business model graph

Here are the 6 options for online businesses you can start.

  1. Software (including apps)
  2. Physical products
  3. Advertising
  4. Affiliate marketing
  5. Coaching
  6. Online courses

Better yet — here’s an illustration that’ll show you where these businesses stand in terms of startup costs (low costs beats high cost) and profit margins (the higher the better).


A few takeaways:

  • Using a simple framework lets you see instantly if a business model is attractive or unattractive (most people never do this).
  • You don’t have to quit your job and raise millions in venture capital funding — which I’ve actually done and can safely say it’s not all it’s cracked up to be.
  • Online courses and coaching look like the best businesses to start. They’re both very attractive…so how do we decide?

Before we jump into that though, I want to explain each online business model — and how I’ve approached them in the past.


Everyone wants to create the next Snapchat or Instagram — and it can be even more tempting if you’re a programmer.

I mean, we’re always hearing stories of sexy new Silicon Valley startups getting billions after their company goes public — why would you NOT start drooling?

The reality is that this simply isn’t a viable option for a lot of us, though.

For most, we can’t even code. And I think I’d rather go play in traffic than figure out the technical stuff that goes into it.

And even if you CAN code, chances are you don’t want to deal with the challenge of marketing, distributing, and constantly upgrading your app.

Software and apps require you to absolutely nail it right away. Otherwise, you spent all that time creating a product no one will buy.

Don’t believe me? The app store is a graveyard of apps no one ever downloads.

(Related: Get Over 100 Proven And Most-Powerful Magic Push-Button software Guaranteed To Ease Your Online Struggles!).

Later, I’ll describe some better options that allow you to adjust to the needs of your customers — options that’ll take less time and energy and help more people.

Physical products

You might think your idea to start selling steampunk cosplay outfits on Etsy is amazing — but the truth is, the profit margins are incredibly low.

For example, we have a notepad that our designers created internally for the IWT staff. We debated selling it to our readers — UNTIL we found out that we would have to price the notebook at around $50 just to break even.

And after we shipped it to people, our profit margins would have disappeared completely — all for a tiny notepad.

I know there’s some money to be made with physical products — but the profits are much better with online products.


We’ve all seen (and been horribly annoyed by) this business model before — typically in the form of little advertisements a la Google Adsense on the sidebars of websites.

And they DO make money…kind of.

As you get traffic to your site, some people will click on the ads and when they do, you get a few cents — or maybe even a few dollars.

BUT they don’t really make that much money.

I tried this for IWT before — but quickly realized that I needed a HUGE amount of visitors (somewhere in the neighborhood of 50 million) per month in order to make good income on ads.

That’s a lot of traffic and a good way to fall prey to churning out pointless clickbait. No thanks.

Affiliate marketing

I used to dabble a lot in affiliate marketing back in the early days of IWT. The way it works is a blogger will write a review of something like “My favorite credit cards” and at the bottom they’ll say, “You can sign up for the card here — NOTE: this is an affiliate link.”

So if you click that link and sign up, the credit card company pays the blogger an affiliate commission ranging somewhere from $50 to $75.

There are affiliate programs for anything too — books, weight loss products, what have you.

And it’s great — at first.

When I used affiliates, I only promoted products that I used myself and knew that my readers would value and enjoy.

As soon as I put in an affiliate link on my site, I became ING Direct’s number one affiliate in the world — overnight.

I was making more than $10,000 a month just by putting a link on my site!

However, I soon learned that it wasn’t a great long-term plan. My click-through rates tailed off and I ended up having to spend all this time dealing with advertisers.

At the end, it just wasn’t worth the time so I stopped.

Related: The Simple System Used by ‘LAZY INTERNET ENTREPRENEURS’ to Make 6 FIGURE INCOMES Regularly By Connecting A Pipe To The Income Stream Of An $800 BILLION COMPANY!

Coaching vs Online Courses: Which is the best for you?

Spoiler: Both business models are great — but the best one becomes clear once you weigh the benefits of each.

coaching vs online courses comparison

I love coaching. I actually believe it’s one of the best ways you can learn business skills. In fact, you’ll pick up skills you’d never learn with any MBA through coaching.

Some other benefits:

  • It’s a fast way to get started with your online business
  • You can charge premium prices for the work
  • You’ll learn your clients’ deep fears, desires, and barriers — incredibly valuable nuggets of information you can use to grow your business

Coaching also has its limitations though — you can only take on a limited number of clients, constraints of travel as well as time to meet with clients, etc. — which is why I prefer online courses.

I’ve taught thousands of people how to start new businesses, become freelancers/consultants/coaches, scale their existing business, and adopt psychology mindsets on how to live a Rich Life through my courses.

This is my favorite business model by far. Online courses are low-risk, high-reward, and they scale incredibly well. All it takes is for you to sell an information product like a video or written course.

Some other benefits of online courses:

  • You’ll be able to reach out to tens of thousands of people all over the WORLD
  • You can create something ONCE and have it generate money for years to come
  • You can scale your course LIMITLESSLY and watch your profits grow every time you do

It’s the cornerstone of IWT — we generate over 95% of our revenue through online courses.

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This is revenue we generated just a few years ago — you can BET it’s much more now.

In the end, whichever one you choose will be good. BUT I would highly recommend doing both if you can.

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