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How Does It Make Money?

Traditionally, this was one of the single most important questions you needed to answer when you started a business before the internet was around. It was generally something that you thought about for hours, days, weeks, months before deciding to launch your business. You would have to include the information in a business plan if you were going to get a loan for the money you needed to help get your business off the ground.

The Internet Business Mentality:

When the internet came along people decided they didn’t need to ever have a plan to make money before launching the business because the barriers to entry were so low. The late 90’s saw dozens of web companies going public that never even turned a profit let alone had a viable business model to survive on. Most of these companies failed and only a few remained after the tech crash, but even now 10 years later I still see people starting online businesses without any idea on how they will ever make money. Call me old fashioned, but unless you have a solid plan on how to make money with your business all you have is something “cool” (aka Web 2.0 companies). This is the same reason why I see so many people failing with their websites today. It takes less than $100 to create a website, throw up some Adsense and hope for an avalanche of clicks to come through. When you don’t make money it’s easy to give up because after all, you spent less than $100 right?

Why I Ask ‘How Does It Make Money?’ For Every New Project:

My First Online Business Experience:
When first I started to try and earn money online five years ago with the launch of my first video game forum I never stopped to figure out how the website could make money. I never did any research on forums beyond the software I needed to run them. I never found out that forums have traditionally the worst click thru rates on advertising and that many advertisers avoid them like the plague. I never stopped to figure out that a video game based forum is even worst for making money because the target demographic is nearly impossible to sell to because they either have little to no money or only buy inexpensive $60 video games. Because I failed to ask these questions the most that website ever made was $500 a month despite the 500,000+ monthly page views at the height of it’s popularity.

Finally, A Viable Business Model:
After several more attempts at running my head into the wall without ever “getting it” I finally decided to branch out and find new potential web business models. I had the unoriginal idea that people are always buying things online so why not provide a gateway between consumers and their shopping destination that provided great advice on what products to buy? This is what lead me to Amazon’s affiliate program and how I earned $40k+ with just Amazon’s affiliate program in 2009 and have earned even more now in 2010. I took what I learned and put it into a training course designed to show people how to build income generating websites which you can see more information about at Niche Profit Course. I did this because I thought other people were probably having the same problems I used to have as well floundering around online without any decent idea to make money online.

Moving Into The Future:
Since then I’ve launched several new projects some of which I’ve discussed on this blog and others that I’ve kept private for the time being; however, the one question I always ask before I launch any for profit venture is “How Does it Make Money?

Do you?