Build an Online Business Portfolio Within Your Budget
It doesn’t matter if you’ve got $20,000 or $1 Million — it’s all about strategy
When you have capital, your aim isn’t usually to keep hold of that capital and let it sit there. It’s to reinvest it to increase your money pile.
So where do you invest that capital?
You probably know of the most common assets: stocks, currencies, real estate, etc. You have low-risk long-term investments, high-risk short-term investments, and everything in between.
However, you don’t just invest in one asset: you build a diversified portfolio across multiple asset classes to spread the risk of your investments. That way, you don’t have all your eggs in one basket.
You might even create portfolios within each asset class to really branch out your tree of wealth.
There’s another asset class that you may not have yet considered that is becoming one of the fastest growing asset classes in the world — online businesses.
With an online business, you see returns on Day 1. Whatever the business is, whether it’s a $1 million business that’s earning $30,000 net profit each month, or a $25K business earning $800 a month, you see those profits as soon as you’ve acquired the asset.
Theoretically, that means you’ll make your money back in just 3–4 years.
The thing with online businesses is they can offer fast returns if you reinvest a portion of the profits to scale them and increase their earnings. The money you earn from your assets works towards building your portfolio.
While you’re increasing the business’ earnings, you’re also increasing its sale value. This means that you can resell the business for a substantial ROI in a relatively short amount of time.
We had one online business buyer purchase a content site for $49,000 and resell it for $75,000 in just four months. They were able to reinvest this ROI and build a business portfolio that consistently generates cash flow.
That was for one type of business, but the best portfolio builders have a variety of businesses they employ this strategy with to minimize the risk of their investments.
Of course, this takes skill, knowledge, and experience.
The Path to Wealth That You Don’t Depend on
Buying, growing, and selling online businesses, commonly referred to as “flipping,” is an ideal wealth-building strategy for those of you who don’t rely on your income to live.
This is for those of you who have saved up enough capital and are looking to make investments to grow your money tree.
This isn’t recommended for people who are new to online business, however, as there is a lot of risk with online business investing. Just this year, Amazon released an Amazon Associates commissions update that slashed commissions earnings, which rocked the boat for all Amazon Associates businesses.
A risk factor like this one can be navigated around by adding extra revenue streams to your Amazon Associates business, such as display ads or other affiliate networks, but you need to know how to employ these diversification strategies.
While flipping online businesses can be a hands-on strategy as you actively grow your investments, it can also be a hands-off strategy for those who have no time but money to invest.
Making Online Businesses Passive Investments
To make passive income from online businesses, you really need to be able to spot good deals. The businesses are either already established with a large market share and are hands-off in an evergreen niche or aren’t hands-off yet, but there are ways to outsource maintenance work to make the business hands-off.
When you have a team operating the business, it allows you to focus on the bigger picture (growth) so you can take the business to the next level.
Building Your Ocean’s Eleven
This is a popular investment approach among portfolio builders.
If you’re familiar with the star-studded film Ocean’s Eleven, you’ll remember that Brad Pitt and George Clooney hand-picked a team of experts to carry out a big operation.
You can employ a similar strategy for your online business investment. Outsource tasks like inventory ordering, pay-per-click advertising, product design, and article publishing to employees who specialize in these areas. Some menial tasks don’t require expertise, so it is easy to find virtual assistants to take on these roles.
If you’re good at operations and can manage a team well, then you can set up your business to be a passive investment.
When your systems are as efficient and organized as possible, and your team knows how to carry out their tasks well, your business essentially runs on autopilot, giving you time to invest in new businesses.
If you want to be even more hands-off with less risk, however, the second option may be preferable.
Finding Smart Partnerships
If you own 100% of an online business, it’s on you to build the team to run it. What if you could invest in a piece of an online business, however?
Operator–investor partnerships are when you as the investor invest in a portion of the company’s purchase value and the operator runs the business.
They have the skills to do this as they will have experience in building and selling online businesses.
They will either be someone who is looking to acquire funding from multiple investors to purchase a business and share the profits or they will be the founder of a business and are looking for investments for growth.
This is a win-win situation for the operator and investor as the operator gets the capital they need to acquire or grow the business and the investor gets to passively invest in the asset.
That said, you need to make sure that the operator has skin in the game with their own capital invested into the business or that they’ve built their own business. They should also have a proven track record of building and growing online businesses as it is a difficult operation.
From Snowball to Avalanche
When you build up your online business portfolio smartly, your cash flow will snowball.
The cumulative profits you make from your investments will enable you to make more similar smart deals. When you’ve got experience, you’ll have a keener eye for spotting the best business deals, and you can refine your portfolio-building game.
If you have a large amount of capital (closer to the $1,000,000 range), it’s necessary to invest in multiple assets instead of one asset because it would leave you vulnerable to the many single points of failure in the online business world.
You must also have the right expectations. Some of your investments will fail. Either the operator will misjudge a business’ potential and invest your money into a doomed business or the business you’ve built a team for will face new competition that undercuts your pricing and takes a piece of your market share. Your investments will be subject to outside forces like Google or Amazon updates or policy violation enforcements.
This is why you want to build a diverse portfolio to mitigate risk.
If you have a lower budget (closer to the $20,000 range), building a portfolio isn’t as easy, so it might be best to take a more active approach.
Again, it could fail (even then, you can sell the business and reinvest in another deal), so never invest money you can’t afford to lose. However, it could also be the start of your massive wealth creation.
If reading this article has got you curious about online business investing, then visit our marketplace, which is the world’s largest curated marketplace for online businesses.
