The Internet offers a myriad of ways to earn money. However, choosing the type of business to start depends on the skills, types of interests, and business goals. Some of these business models are suitable for small entrepreneurs working out of their homes, while others are better left to the big boys with hefty capitalization.

The Web has opened tremendous opportunities to home business entrepreneurs. It offered the chance for entrepreneurs with little capital to sell their products without the significant overhead costs, rental fees, and other expenses of a traditional retail store. The Web has allowed home business entrepreneurs to start a business selling a physical, shippable product online such as books, Indian silk paintings, or even gourmet foods from the comfort of their homes.

Selling on the Web can take many forms, ranging from a simple web site offering details of products or services to fully functional sites incorporating searching, shopping carts, ordering and automated payment systems.

There are three major ways of selling on the Web:

a.  Selling through a storefront

Often called e-commerce, an online storefront is similar to a traditional store - it has a product display section, utilizes shopping cart to hold items ordered, and has a checkout process - except that everything is done online. When choosing products to sell, a home business entrepreneur must consider its overall fit with the medium, and whether customers are likely to overlook the shipping costs.

A successful e-commerce business is a result of various factors. The storefront must have a "hot" product to sell - a product where demand is high and customers are known to buy the item on the Web. The web site must be designed to sell, taking into careful consideration how the copy (both text and pictures), navigation, and overall design affect users.

b.  Selling through online auctions

Online auctions such as eBay and Overstock Auctions have afforded home business entrepreneurs the chance to earn a living online. Many people from all over the globe are now using online auctions to launch their full-time or part-time businesses. From selling "excess and unwanted" things from their homes, many home business entrepreneurs have created businesses - many of them profitable -- selling collectibles, antiques and even new items at a discount on Ebay.

Online auctions are ideal for home business entrepreneurs, particularly those with limited web skills. There are no hassles of creating and managing an e-commerce store, no bricks-and-mortar storefronts to rent, no distribution channels to create, no marketing campaigns to launch, and not even HTML skills to learn. All they need is a picture and a description of their items to create a basic auction listing.

Even big businesses are discovering online auctions. Large manufacturers and retailers such as Disney and IBM are using auctions for liquidating their excess inventory and closeout products. Small business etailers are also using online auctions as another sales channel, as a means of reaching out to a wider clientele, even for marketing their own web sites.

c. Selling through classified ads.

The classified ads website Craigslist.com has become an important marketplace for small and home-based entrepreneurs. Listings are mostly free and items for sale are primarily targeted towards the local market. Other classified ads website include Kijiji.com for those who do not live (or wants to reach) in big cities that Craigslist typically reach.

One of the key purposes of the Web is to deliver information. Web sites have been created as means of sharing information to the world in a fast, efficient, and practical way. A home business entrepreneur with keen interest, knowledge and passion in a particular topic (as well as strong writing skills) can earn their living from producing Web content.

There are several ways a content publisher can earn money from the Web:

a. Earning from Advertising

A website can make money by selling space on the site to those interested in promoting other sites or goods or services, while offering its services for free. Sites such as CNN.com, WashingtonPost.com and PowerHomeBiz.com earn revenues from selling advertising spaces on their sites while keeping their content free.

The keys to a successful advertising-based site are two-fold: the number and type of visitors it attracts. The more traffic a site attracts, the greater number of ad impressions that it can sell. The demographics or type of visitors the site attracts also dictate the ad rates that it can charge - a site catering to CEOs may be able to attract high-paying advertising compared to a site for lovers of rabbits.

Home business entrepreneurs can leverage the income potential of their site's content by selling their advertising directly. They need to identify products and services that would interest their visitors, and then solicit the advertising interest of these companies. Site publishers, however, must submit a media kit, detailing their rates, reach of their site and type of visitors. They must be able to provide ad serving capabilities (e.g. using software like OpenX) and results tracking.

Joining a third party ad network is another way of maximizing the site's revenue potentials. Burst Media and Fastclick (now ValueClick Media) are some of the ad networks that cater to the smaller publishers and mom-and-pop web operations, although these networks require a minimum level of traffic (about 5,000 impressions a month).

Contextual advertising program has also become important in recent years, with Google Adsense at the forefront. Google Adsense allows content publishers to display Google's text ads. Income potential is variable depending on the keywords that can be served up on the site.

b. Paid Online Content. 

Whereas "free" was the mantra of the Internet in its early days, fee-based online content is poised to grow significantly in the next few years. A growing number of web publishers are finding that people are willing to pay for content - if it's the right content and marketed in the right way. As a result, more web publishers (including home business entrepreneurs) are looking for ways to charge for their content and instead create members-only websites.

The types of content that customers are willing to pay to access include article libraries, searchable databases, coverage of in-depth topics, researches and white papers, and even content written by well-known columnists.

c.. Affiliate Programs

Web site owners with no products of their own can earn money by selling other people's products through affiliate programs. Affiliate program is defined as the revenue sharing between online advertisers/merchants and online publishers/salespeople. The compensation is based on performance measures, typically in the form of sales, clicks, registrations, or a hybrid model.

d. Content Licensing and Syndication. 

Content syndication is a business model prevalent in the print, radio and broadcast media and has now been adopted on the Web. The need for specialized content is created by a shortage of resources (like talent or money) to satisfy the demand. Original content can be expensive to create; hence Web sites that produce quality content can offer their content to other web sites through syndication deals.

July 29, 2003 (Updated April 16, 2009)