The most profitable small businesses are easily scaled, have low overhead, and/or charge high hourly fees. These businesses can increase profit with little additional work, such as software, which can have profit margins of more than 80%. Low-overhead businesses have fewer expenses. High hourly rate businesses, such as consulting, can charge based on expertise.
Every type of small business will need a website. A website increases a business’s credibility, which is especially helpful when charging a higher hourly rate. DreamHost is a website builder and web hosting platform that you can use to promote your profitable business. Web hosting is the server where your website and software are stored. Get started with DreamHost today.
Here are the 12 most profitable small businesses.
1. Sell Online Courses
Online courses are very scalable businesses that anyone with expertise can create. They are scalable because once created, so you can sell them an unlimited number of times with little to no additional work. This business is very accessible for the average business owner because they typically have specific expertise or experience that others want. Even if you have expertise in a niche business, only sell 500 courses a year, and charge $300 per course, you can build a business that earns an average of $150,000 annually.
For example, if you’re a woodworking enthusiast and believe there is an audience online who would like to learn how to make your wood-based creations, you can sell an online course teaching your woodworking blueprints. If you’re a fitness instructor who specializes in water aerobics and believes that there is an audience online who would like to learn your fitness program, you can sell an online course teaching others how to get fit in the pool.
The most challenging part of creating a successful course is finding an online audience to which you can sell. You can use an online course platform like Udemy to help publish your course and sell it to an existing audience. Unfortunately, Udemy prices it’s courses at $20 on average and takes 50% of all sales. It’s hard to create a full-time business on Udemy. However, it’s a great way to learn the process of creating an online course. The average course creator makes about $1,500 on Udemy.
A more lucrative option is to build your own audience online and use a platform like Teachable to host your online course. Teachable costs $29 per month for its basic plan. If you create a course on Teachable, you can charge students however much you like to purchase your course.
We recommend you don’t create a course until you have at least 1,000 emails of potential customers. Build an online audience by blogging and posting YouTube videos, Instagram posts, or LinkedIn posts. To collect email addresses from your audience, offer a freebie download, like a cheat sheet.
2. Write & Sell E-books
Similar to an online course, an e-book is a very scalable business. Typically, compared to an online course, an e-book costs less per unit but can be created more easily because video is not involved. Additionally, the e-book industry is larger than the online course industry with platforms like the Amazon Kindle.
You can create and publish many types of e-books, including fiction and nonfiction. The most profitable industries typically are the ones that solve a problem. If someone can read your e-book and solve a problem they’re having, then you can charge more for it. Additionally, you can sell an e-book on your own website and use graphics to make it more appealing. For example, if you create a recipe e-book, you can include step-by-step instructions with photos to show the process.
It’s difficult to say how much money you can make selling e-books. It’s best to develop an audience beforehand who will purchase your e-book rather than create an e-book and then find the audience. If you choose to create a Kindle e-book and sell it through Amazon, Amazon will take 70% of the sales price if it’s priced between $2.99 and $9.99. If it’s above $9.99 or below $2.99, Amazon takes 35%.
3. Develop & Sell Software
What also makes software appealing is that new customers increase expenses very little. A great example of this is the email marketing platform MailChimp. It has a software company with 20 million customers worth $600 million in annual revenue. There are only 1,000 employees, and both of the founders are billionaires. MailChimp may be a unique example, but it illustrates the scalable power of software.
If you’d like to create a software product that you believe can help solve a specific problem, start small. Create a minimal viable product (MVP), which carries out the basics of the software, sell it, and solicit feedback about your idea as quickly as possible. You don’t want to spend years creating software that won’t sell. It’s better to have a slightly faulty software product and get feedback as soon as possible so you have time to update features, rather than a perfect software that won’t sell.
4. Online Ads Management
Online ads management is considered an hourly business. It may be difficult to scale because there are only so many hours in the day to work. However, successful online ads management based business can be lucrative. The overhead is low because you can operate it out of your home. Your costs include computer hardware, internet, and ads management software, which can be less than $400 per month in total.
It’s also in a lucrative industry. If you can help a business earn more revenue, you can charge a higher fee or hourly rate. For example, let’s say a Facebook ad specialist helps a pest control company gain 30 new customers per month. Each new lead is $150 in profit for that business.
