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What Is an Online Business and How It Works?

Have you ever asked yourself about; What is an online business and how does it works?

For sure you do.

That’s what so many people are so curious to know the answer of.

First of all we should know what are the differences between an online business, a regular brick and mortar business.

Here I am going to explain them all in more details.

Also, the advantages and disadvantages of each method of doing business.

What is The Different Between Online and Regular Brick and Mortar Business?

The differences of an online business with the regular brick and mortar business.

In an Online Business:

1- You have a product or service.

2- you have a website to generate targeted traffic to sell the product or service.

In a Brick and Mortar Business:

1- you also have a product or service.

2- You have a physical location or store to sell the product or service.

Running an Online Business

1- The most important part of running an online business is that your products and services are presented to your clients globally.

Means, that you can sell globally to anyone and anywhere around the world.

There is no limit.

2- It will make you money non stop.

While you are sleeping or travelling on vacation, your business still running and makes money for you.

3- It is all digital and you don’t need any physical employees or place.

4- When you run an online business, you don’t necessarily have to have a product or service.

This is the best part of an online business.

You can sell the others’ products and services and make commissions.

All you need is online marketing to generate targeted traffic to sell the product or service.

Targeted traffic in Online Business:

There are two kinds of targeted traffic:

  1. Free
  2. Paid
Free Targeted Traffic:
  • Blogging
  • Social Media

Blogging is the best way of bringing targeted traffics to your site.

You can provide free items and services to attract your audience, so they will follow you.

Usually the subscribers are people who are showing interest in your products and services.

By saying that, they are your customers and you can offer them the products that they are interested in.

Social Media is another way of bringing free targeted traffics to your site or blog.

Sharing your articles to the social media will bring a good traffics to your site as well.

People with a big amount of followers are usually able to bring a good traffics to their blogs and sites.

Paid Target Traffics:
  • PPC
  • CPA
  • Social Media Advertising
PPC (Pay-Per-Click)

Pay-Per-Click or cost per click, is an online advertising system that most of search engines are providing to direct traffics to websites.

In this type of advertising, the advertiser pays a website owners who registered for google Adsense.

They will pay when someone clicks on their ad.

PPC or CPC is usually offer by the search engines such as google AdWords, Facebook, Tweeter or Microsoft Bing Ads.

Search engines are usually using the keywords or keyword phrases related to their niches or target market.

Usually there is a fixed price charges per click based on the popularity of the product or services.

The display advertising are shown as banners in different sizes, that can be display when the keywords matches the advertising keywords.

Cost-Per-Action (CPA)

CPA or Cost per Action, is an online business similar to the CPC, with a difference of they will pay per actions.

Actions such as:

  • Filling the forms and Submission
  • Sign up for newsletter
  • Subscription
  • Sells

In this type of advertising everything else is the same way as cost per click (CPC), except that in this model of advertising they will pay when the client or visitor finishes the action such as signing up, submission or purchase something.

Its using the keywords as well to match the target traffic as well.

In this a way of doing online advertising with the target of selling something to the client the cost is usually more and the commission is also  more.

It is a kind of affiliates for collecting leads in order to be able to sell something.

So, in CPA the advertiser won’t pay for bad referral leads and looking for the real good leads that can have benefits out of it.

Social Media Advertising

Nowadays the use of social media advertising is very important since the majority of people are using social medias in their daily basis.

Each social media network has its own way of advertising method.

For example;

Facebook offers the procession for your products with your choice of audience and radius of distance.

YouTube allows you to collect subscribers and followers.

Tweeter is for small text messages advertising and so on.

Since the social medias already have the target traffics, you can use the advantages and do your advertising and sell your products.

If you are serious about your online business to be successful you should do advertising it in different social media websites for at least four times per year.

The costs are different and you can choose the best package that suits your budgets and anything is better than nothing.

Without advertising no one knows who you are and what you are offering.

Let the world to know who you are and what you are offering by doing some online advertising for your online business.

Offer promotions, discounts, coupons and so on to keep your clients happy and let them follow you for long time.

Brick and Mortar Business

In order to have a regular brick and mortar business you need the followings…

  1. Big Budget
  2. Business Plan
  3. Good Location
  4. Products
  5. Employees
  6. Working hours
  7. Advertising
Budget to Open a Business:

The main and most important part of starting any business is the budget and your financial power.

Without having the budget you can’t run any brick and mortar business, but you can have an online business without any big budget of no budget.

Business Plan:

Having a business plan is very important in any type of business (online business or brick and mortar business).

