PREFACE

Being an 'online entrepreneur' means different things to different people but for me, the definition that sums it up in its purest sense is 'one who identifies a need, any need, and fills it using the internet as the main means of promotion'.

Creating an online business that sells to a global marketplace 24/7 can be intoxicating and when those first few sales arrive, it becomes quite addictive. I can still vividly recall that moment when I launched my online business. It was June 2006 and my online entrepreneurial journey had just begun.

How to make money in your pyjamas

Date: June 2006
Time: 9:17 am

The baby's napping. I'm in bed, eating Vegemite toast and drinking coffee. I fire up the laptop and check my email. My new website's been up for two days and overnight two people have bought my home-study copywriting course. One thousand, six hundred dollars went into my bank account while I slept. I forward the email receipts to my virtual assistant and she dispatches the packages to their new owners, triggering the auto-responders that will take care of all client communication for the next few months. Automation heaven! I sweep the crumbs out of the bed, put my mug aside and snuggle down to catch up on the sleep I lost tending to a newborn the night before.

I had hoped my new website would work, but really - seriously - would anyone buy my home-study course sight unseen, without even knowing me, without even so much as sending an email to check that I was real? Would they really entrust this random website with that most precious of data, their credit card?

As it turns out, yes they would and yes they did.

The thought that the average Australian would have to work a week to generate what I earned overnight was not lost on me. At that very moment, I fell in love with online business, and that thrill of seeing money go into my bank account without me having to do anything on that day (note the italics) still thrills me.

Online business? I was hooked.

But that was then, and this is now. Boy, how things have changed.

The allure of an online business

There was a time when online entrepreneurs were greeted with awe, curiosity and intrigue.

'Wow, someone who makes money out of thin air, without doing anything! What a talent!'

'Yes, it's a passive-income business,' we'd muse, smugly.

In the early 2000s, when the world wide web really was the wild, wild west, having an online business that delivered a passive income was not that hard to achieve. I know because I had one: a business that provided an income whether I was in bed, the Bahamas or the bath.

It seemed that if you could put a half-decent website together, devise a reasonable product and get the site on page one of Google, you really could make money out of nothing.

I recall a colleague who wrote an eBook containing original fairytale stories for children. Its point of difference was that each story ended with a simple moral that dealt with everyday childhood fears and worries. Those books are commonplace now, but back then they were the height of novelty and, even better, you could get them instantly - without going to the bookshop! Amazing. She sold more than 10 000 copies in four weeks. At $47 a pop, that's a nice little earner for a 50-page digital download.

Another colleague built a simple membership site costing $97 per month. Within a few months, he had more than 500 people in his club. That should pay his mortgage for the month.

Is passive income really passive?

Let's knock this one on the head right now.

There's no such thing as passive income. Most people I know who make money 'while they sleep' are actually really, really active in making it - they just do all the work in advance of the sale, not after it.

Passive income may look easy, and it certainly was easier to generate back then compared to now, but the reality is and always has been that you actually have to do something to make a passive income.

Four reasons why what worked then won't work now

The days of making easy money online are certainly not over - far from it - but you have to be a lot, lot smarter to do it. Much smarter than we were in the early days.

Why? Because in the early 2000s, four unique factors existed that enabled many novices to experience outrageous online prosperity.

• Low competition. If you were one of the early adopters, you could own page one of Google with no pesky competitors muddying the waters. I recall very clearly that my business had few direct competitors online when it began, and virtually none from Australia. Now, there are dozens.
• Google was new. Back then, search engine optimisation (SEO) was considered a dark art and if you understood even the most rudimentary SEO principles, you could get your site on page one. Now, you need to be an SEO ninja to get close, especially if your site is new.
• People were not as savvy. While 300-page hardcopy books struggled to sell for $30, you could sell a 60-page eBook for $60. Now, we practically pay people to download our eBooks.
• Lower costs. Getting a basic website up in 2006 cost well over $5000 (or whatever the web consultant figured they could get away with) so only those who were committed or had a geeky cousin in IT were prepared to invest in one. Now, basic websites are virtually free.

That's not to say you can't succeed online now because the 'conditions aren't right' - of course you can - but the point is that the conditions that existed then don't exist now. The rules have changed - dramatically - and to act as if they haven't will most certainly lead to failure.

That may sound like bad news, or like you've 'missed the boat'. But it's not and you haven't. The reality is we are living in the most transformational time in history and the potential to create a wildly successful online business has never been better. Here's why.

Why now is a great time to be an online entrepreneur

It's never been cheaper or easier to set up an online business, and the opportunities to make money from an online business have never been so plentiful.

As mentioned earlier, websites are much cheaper now; they're often even free. A personal assistant, which used to cost $4000 a month, now costs $400. A video camera, which used to cost $3000, now costs $30 per month, or it's free, depending on which phone plan you're on. A tiny newspaper advertisement that reached a sliver of the target market would cost $2000. Now it costs $200 or $20 or even $2 if you advertise on Facebook. The cost efficiencies are everywhere to be found and a cornucopia of opportunities await those who dare to dip in.

The long tail prevails

While you may not be able to sell a flimsy eBook for $100 anymore, or a piece of Jesus-shaped Nutri Grain on eBay for the price of a small Sydney unit, what you do have to sell can now be offered to a global audience. What you lose on the margin you make in the volume and it's the profitable niches within niches that are making online business very exciting.

Now more than ever your quirky little passions or hobbies can find a flourishing home online. All you have to do is create a product that helps solve a very specific problem and you've got a ready-made market that's easy to find and hungry for knowledge. For example, if you love dogs and want to create a doggy-related business, instead of focusing on dog care in general, you can drill down to create niche products like 'grooming care for labradoodles' or 'exercises for ageing labradors' or 'Halloween costumes for dogs'.

Maybe you're into naturopathy or health care for women, so instead of being all things to all women, you could focus on products and services for 'women over 40 who can't get pregnant' or 'women with alopecia' or 'gluten-intolerant women with breast cancer'.

Even if only 20 per cent, or even 2 per cent, of these markets may be interested in what you have to offer, that's still 20 per cent or 2 per cent of a global audience, and you can easily find where they reside online, which means you only pay for those you want to reach. And what's more, you know what they want so you can create a product that speaks to them directly, which means they're more likely to buy what you have.

Riches in niches

Then, of course, you've got your novelty niches like an entire cruise dedicated to vampire fanatics. Or breakable dishes specifically designed to be thrown at walls to vent your anger, miniature diapers for birds, nude wedding celebrants, and much more.

And sadly, as new lifestyle and social problems crop up, new products and services need to be created. Problem gambling has never been worse in this country, which creates the need for all sorts of products to help gamblers and their loved ones deal with the addiction and its associated problems.

Bullying, and in particular cyber bullying, has spawned an entire category of eBooks, online support groups and coaching programs for parents and teachers.

All these groups can now be found very easily online,...