The Three Approaches To Online Businesses


I’ve been at this for quite a while now. I think I’ve been working on building full-fledged ecommerce businesses for at least 3 years, and I’ve been documenting what I’ve learned and am learning for a little over a year.

That and by following other thought leaders in the ecommerce and online business space, I’ve seen that there are a few approaches that you can take to building businesses online. There is no correct approach – it’s a matter of what you want to do and the amount of time and effort you are willing to put in.

These approaches are:

  • Hobby/side income
  • Lifestyle business
  • Growth-focused operation

The approach you begin to take might not be what you end up doing. Business is a journey where you can only visualize your destination, but your path might take you somewhere else.

This happened to me with Fish Finder Source. My goal with Fish Finder Source was to build a lifestyle business that would bring in nearly $1,000,000 of revenue each year. If you assume that I had a net profit margin of 15% after all expenses, that’s $150,000 a year in profit: more than enough to live a comfortable lifestyle.

However, things didn’t really go the way I planned, and Fish Finder Source ended up turning into a hobby/side income business for me. I make a decent amount from it every month from Amazon Affiliates, but that’s about it.

The interesting point to note with Fish Finder Source is that by itself, it never had the potential to grow into anything more than a lifestyle business. Fish finders are a limited market, and I would have reached my target had I become king of my niche, similar to what Andrew Youderian has done with Right Channel Radios.

Once I was king, that was it. The only way to grow it any more would have been to open a network of sister stores, and eventually be king of a broader niche in fishing, and ultimately of all fishing itself. But since that involved building out new sites, it is a difficult proposition.

So what kind of business do you want to build, and what do you need to do to build it?

Hobby/side income

Hobby businesses are entry points into online business. These start out as an obsession to get rid of all the junk in your garage on eBay and Amazon, and the satisfying “ping” of an order email notification will eventually turn into an addiction that you can’t get enough of.

Once you’ve been bitten by the online selling bug, you’ll get into to small niches and try to build an online presence. These businesses won’t make you a millionaire, but they’ll be enough to be worth the time and effort you put in, and will bring a nice source of side income every month.

You’ll see thousands of these hobbyist entrepreneurs on places like eBay and Etsy – and this is perhaps the best way to get your feet wet with online selling.

A hobby business is something you can truly bootstrap – you can build it and improve it by learning new skills such as coding, design, and online marketing, mostly from the excellent free resources available online. Once you’ve gotten the hang of these skills, you can apply them more seriously to a bigger niche.

What can you do with this side income?

This side income can either supplement your existing income by giving you some extra spending allowance or you can drip it into a more stable investment(more on this coming up). If you do the latter, think of it as a nest egg. It won’t seem to amount to much now, but over time, it will compound into a neat sum.

Lifestyle business

Once you graduate the hobby stage, you’ll enter the lifestyle business stage. These require a lot more work and money to set up. You won’t be able to really bootstrap it unless you are a jack of all trades: a designer, coder, marketer, and accountant all in one. Even if you are, you’d have to devote a LOT of time to it to really get it to where you need it to be.

So you will need to invest some money into this business to get it set up, and then to start building your audience and driving traffic. Once your business is up and running, you’ll probably want to quit your job and start working on it full-time, and maybe even consider having full-time employees to help you manage everything.

This is where the crowd begins to thin out. Instead of thousands, there are probably hundreds of people doing what you are doing, although only a handful will have the tenacity to pull all the way through.

This business can and will probably replace your income from your day job, and is the way to go if you are into the idea of lifestyle design: having enough money and time to be able to do what you want. If you’ve read the Four Hour Workweek by Tim Ferriss, this is the kind of business that he talks about in his book.

Lifestyle businesses sound very appealing, but they are still hard work. The “Four Hour Workweek” is more of a marketing slogan than a picture of reality. But done right, a lot of hard work(and some luck) in the beginning can set you up for escaping the 9-5 lifestyle. The way ecommerce is set up nowadays, you can actually run a full-fledged business from anywhere in the world as long as you have a decent internet connection and a laptop.

The only truly physical part of an ecommerce business is inventory and shipping, and there are companies that you can(and should, when it makes sense) outsource that to, so you can literally run your business from a laptop or smartphone. Your site, marketing, and customer service is all online/on the phone.

Lifestyle business either take a sizable chunk of cash or a lot of time to set up, sometimes both. Take Shopify Build-A-Business winners Drones Etc. They are in a pretty niche market and saw strong sales pretty fast, but they had to put up the cash to first buy their inventory.

Andrew Youderian’s businesses took many months to get into a position where he had steady traffic and sales, too.

Everyone is trying to build a lifestyle business nowadays, and everyone wants to do it easily. They are too sold on “Four Hour”, but don’t want to deal with “Workweek.” That’s why either time or money can push you to the front of the pack. If you can spend the money no one else is willing to spend(usually on inventory for stuff you can’t find drop-shippers for), or if you are willing to put in the time no one else is putting(to build a brand, do SEO, and tweak your ad campaigns), then you can really get somewhere.

What can you do with this income?

Pretty much anything, really. That’s why it’s a lifestyle business. If you dream of skiing in the alps all year long, or dancing on a beach in Thailand, this is the way to go. You just have to be prepared to put in the initial effort.

However, it’s still a good idea to build a nest egg. If you move to a country where your living expenses are much lower, you’ll find that you are saving a lot more money than before. Invest this money!

Growth-focused operation

The final stage of ecommerce dominance is being a growth machine like Zappos and Hayneedle. The barriers to entry here are really, really high. These operations require lots of funding(not just for inventory, but for operations, too), lots of employees, and both of those things put to good use.

A growth-focused operation does not aim for profit first, it aims for growth first. In Q2 of this year, Amazon reported revenues of nearly $20 billion dollars. But on that revenue, they reported a net loss of $126 million – and this isn’t just a one time thing. It’s been this way for a long time. So for the past 20 years of Amazon’s existence, all they have focused on is growth. They don’t seem to care about profits(yet).

In this business, unlike a lifestyle business, your first priority will be growing and dominating the market. Are you getting more and more customers? Are your revenues going up? If you can stick it out long enough, you might just be an unstoppable juggernaut.

A growth-focused operation is built on an idea and is fueled by professional, meticulous execution. You can do a duct-tape job of building up a lifestyle business, but you can’t do that with this.

Before you jump onto Kickstarter or start calling up angel investors, remember this: you may well be headed towards a corporate life here. Lifestyle businesses let you enjoy the “ecommerce” part of online business. Growth operations will put you at the helm of the “business” part of online business.


Ultimately, there is no right way to go. It’s really up to what you want to do and where you see yourself. In a hobby or lifestyle business, the stakes are much lower. You can probably build the business while working your regular day job, and once you feel confident enough, you can quit and move on. Or not – Steve Chou has a business that profits over $100,000 a year but still works his day job.

If you decide to go the startup route and aim for growth, you’ll have to dump everything and work on it full-time. If that’s a risk you are willing to take, and you believe enough in your product and idea to take it all the way, by all means, go for it.

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  1. Hey Shabbir, great post as usual! I do have a question and it may be a little off track to this post, but I am sure you can help out!
    I am interning with an online fashion boutique, and it can be categorized as a lifestyle business according to your post. ( They run this boutique on the side). The question is, they now want to “grow” it, and need my help. What would you suggest should be the go-to-strategy in this situation?

    • Hi Sindhu, thanks! I’d say that to grow the business, ask your existing customers what else they want and provide it to them.

  2. Internet companies should lead the same way as those from the offline. Here, too, the money does not grow on trees and everything must be earned 🙂

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