Honing Your Financial Success Edge as an Online Entrepreneur
17th Jun 2020
The modern entrepreneur is being redefined. Yes, they still need drive, perseverance and an intuitive business sense but the COVID-19 pandemic has created new opportunities and forced existing businesses to rethink their business models. At Dedicated DB, we’ve become accustomed to working with unique entrepreneurs–YouTube influencers, online style gurus, specialized tutors–who have tapped into a niche and soared. With many people now working from home, the internet offers a tremendous ability to do great things, and has created a prospect for business entrepreneurs who are looking for large online businesses to begin.
The World Economic Forum says more digital entrepreneurs will help shape the future because of the ability to leverage digital tools—a must for entrepreneurs to survive the ongoing COVID-19 crisis. Although the pandemic has had a severe impact on global economy, it has accelerated the process of digital transformation across almost all sectors. An online business is worth the time and investment if you can find the golden needle in the morphing haystack.
Steps to Online Business Success
The most important step in launching a successful online business is to find a business idea that matches your skill set, strengths and passion. Whether you are looking to become a full-time entrepreneur or just want to start a part-time business for passive income, your product or service should fulfill a specific consumer need. It’s also important to have a plan—you don’t need a formal 20-page business plan but you need to know who your customers are, what you are selling and what people are willing to pay for your product or service, according to Entrepreneur.
Online Education Is Booming
Business has never been better for online learning. When schools shut down because of the pandemic, many education technology companies saw demand for their services increase, such as Chegg, an education company that provides digital and physical textbook rentals, online classes and tutoring. We have clients who found financial success in the online space as tutors, creating school curriculums and teaching courses. One of our clients, a standardized test tutor from Massachusetts, has helped high school students for 20 years achieve high scores on their SAT and ACT exams. He offers one-on-one sessions and also builds confidence in his students. In 2019, his net business income was $800,000 and contributed $291,800 to a Defined Benefit and 401(k) plan with annual tax savings at about $62,000. If he sticks with his plan, he will accumulate $2.9 million for retirement.
YouTube Launches Lucrative Careers
Content marketing is a rapidly growing industry and is projected to grow by $269.24 billion during 2020-2024, according to Technavio. YouTube has produced a new generation of influencers that have turned online video creation into lucrative full-time careers—the most successful YouTubers sell products or learn how to monetize their influence in other ways. Some of the most popular YouTubers include video game commentators, makeup artists, and vloggers. One of our clients, a fitness and lifestyle expert, started his business with YouTube videos and online sales. Today, he has own brand of products, product placement, reviews for sponsors and offers virtual training to be an image consultant. His S-corporation income is over $650,000 a year but in the past, he kept his W-2 low–about $40,000–to minimize payroll taxes and took the rest in K-1 distributions. However, on the advice of his CPA and advisor, he will increase his annual W-2 to at least $285,000 so that he can use that compensation as the basis for a retirement plan. He will now contribute over $122,200 each year to a Defined Benefit plan, which is deductible from current year taxes and will accumulate $2.78 million toward his retirement.