What do you think it takes to generate wealth? Sure you could become a world-class athlete but there’s a lot of sweating involved with that.
That’s why I gave up my dream of becoming a table tennis ace and instead asked my family if I had any rich uncles.
Since I failed to inherit a mansion, I did what I was taught – seek out stable salaried positions, save as much as possible, and invest a modest amount for the future.
Traditional investments such as index funds, real estate trusts, and high-interest savings accounts are where we’re taught to look.
That plan seems sensible, but it’s a terrible earning model for those of us who want to build wealth that we can enjoy before we get old. With over 4 billion active users worldwide, the internet provides an avenue for business that everyone should tap into. Online businesses are the best cash flow investments.
And they’re way sexier than ping pong, even though I had a very manly sweatband with skulls on it.
What is Cash Flow Investing?
Simply put, cash flow investing involves purchasing an asset with the goal of earning regular returns (whether that’s on a monthly, quarterly, semi-annual, or annual basis).
If you’re familiar with cash flow investing, you probably know about the most widely recognized strategies like buying and renting out properties as one form of real estate investing. Additionally, investing in the stock market is a trusted and popular method for wealth generation.
While those tried and true methods are still worthwhile today, there can be major barriers and risks that are not of concern with an online business.
Although the internet has drastically increased the financial opportunities available to us, most of the information you’ll find on cash flow investing focuses on traditional earning models that tend to pay off only after several years. Making money online is widely ignored as an option for building wealth, but you don’t have to miss out on the opportunity!
Why Invest in an Online Business?
Online businesses are not risk-free (every investment carries some degree of risk), but they offer several benefits that make them both profitable and relatively easy to start. Here’s why you should start investing in at least one online business today:
Low Start-Up Costs
And even lower start-up costs if you buy an existing online business.
When launching a brick-and-mortar business or investing in a traditional cash flow investment, a need for start-up capital can be a major barrier. With the low overhead costs of an online business, you can expect to enjoy higher profit margins and multiply your income faster. Several online business models require little to no start-up costs. Many of the best web hosting services are under $10 per month.
You can also buy a website that’s already profitable! You might not even need a rich uncle or ping pong endorsements to afford it.
Many Opportunities to Generate Passive Income
The best cash flow investments will allow you to generate income without much continuous effort on your part. Online business provides numerous opportunities to create passive income sources so that you can spend less time working for your money and more time living life exactly how you want to.
Affiliate marketing, selling a digital product, and building an app are just a few great passive income options to consider. Remember, although you’ll be able to enjoy easy cash flow once you’ve set up these ventures, an initial time and money commitment is required – unless you’re able to outsource tasks.
Excellent Scalability
Unless you have access to an extremely large budget, growing a traditional brick-and-mortar business usually takes years. Operating from a single location can be a hindrance to reaching a new, larger clientele. This means that to scale your business, your best bet is to launch a whole new location – expensive, risky, and lots of work – even if it is a fun business like a playground for puppies who fetch ping pong balls.
To scale your online business, you may just need to rethink your marketing strategy since you already have access to a huge market no matter where you’re based.
With a smart SEO strategy you can rank your website at the top of search engines like Google, reaching many thousands of people interested in your topic.
The Value of Online Businesses Is Increasing
If you are planning to buy and sell online businesses, you could enjoy many benefits. Traditional businesses are finding it tougher and tougher with behemoths like Amazon dominating the market. For this reason, they’re harder to build and eventually sell. The opposite is true of online businesses as their value is still increasing over time.
You can realize a very high rate of return on your website. Remember, you don’t sell the site for what it grosses in one year. You sell it for multiples of that number when the buyer sees an opportunity to unlock more value from your asset.
For example, Ecommerce alone has seen a tremendous increase in popularity recently. More than ever consumers are choosing to buy online.
According to the United Nations Conference On Trade And Development, global Ecommerce sales jumped to 26.7 trillion dollars amidst the global pandemic and there’s no sign of it slowing down even as pandemic-related restrictions end. The trend of the convenient online shopping experience is gaining momentum. The growth of the online marketplace indicates future appreciation in value for online businesses you start or buy.
This projected growth in online business makes it the best cash flow investment for anyone seeking a relatively low-risk venture with great returns.
What are Your Options?
Now that you know that online businesses make the best cash flow investments, you’re probably wondering what sort of ventures to try? These are just a few to consider:
Ecommerce
As we’ve discussed, Ecommerce is growing in popularity as the online market grows. Ecommerce is not ideal if you are seeking to develop a passive or hands-off income stream; however, there are lots of options out there to make the start-up process easier. For example, instead of shipping your goods to customers, you can use drop shipping where your supplier manufactures and ships the product, relieving you of any shipping duties.
Advertising
If you’re a social media whiz or have a huge network, advertising might be the perfect online business model. Using a blog or social media platform, you can carve a niche in an industry of your choice and display ads for businesses at a fee.
This business model is relatively low-maintenance once you manage to establish a consistent viewership. This can take some time, but many professional bloggers and content creators who offer advertising services can make up to six figures.
I tried to be a table tennis influencer but the feedback was generally “You stink. We don’t like your stupid sweatband. Try buying an established online business for cash flow instead!”
Affiliate Marketing
Similar to advertising, making money with affiliate marketing requires you to develop a significant viewership within an industry niche. Many companies offer affiliate programs that allow you to earn commission from any sales that you made by displaying a link on your website, in your video, on your podcast, or on whatever platform you choose.
In my experience working with The RideShare Guy, most of the revenue is generated from affiliate marketing where the site provides excellent information for people researching gig driving jobs. The site is paid by affiliates like Uber and DoorDash when folks sign-up to earn with them.
SaaS
SaaS stands for Software as a Service. It refers to any software solution that’s designed to make your life easier. You probably use several of these services in your everyday life. PayPal, Grammarly, and DoorDash are just a few examples.
According to Wharton Magazine, along with Ecommerce, SaaS businesses are valued highest because of how many customers and clients they serve. Though a lot of technical experience is required to start a SaaS business, you can easily partner up with a tech whiz to bring your vision to life.
Apps fall under the SaaS category. When launching an app, your chief concern should be bringing as much value to your users as possible; but at times it can be difficult to measure this definitively. Fortunately, there are helpful services available to determine the value of your app and improve sellability and in turn, profits.
It might be time to change the way you plan to build your wealth. If you haven’t already, consider ways you can earn money with an online business. With their low barriers to entry, simplicity, and value, online businesses make some of the best cash flow investments. They’ve helped countless people take charge of their lives and enjoy the benefits of financial freedom.
Wrap Up
Online Businesses are some of the best cash flow investments you can make. The main reasons why you should start an online business include:
- Low start-up costs
- Opportunity for passive income streams
- Excellent scalability
- Ever-increasing value
Below are some great online business ventures to explore:
- Ecommerce
- Advertising
- Affiliate marketing
- Software as a Service (SaaS)
The best cash flow investments allow you to generate income relatively quickly compared to traditional investments. This way you can start building wealth you can enjoy long before retirement. Buying an online businesses can make this possible for you.
And if you want to find out the value of your online business right now, you can get a free valuation here.