The Facebook ad specialist helped that business earn $4,500 in additional monthly profit. In this scenario, you should consider charging 25% of the pest control company’s new revenue, which equals $1,125 ($4,500 x 25%) in extra income for your business.
Another feature that makes an online ad management business scalable is repeat ads. Once the ad specialist creates an ad that can deliver additional customers to a business, that ad can repeat for several months and doesn’t require much additional work. If the ads manager can replicate what they did for the pest control company for another eight businesses, they could build a six-figure business with very few overhead expenses.
5. Create a YouTube Business
If someone is an expert in a niche and interested in creating video content to teach or entertain others, they should create a YouTube channel. It’s free to get started. If you have a fairly new smartphone, the camera should have enough quality to record videos. If you opt to use your smartphone, you may want to invest in a lavalier microphone (about $70) and a tripod (about $30).
A YouTube channel makes money from a few different sources. On average, YouTube pays the channel owner $2 to $5 for every thousand views from companies paying to advertise on YouTube videos. In certain industries, that number may reach more than $12 for every thousand views.
Additionally, once a channel has a certain number of subscribers, a third party may want to sponsor videos for product or name placement. Sponsorships on YouTube are part of a larger and quickly growing marketing industry called influencer marketing, which is valued at over $10 billion. Another way to earn revenue from a YouTube Channel is to become an affiliate of products reviewed in the videos. An affiliate earns a commission from every sale that results from link clicks originating from their videos.
For example, hickok45 is a YouTube channel created by a retired middle school teacher and police officer with more than 4.4 million subscribers. The channel has hundreds of videos reviewing old and new guns. In the video descriptions, there are affiliate links to gun manufacturers. Hickok45 also promotes a Patreon account where fans of his channel can sign up to be a monthly paying contributor and receive exclusive content that is not on YouTube. He has 1,711 registered patrons paying him $1 per month.
6. Build A Website & Sell Membership Subscriptions
A membership website is a business in which customers pay a recurring fee for access to online information. It’s similar to an online course, except the content is updated more frequently. Running a membership website will cost around $250 a year for a WordPress plugin, hosting, and a domain name. The upfront cost to build a WordPress website may be anywhere from $5,000 to more than $15,000.
Revenue for membership websites is similar to that of software because customers pay a recurring fee, which can potentially make the business very profitable. You can sign up 500 members who are willing to pay $29 per month and earn $14,500 in monthly revenue.
An example of a membership website is Lady Boss Weight Loss. It’s a monthly membership site marketed toward women who want to lose weight. Members receive many products upon signing up, a new workout plan every day, and a new meal plan every week.
Blogging can be a profitable business because you can write content once, and it’ll earn revenue for many years. Essentially, bloggers provide answers to questions people ask on Google, such as regarding product recommendations and reviews or parenting questions. Successful bloggers get content to rank high on the first page of Google search results and receive free website traffic. Bloggers also may promote their content on social media and through their email lists.
Blogging is considered profitable because it’s very scalable. It also is low overhead and can be done at home. The cost to start a blog could be nothing if you use a free platform like Blogger. To create your own blog, you will need hosting (around $20 to $50 per month) and a domain name ($15 a year). If you hire a designer, you may have to pay $500 to more than $5,000, depending on how elaborate and functional you want to site to be. Starting a blog for low-cost is pretty easy with tools like WordPress that provide step-by-step guides on setting up a website and getting started.
There are many ways to earn money blogging. The easiest way is to place Google ads on the website. Every time a website visitor clicks on an ad, the owner makes money. Additionally, many bloggers are affiliates for other products, which means they receive a commission on every sale that occurs from an affiliate link on their website. Another common way bloggers make money is when they sell their own products, which can be physical like T-shirts or gadgets or digital like online courses or e-books.
8. Purchase & Revamp An Existing Online Business
Instead of spending years blogging and creating your own website, consider purchasing a current website from an online business marketplace. There are online businesses available from anywhere between $500 to $1 million. The costs to manage these websites vary. However, if you choose a low-cost website, the typical cost to manage it will be $50 per month. There is a domain name cost ($1 a month), a hosting cost (around $30 a month), and a possible software add-on.
Many of the online businesses that are for sale have much potential because their owners have not recently updated the content. If you know search engine optimization (SEO), which consists of strategies that help web pages rank high in Google, or have other marketing skills, such as social media or video marketing, you could improve the website’s visitor traffic and reap the profits.
