5 STeps to Set Up a Sustainable Online Profitable Business

In this post, I go through Pat Flynn’s points on how to set up a sustainable online profitable business.

There are firstly two things that all businesses must fulfil in order to find prospective customers and to convert them into buying customers. Those two essentials are:

1. The business must provide value or a service that people want or need.
2. Secondly you must find a group of people and find out what is causing them pain.

Here are Pat’s four business models that you can adopt, which I will go into detail about.

1. Arbitrage
2. Share a message.
3. No ideas/no business/no audience
4. Static website/niche site

1. Arbitrage

Arbitrage is buying low and selling high, simple as that. It is not strictly passive because you have to actively look for buying opportunities and then ensure when you sell, it is at a profit. Although it isn’t passive, it is a good start for the budding online entrepreneur.

Here are a few examples of arbitrage.

Location arbitrage

Location arbitrage is when the prices of a certain product are higher in some locations compared with others. For instance there might be a physical shop which sells goods at a discount near to you. You could buy these goods bulk and then sell them online at amazon or eBay, to people in areas where the prices are higher. They get a discount and you can get some profits.

Time arbitrage

This is when the price of something varies over time. It is as simple as buying when the price is low and selling when it is high. Here you capitalise on the fact that some people will buy when the price is high, just because they need the products now.

Knowledge arbitrage

Here you buy products, which you are knowledgeable about from somewhere where there is no information given by the seller. For instance it could be from a seller on eBay who has listed the item with a basic description and poor quality photos.

You would then re-list that product at a higher price with a detailed description which would help prospective buyers to make a decision.

2. Share a Message

Then next of Pat’s models is where you share a message and become an authority figure on a certain topic. The objective is to build a tribe of loyal followers, who are interested in your topic. You create a brand that the tribe can relate to. Usually this is done around your own website/blog. You would then collect their email details, so you can message your tribe with more in-depth information. This builds trust in the mind of the customer. Occasionally you will also then market your products, services and consultation to your tribe.

This model takes a lot of time and is an ongoing process. You can speed the process up by piggybacking on to other blogs and platforms. Your objective here is to get them back to your site.

The key with this model is patience and consistency. The rewards will come after a time and will be longer lived.

This methodology would be that espoused in 1,000 True Fans .

3. No ideas/no business/no audience

This model intrigued me. How could you possibly start a business with no ideas, no previous business and no audience? Pat explains this model thus:

First you call a small local business up or meet up with them at a networking event. You ask them this question: What do you do that you hate in your business, or that you need help with? When they give you the answer, ask them why this is a problem. Then ask if they would be willing to pay to solve this problem. How much?

When you have the answer, you simply go away and develop an app, product or information product to help them.  Once you have developed the product, you have a proven market already.

4. Static Website or Niche Site

The saying goes that the Riches are in the Niches (which doesn’t rhyme when I say it). This is different to your authority site, where you build up a tribe of loyal followers. A static or Niche website has a finite amount of information in it, to allow the reader to reach a certain goal. And that’s it, nothing more. This site will be have a define focus on one problem.

The logic here is that it is easier to specialise than to generalise.

Here are a couple of methods to choose your niche site:

a) Pick a Market

Pick a market you are interested in or have some affinity for. Have a look on Amazon.com and look up this category of products. For example Photography. Then pick a subcategory. Then keep defining the sub categories to smaller and small categories as per your preferences. Keep dividing down until you get to a specific need, that you could be an expert in.

So a photography category might niche down to Studio lighting for photographers on a budget. Cars might go down to mini-vans for families with more than two children. Pets could go down to breeding Betta Fish.

This method starts with your interests and works down to a need.

b) Keyword Search

This method is the opposite of the niching down method. It is the use of keyword research. Here you use a keyword research tool. (There are many of these such as Google’s Keyword Research Tool). You research the search terms that people are typing into Google. You are looking for The Longer Long Tail . These are very specific terms or phrases that people will search Google for. The more specific the search term is, the more the searcher is willing to spend money on it. For instance the search term TV is so monstrously broad that it is next to useless. However your long tail search might come up with Samsung TV. Now this is better, but still very broad. So next you put Samsung TV into the Research Tool. Then it might come up with Samsung HD Smart TV. This is getting very specific. Finally you are lead to Samsung UE55K5500 55-inch 1080p Full HD Smart TV. This is so specific that it can only have been searched for by someone with their credit card in hand, ready to buy.

Now, what if you created a small niche website reviewing the Samsung UE55K5500 55-inch 1080p Full HD Smart TV, with an affiliate link to a site selling it? You would get very targeted traffic to your website. Your website would be small, very focussed and probably short lived. It could however be very profitable.