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?
That is exactly what I have been looking at. Maybe it is the accountant in me and I just need to stop analysing and put something out there. But, most people I agree don’t do their homework before spending that $100 and what do they expect to get in return. Without this expecation it is impossible to determine if you have succeded.
Exactly – the key is to really have some solid business plans in mind before starting a website and potentially wasting your time like I did.
Chris
Nice post, very old fashioned ๐
“make sales first” is my mantra. When I started out I would get so side tracked with design, plugins, tweaking… all stuff that really doesn’t matter at the end of the day.
Now I get the site making sales first, then play around with it if I must.
Cheers!
– Devin
You got it ๐
It’s so funny that you mention this because I came to a very s l o w realization of this. My journey started from what home business could I start (like daycare, etc. and counting numbers) to blogging (where I didn’t really think about how I was going to make money) to Internet Marketing (getting sucked into endless ways to make money) back to okay I’m not doing anything unless I see exactly how I will make money! Ever since I’ve done that and mapped out how I will reach my income goals – BAM – I actually make money. Go figure!
I think something happens to us when we start learning we can make money online. I’m not sure what but it sure is weird!
Yah, my hope behind this blog is to help people that are still trying to figure things out as well as those that are already doing this for a living. But if I can help save someone months or years (in my case) of wasted time it’s well worth it for me.
Chris ๐
Most are unfocused and are constantly jumping in and out of all sorts of stuff. They do not settle down long enough to make money with any of them. Once you’re making money then you can experiment with other things. The diffrence is you will then have the knowledge needed and the wisdom to know where to focus your attention and efforts.
Great input Britt and I definitely agree.
Here points you mentioned are great one but more disccusion requied before reaching at conclusion
My first blog was able to make money from sposnored reviews so I did create a lot of general niche but I found out that it is not as stable as I thought it will be since the offers aren’t coming as often as I thought. One day, I got banned from that site and that made realize that I need to work on increasing some traffic so I tried niche marketing. This is the start of true money making for me.
Thorough research is what we actually need in order to be successful online. It is important for us to check everything before starting our venture. Also, considering that not all strategies which are proven to be effective to others will be as effective to us.
If it’s your first shot at learning how to build an online business, I wouldn’t worry about whether it can make money or not — you don’t know nearly enough yet to be able to assess that accurately. If you try to go where the money obviously is, you’ll jump into a pool that’s way too deep for you and end up frustrated because you can’t have any success.
I always recommend that people start with something they’re genuinely interested in and learn how to build a website and drive traffic. Once you get good at those two pieces, then you can start thinking about a new site. At that point, you do need to take monetization into account.
Hey Shane,
Very good points you make there and the argument could be made that if I didn’t start and fail with those video game websites I would have never gotten to where I’m at now and doing this full time for a living.
Chris
To success an online business, you need to select one online business model and focus it until the online business earn big money monthly. Because for the early stage, you will spend a lot of hours with the online business.
[…] Bottom line: if you aren’t working extra hours after you get home from work to build an online business you should start now! Just remember to ask yourself this question before getting started “How Does It Make Money?“ […]
Chris so what you are stating is that I have a biz plan to start an online biz? Secondly I want to try so many things you know not all my eggs in one basket just scare of failure again I had an at home biz which did fail but I have to figure something out I love the computer and emails and text etc . I heard from Elon that you can have a few banners on a site and make money is that true?
I think the key is that you just really want to think about how what it is you’re working on will make money. Just have a loose idea in the back of your mind.
I also like to analyze if it’s something that is going to make money right away, or if it is going to give me smaller amounts of income in the beginning, but gradually grow over time. For example, an affiliate program that is going to pay me a one time fee (like a commission when I get a new customer for a company or make a one-time sale of a product) may pay me more money initially on that one time commission. But a program that pays me over and over again (like a commission on a monthly subscription) may give me a smaller commission initially, but more money over time. I hope to balance the two so that I have some money coming in up front (with one time sales), but also I am building up a passive income base with recurring commissions that require no further work.
After you determine if your site/biz can make money, you need to decide which methods of monetizing are right for it. My problem is my main site is much more fun for me, but my other sites will be easier to monetize. Though I know I really should just focus on one at a time, I need some income to start coming in for validation and money to grow with.
Though money is important, we don’t need to concentrate on it. We must try our best to develop something within us to reach our goal. In every business, money is important for investment but yourself is important for the whole operation in order to earn lots of money.