Flippa is an online business marketplace that lists thousands of low-cost websites for sale. Find a website you believe you can improve, purchase it, and then monetize it. Many of the online businesses are already monetized. It’s a great way to learn how to operate an online business. If you don’t want to continue managing the website you purchased, sell it for a profit.
9. Become an Online Influencer
An online influencer is anyone with a large number of online followers that they can persuade. Simply having a following is not enough to create a profitable business. To make money as an influencer, you must be able to persuade your followers to take action. For example, an Instagram account with 10,000 loyal followers may be more profitable than an account with 300,000 passive followers.
There is no cost to become an influencer because you use a social media platform to build your followers. Some influencers have a semi-professional photographer take photos and videos of them. However, most times, it’s friends taking photos and videos of each other.
Becoming an online influencer can help you create a profitable business because the overhead is extremely low. It’s also scalable because you can grow your follower base fairly quickly. There are several ways to make money as an online influencer. One way is affiliate marketing, in which the influencer recommends a product or service and receives a commission on every sale. Commissions vary from 5% for a sale of a physical product on Amazon to 65% for a digital product from ClickBank.
Other ways online influencers earn revenue are through sponsored posts, which consists of a company paying an influencer for product placement or a mention in the post description. One last way online influencers can earn revenue is through selling their own products. For example, if someone is a flower photographer, they can sell a product teaching others how to take high-quality flower photographs.
10. Sell on Etsy
Etsy is an online marketplace where creators can sell handmade goods. Etsy is not as scalable as the previous businesses because the items must have a handmade component. Etsy businesses do usually have particularly low overhead because you can operate them out of your home. Additionally, because the items are handmade, it’s easier to charge higher prices when necessary. Joining Etsy is free. It charges 20 cents per product listing, a 5% transaction fee, and a 3% payment processing fee.
Copywriting is using words to persuade someone to do something that, in many cases, is to make a purchase. It’s similar to managing online ads because you can earn a client more money. There are no costs to start a copywriting business. You use your own writing and persuasion skills to increase leads and sales. Many freelance copywriters need a website, which will cost around $20 a month if you use a website builder.
If you can increase the conversion rate on a business’s landing page and help it get more customers, you can charge a higher fee. For example, let’s say a copywriter rewords a plumbing company’s lead generation landing page, earning it an additional 25 leads a month. Each lead is worth $75 per lead. That copywriter adds an additional $22,500 (25 x $75) in monthly revenue to its client’s business.
Even if the work only took the copywriter 20 hours, they should charge at least 20% of profit, which would be a $4,500 ($22,500 x 20%) fee. Of course, it takes a lot of work to reach the point at which a company will pay a copywriter $4,500. However, it is possible.
12. Professional Consulting Services
Another type of business that can charge a high hourly rate and has low overhead is professional consulting. Consultants with in-demand expertise can charge higher rates than those with skills that are not in demand. Also, those with significant experience in high-powered industries like tech companies can be higher earners, specifically if they have knowledge that will help businesses earn more profit.
Many consulting businesses have low expenses because they are typically home-based. To be able to communicate with clients, a home-based business should only have a few expenses, including internet (around $80 a month), video chat (free with Zoom), and scheduling software (free with Acuity).
An example of in-demand expertise would be an engineering consultant who can help solve a specific problem. People pay high consulting rates to help their businesses earn more revenue. For example, many business owners hire a branding consultant to create new marketing for their business. Professional consultants can charge anywhere from $150 to more than $500 per hour for their expertise.
Profitable businesses are exciting to create because they have high income potential and low expenses. Creating and selling software can be very lucrative—think Mailchimp email marketing— because they’re scalable and charge recurring fees. If you are an expert in a niche, charge clients a high fee for your services. Consider developing an online audience who needs your expertise and charge them for an online course, membership, or e-book. If you’d like to start a more traditional business, consider a low-overhead option like a consultant.
Any business you choose needs to have a website. A website gives your new small business credibility to potential customers. On your site, write about your background, client testimonials, and display case studies. DreamHost is an affordable company that registers your website name, secures web hosting, and provides the technology to create a no-coding-necessary website. Get started with DreamHost today.