You should set up your goal and plan in advance prior to start your business.

Knowing about your business plan and creating it, will help you with all the steps and necessary plans in order to reach your goal.

With an online business, you can start with a simple business plan and start with registering your domain and hosting package which costs less than a hundred dollar.


With brick and mortar business method, you should have a good location for your business.

The famous word of any success for the good business is: “Location, Location, Location” is the most important part of starting a business.

You need a good location for your business in order to make more sells.

A location with lots of targeted traffics and clients.

For example; you can’t have a cloths store inside a business office building where no one can see your products. The best place to get your target clients is the shopping center.

However, with brick and mortar business you must have a physical location for your business, which with an online business you can enjoy the advantages of location freedom.

For sure we can’t move everything to online business and local service businesses such as; groceries, hair salons, repair and mechanic stores…


With brick and mortar business model or online business, you need your business products anyway.

You need products to sell and make a profit.

Having a products means you need an inventory and a space where you can keep your products.

With an online business model, you don’t necessary need physical products to sell them, you can sell other people’s products and get the commission without seeing or touching the products.

But with brick and mortar business you must have a physical products in order to make sells.

Selling your products are locally and limited, but with an online business you can sell globally without any limitation.


In order to run a brick and mortar business, you need employees.

That employee can be yourself or someone that you hire to work for you.

The training, salary, taxes and payroll is also should be consider with any employee.

Human resources is one of the most important part of any business.

You need a manpower to run your business and those candidates should be well qualified for the type of your company’s needs.

Good managers usually trying to keep their existing employees happy because unhappy employees can cause a big loss for the business.

In average, the cost of turnover for each employee is around $50,000 for the company.

Costs for the company as a result of bad management/manager (damager) and the employees turnover costs are:

  • New employee’s hiring
  • Training
  • and time for unfilled rolls

Running a business requires employees no matter if you’re running and online business or brick and mortar business.

Make sure your employees are well selected and trained and keep them all happy in order to success in your business.

Working Hours Schedule:

With brick and mortar business you can’t work more than certain hours per day.

The average time to spend at work is usually between 6 to 10 hours per day.

You have to be physically at the work place for the certain hours based on your daily schedule.

Sometimes you need to work overtime or on the weekends and holidays.

One of the best advantages of running an online business is that gives you time freedom.

Time freedom in online business means that you can work at any time you want and as much as you want as long as the jobs are done, you are good to go.


Without advertising it is not possible to run any business.

In brick and mortar business model, the advertising techniques are not the same as online business advertising.

The followings are some examples of advertising in brick and mortar business model;
  • Local newspaper
  • Flyers
  • Phone advertising
  • TV and Radio advertising
  • Business cards
  • Signs displays
Newspaper and Flyers Local advertising

When you run your brick and mortar business the best way of attracting clients is to do some local advertising such as local newspaper and flyers.

Local advertising is limited and you can get only local clients.

Phone Advertising

In the phone advertising, where big companies are hiring a phone marketing company of they will have a phone messaging system to send all their clients the advertising message.

Radio and TV Advertising

The Tv and radio advertising, can also be good for local and global businesses that can be use in both online and brick and mortar business models.

Business Cards

When you are running a brick and mortar business, you should have a well designed business cards in order to let the clients to communicate with you.

The business card is very convenient for the clients to carry them in their wallet or purse and keeping them handy in case if they have to contact you.

It should contain all the keywords about your products and services in short sentence.

Signs Display

When you have a brick and mortar business you need an good sign to show where your business is located.

The sign should be visible enough to attract the clients and bright enough to show at night as well.

Having a nice sign and logo is very important in any business.

Nice and visible bright sign, will pop up in the neighborhoods and that can be a good way of doing advertising.

In online business also, your website design, themes and logo can attract the visitors and keep them stay in your site to discover about your services and products.

Advantages of Having an Online Business

The best advantages of running an online business is that will give you the following freedoms:

Money Freedom: That you can make a lot of money and can buy anything you want.

When you have a purchase power, you feel good and as a result you become more motif to run your business in the best way.

Location Freedom: running an online business gives you the location freedoms because you can work from anywhere.

All you need is a laptop and an internet connection to work from anywhere.

While with brick and mortar business, you have to work in certain location and traveling to work in daily basis.

Time Freedoms: When you run your online business, you have a time freedoms as well.

Means, you don’t have to work  for specific time frame schedule.

Starting and ending your work is all in your hands with freedom.

Online business can make you money non stop and while you are sleeping or on vacation as well.

You can watch my video to understand the above article easier…

About: RojanSalman

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