4 Reasons Why an Online Business is the Best Investment You Will Ever Make

By Thomas Smale, Co-founder of FE International, entrepreneur.com

Entrepreneurs are a rare breed of individuals who are constantly exploring new business opportunities. Some seek out new opportunities on their own while others are constantly being pitched new ideas.

The majority of opportunities, no matter how good they might sound, end up being a complete money-sucking nightmare due to expensive overhead,

slow scalability and low margins. Online businesses, however, can be very appealing because they don’t have the traditional hurdles that most new ventures face. The following are four reasons why online businesses are the best investment entrepreneurs can make.

1. Offers incredible scalability

Not every single online business is going to automatically morph into a huge success with rapid exponential growth. Many entrepreneurs start an online business thinking customers are automatically going to find them and sales will pour in because they have a small footprint on the Internet. They think that a few tweets and some Facebook posts are all it will take to snowball an online business into a virtual ATM machine.

Scaling any business is not easy, whether it is a brick-and-mortar location or an online business, but an online business has advantages. For instance, a brick-and-mortar retail store has a defined audience, typically a radius from the business location. An online business isn’t restricted by this and can market to a worldwide audience.

Once a successful marketing and advertising strategy is identified an online business can simply open up its target and increase budget to grow very fast.

2. Provides limitless freedom

Many entrepreneurs are drawn to online businesses because of the freedom they offer. Modern technology, laptops, tablets, business apps and VOIP communication systems are just some of the tools that allow businesses to be operated from any location. Next time you are in a Starbucks take a look around -- I guarantee someone is working on their online business or startup while connected to wifi and sipping their favorite coffee.

Not being tied to a particular location or desk from nine to five can be very empowering. Some entrepreneurs don’t know how to balance the freedom and fail miserably, while others use the freedom as motivation to work even harder. Don’t mistake freedom for time to slack off. True entrepreneurs respect the freedom and understand that the hard work is well worth the ability to spend more time with their families and partake in activities that most miss out on because they are part of the nine to five grind.

3. Low overhead and high margins

An online business will often allow you to eliminate some of the huge costs associated with an offline business. Not only can you eliminate things such as pricey office or retail space and long-term lease commitments, but you can also eliminate having to tie up your money in stocking inventory. A drop-shipping agreement with the manufacturer or a manufacture-to-order arrangement can greatly reduce your financial-risk and will allow you to maintain more consistent margins with less upfront cost.

Imagine if you had a business that sold hats and you carried five variations: red, blue, green, yellow and orange. In a physical brick-and-mortar location you would need to keep all of the variations in stock because you don’t know what hat the people walking through your door are coming to buy. If the yellow hats don’t sell you are forced to discount them and take a loss. Selling the same hats via drop-shipping would mean you won’t be left holding unsold merchandise that you have already paid for.

4. Access to a worldwide market

The beautiful thing about an online business is the ability to run it 24/7 without boundaries. There are no geographical boundaries and there are no specific hours of operation -- an online business can produce revenue around the clock, even while you sleep.

With a well thought-out social media plan, search-engine optimization and paid media strategies, an online business can thrive. You have access to the entire world right at your fingertips. The luxury of being able to target specific states, regions and countries gives an upper hand to online-based businesses.

Have you previously invested in an online business or are you considering it in the future? Share your thoughts with us in the comment section below.