Business 101: Online vs Offline Business

Business 101: Online vs Offline Business

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From the desk of Harsh Strongman
Subj: What are the advantages of being in the online business over offline business


Hello everyone!

I’ve been busy with non-LMM related things for the past few months, which is why you did not see any articles published in the past 2 months.

I’m back now and I hope 2022 has been treating you well!

I’ve been in business for many years now. I’ve had both offline businesses (I’m a qualified Chartered Accountant and used to be a consultant) and online with LMM and affiliate marketing.

I’ve learnt a tad bit about business and how to run one over the years, and I’ve decided to start the new year with a series of “Business 101” articles that will give you a lot of lessons that took me many long and painful years to acquire.

If you’re someone new to the game, there are several advantages that online businesses have over physical businesses.

Why Online Business Is Better Than Offline Business

1. Pandemic and Lockdown Proof

Shop closed due to covid-min

If there’s one thing I (and many other people perhaps) learnt from the turn of the decade, it’s that you must make your business pandemic proof.

We live in the era of COVID-19, frequent and abrupt lockdowns, and EDNV (Every Day New Variant). Who knows how long this will go on for, and how long until it starts again.

Invest your energy in businesses that are not affected by poor government policies like EMNL (Every Month New Lockdown).

There’s two ways of doing that: 1) Find a way to fit into the definition of an “essential service” or 2) Be an online business.

I don’t know any essential service business that is highly scalable or highly profitable, which leaves us with online business (which are inherently scalable and profitable).

If you’re still thinking of starting a business that depends on physical existence (i.e. requires an office, requires employees to be in the office, and requires clients/customers to visit that office), you are a fool. A fool.

If you already run an offline business, it’s time to take it online.

2. Access to a Global Audience and an International Market

Global Marketplace

Offline businesses limit you to whatever local area you and your business are situated in. This limits you to a much smaller customer base and, thus, your income potential.

Online businesses allow you to sell your products and services to people all over the world. You could be based in India and be selling to customers located all across the world.

People buy LMM products, i.e., Live Intentionally: 90 Day Self-Improvement Program and The Art of Twitter from all over the world. We have customers from:

  1. USA
  2. India
  3. UK
  4. Mexico
  5. Russia
  6. Japan
  7. Saudi Arabia
  8. Australia
  9. Nigeria
  10. Sweden
  11. Nambia
  12. China
  13. etc.

This would literally be impossible in case Life Math Money was a physical business.

3. Cheap to Start and Low Operating Costs

Low Cost High Value

Online businesses are extremely cheap to start and have very low operating costs.

How much does it cost to host a website? $100 a year for the hosting and $10 a year for the domain.

All the tools and services you need to make sales are available for cheap.

Shopify, WooCommerce, business email, web host, simple automation services like Zapier – you can get everything for $100 a month combined.

Growth engines like SEO and social media are FREE.

Compare that to the costs of running an offline business.

Depending on where you are based, you have to invest a bare minimum of $100k to $250k upfront for a physical shop or office space, inventory, advertisements, local government licenses and taxes, etc.

Not only are the upfront setup costs high, but you also have high operating costs – you have to pay rent, cleaning and maintenance work, electricity, license renewals, etc.

Not to mention the time wasted and hassle all of it is.

The difference in costs is so stark that it makes almost no sense to operate a physical business if you can instead run the same business online.

For example, it is much more cost effective (and thus profitable) for you to set up an e-com store selling clothes than it is to rent a shop in a market and sell clothes.

4. Online Businesses Run 24/7/365

Sign with business hours for a restaurant

An offline business has “working hours”. Usually from 10 am to 8 pm or similar. That’s just 10 hours of a 24 hour day. Not to mention that they’re closed on one or two days of the week (usually weekends).

Meanwhile, online stores are open 24/7/365. You are in all markets at all times.

Your potential customers can wake up in the middle of the night and place an order, which happens more than you think because a lot of sales are made on moods and whims!

You make money even as you sleep, and the customer gets the great experience of being able to get what he wants whenever he wants it!

Win-win.

5. Higher profit margins and Scalability

Of course, it goes without saying that all the above factors combined mean online businesses typically have much higher profit margins and potential for scale than offline businesses do.

You have lower upfront and operating costs, you’re making sales 24/7 to people all over the world, and your business isn’t being interrupted every few months because of a new virus or variant.

6. Geo-Arbitrage: Make in First World Currency, Spend in Third World Currency

International Currency

This is a very underrated aspect of making money using the internet.

If you live in a less developed country like India, Russia, Turkey, Nepal, or anywhere in Africa or South East Asia, your local currency isn’t worth much and is constantly depreciating to first world currencies.

If you start an offline business, you will earn your money in that weak currency.

With an online business, you can target richer western countries and earn stronger currencies like dollars, euros, and pounds.

$1 in the west has as much as $3 to $5 in purchasing power in developing countries.

Even if your online income makes something really low like $2,000 a month, you can live a very comfortable and even a luxurious life in your home countries (where the average monthly income likely is closer to $500 a month).

Anyone who hails from a developing country is at a massive advantage – this geo-arbitrage makes life 10x easier. Even failed websites (makes less than $500 a month) are successful for you (assuming they’re passive income)!

7. The World is Moving Online

Online Grocery Shopping

More and more people are buying everything online.

Back in 2014, if I had to buy a phone, I’d go to a retail store and haggle. I did not “trust” online sellers.

Today, I buy everything online – often, even things like groceries.

Over the past decade, almost everyone in the world made an online transaction, and most people with places with internet connections make frequent online transactions.

The last remaining faction – old people – learnt how to make online purchases because of the pandemic. Many of them are comfortable with it and will not go back to their old habits of going to stores for everything.

The age of physical businesses is in its last hour, and to start an offline business is a lot like starting a horse and carriage business when everyone is moving on to motor cars – you’re NGMI (Not Going to Make It) from day one.

The present and future of business is online. If you’re going to start a business, make sure it’s internet based. There is literally no reason for it not to be.

– Harsh Strongman

P.S. If you’re interested in starting a Twitter based online business from scratch, check out The Art of Twitter.

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