It's a jungle out there... including and especially the business world. While there are countless businesses all over the globe of varying sizes, you might be surprised: even household names like Spotify and Uber are still making a loss. Of course, huge companies in a disruptive market can afford to absorb negative profit margins in the short-run, but not so for startup and SME owners. For the rest of us, here are some lucrative small business ideas for the age of digital transactions.
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After all, the principle to have a profitable business is simple: total revenue must be greater than total cost. In this article, we will explore some small business ideas which can be profitable in a relatively shorter time frame. In essence, these are business models based on selling products or services at a price higher than the cost of preparing them.
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1. Ecommerce
As we've covered in a previous post, FinTech innovation has seen the explosion of ecommerce. If you want to position yourself in this bustling digital marketplace, you could start by opening an online store.
One of the simplest places to begin is on an ecommerce marketplace. These platforms offer security for both buyers and sellers by acting as middlemen in the supply chain and retail fulfillment process. Additionally, ecommerce platforms offer a myriad of convenient payment options, like bank transfer, credit card, other cashless payment methods.
These built-in functions allow sellers to focus on one thing: their profit margin. By sourcing for stocks at the best price, creating your online shop (i.e. making an account on an ecommerce marketplace, setting up a profile for your store, and posting your products), and attracting the right customers, you can start reaping a tidy profit. More popular product categories include fashion, electronics, home and living tools, health and beauty products, as well as food items. Do observe other shops that sell similar products very closely.
2. Dropshipping
If you do not have much capital, you can still open your online business by dropshipping. A dropshipper is a store doesn't keep the products it sells in stock; instead, once an order is placed, it purchases from a third party, then ships it directly to the customer. That means a dropshipper doesn't even need to handle the product, and thus does not face any inventory risk.
The same rules apply to operating a traditional ecommerce fulfillment business, but you'll need to doubly make sure that you're working with a reliable shipping partner. It's a good idea to quality-check consistently: in the beginning, when you're sourcing for products, and also in response to customer feedback, to make sure you're selling something you can stand by.
Psst… you might also be interested in:
What FinTech Means for Ecommerce
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3. Clothing brand
Another profitable online business idea to consider is starting your own clothing brand. It might be a good idea to oversee the manufacturing side yourself, provided you have the expertise and resources. Alternatively, there are also third-party companies that you can work with, for example, to get your custom designs printed on T-shirts— so all you need to do is to focus on designing and marketing your brand.
If you want to start your own clothing brand, you definitely need to have a good design sense. Alternatively, you can hire a freelancer (who can also be found on online platforms) to help you with the design process. On the marketing front, you can utilize popular social media channels to build and strengthen your branding. You'll need to do market research on the social media platforms most frequented by your target demographic, but Facebook or Instagram should be a good place to start.
We've suggested just 3 small business ideas with profit-making potential, and that are particularly apt for this internet age. All entrepreneurs have to start somewhere, and many of us would prefer to own a small business that can turn a tidy profit, even in its early stages. From there, use your savings to differentiate, brand, and build scale... who knows? You just might end up with the next big business idea. Good luck!
Psst… you might also be interested in:
The Small Business Owner’s Basic Guide to Digital Marketing
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