All of these marketing channels require very little maintenance once they are optimized. As a result, they can obtain new customers for the website 24 hours a day, 365 days a year.
Keys to success
Although e-commerce represents an attractive business opportunity, e-commerce businesses still need to accomplish what every good business does: fill a need for a particular segment of the population. Individuals that want to start their own e-commerce site need to first identify a product or service to sell where there is a significant demand, and a lack of suppliers or the market is unsatisfied with the current suppliers. This may sound like a daunting task, but they’re are a number of tools to make this research easier. Signing up for a Google Adwords account gives potential e-commerce site owners a keyword tool to see monthly search volumes for any string of search terms.
However, the terms with the highest search volumes do not always represent the best business opportunities. In fact, search terms with the highest search volumes often attract larger businesses to a market that a typical small business owner does not want to compete with. It will be extremely difficult for a website to reach page one for these sites, and paid advertising will be very expensive because of the competition.
The key is to find niche products and services where there is sizeable search volume, but very few sites are serving this demand. A great way to do research on competitive sites is to use a tool like PR Checker to check a page’s Google Page Rank. A lower page rank represents a site that has little credibility according to Google. Search terms that have a lot of sites that have a page rank of three or less, represent an uncompetitive market. Search terms with a lot of sites with page ranks of four and above represent competive markets and should probably be avoided, especially for small business owner.
E-commerce represents a home-based business opportunity that many people should consider. They can be set up with relatively little start up capital, and can be set up to generate a tremendous amount of passive income. However, prospective e-commerce site owners must do research to find the right e-commerce opportunity. The key is finding products or services with corresponding search terms with a high enough volume of monthly searches, but also a lack viable competition to make it an attractive business opportunity.
Once a prospective site owner identifies a product or service that he or she deems as a viable business opportunity, they must then identify a supplier and company to provide the back end for their e-commerce site. Finding the right product or service to sell through an e-commerce site may mean the opportunity for the owner to achieve financial independence.