The Power of Small Numbers for Your Online Business
By: Jason Mcbride
Tags: Entrepreneurship, Small Business, Business, Make Money Online, Online Marketing

A shockingly high number of online business owners I meet tell me they aren’t good with numbers. The truth is many of these people just don’t want to think about numbers. Some are still carrying around baggage about math from their school days. Others are worried that if they think too hard about things like profit margin, cash flow, and costs, they will get discouraged.

The good news is that to be a successful online business owner you don’t need to understand complex mathematics. You also don’t need a degree in finance. All you need is to understand the power of small numbers.

Online businesses are all about finding your small part of the population that you are best suited to serve. If you can serve a small group of people consistently, you can earn a great living.

You Don’t Need to Go Viral

It seems like everyone wants to go viral. Many believe this is the key to fame and fortune. But, building a business isn’t about fame and fortune. It isn’t about shortcuts. It’s about doing a small number of good things consistently.

You don’t need to go viral to make a lot of money online. You don’t need millions of views.

Did you know that it if you had a YouTube video with a million views, it is only worth between $1,000 and $3,000? That’s not a lot of money.

Some businesses that gross $450,000 a year only serving 1,500 people. You can potentially make a great living serving groups as small as 100 people.

Running a small business with small numbers doesn’t have to mean small profits.

Selling Your Services

There are thousands of different types of online businesses. But, they all are service-based, product-based, or a hybrid of the two.

I make most of my money selling my freelance writing services. I’m able to support my family without working all hours of the day. Some people may say that I’m kind of lazy when it comes to my freelance writing.

I only work with a small handful of clients, many of whom I do work for every month on a subscription basis.

With a service-based business, your income is limited by your time. You have to charge a premium price if you want to avoid working 80 hours a week. Charging higher prices also means you need fewer clients to be successful.

If you can average $300 an hour for the time you spend providing services you only need to work 333.33 hours a year to make $100,000. That works out to 6.67 hours a week, even if you take off two weeks a year for vacation.

Six hours a week is a small number. You don’t need thousands of clients to make a great living as a freelancer. You only need a small number of clients who have the budget to pay you a decent rate for your services.

Selling Products

Unlike service-based businesses, product-based businesses are scalable. Your income isn’t dependent on your time. You can create something once and sell it a thousand times.

However, many people make the mistake of trying to sell low-cost products. Why is this a mistake?

The lower the cost of your product, the more of them you have to sell. You aren’t Walmart. It’s hard to succeed as a volume seller. It’s much easier to sell premium products to smaller audiences.

If you sold a $300 course, you only need to sell 334 courses to make $100,000. If you sell a $5 course, you have to sell 50,000 courses. It’s often easier to find 334 people willing to spend $300 than it is to find 50,000 people willing to pay $5.

Of course, before you can sell high-priced items, you have to invest the time in creating something worth the high price.

Subscriptions

One of the most lucrative online business models is the subscription model. This is where you sell to the same group of people month after month.

I sell blog-writing as a subscription service. Clients pay me a set amount each month, and I write them a new post each week.

However, the real money is in product-based subscription businesses. If you ran a specialized paid newsletter that provided rare and valuable information to a niche market, you could charge as much as $97. With only 100 subscribers, you would have monthly revenues of $9,700 and annual revenues of $116,400.

According to the Side Hustle Nation podcast, Carol Tice’s Writer’s Den membership site has 1,500 monthly members. Membership is $25 a month. That means this business has revenues of $450,000 a year.

1,500 people is a small audience.

Succeeding Big by Going Small

The power in building a business for a small number of people is that it allows you to know and serve every one of your customers better. The better you are at serving your customers, the more money they will be willing to pay you for whatever you create.

It is much more personally and financially rewarding to sell to your true fans than it is to try and sell to everyone in the world.

If you’re building an online business, focus on making something for one true fan. If you can add one true fan every day, you will have enough customers to support you going full time in your business in a year.

But, it all starts with the smallest number of all, one. One true fan at a time.