I work in an industry where a lot of people try to chase after the big money with small efforts invested, looking for quick cash. Seldom their expectations are met. What brings the cash in is long term dedication towards strict economical, and other measurable, goals. This holds for true with online businesses as well, a lot of people is looking for the big cash-in, either through advertising, affiliation or selling one of its properties. Instead of buying useless “Universal Solutions” for making you a millionaire over night, try to set the correct goals for being a millionaire within 5-10 years instead. Otherwise you will only feel frustrated every single day, when you miss out on your short term goal to become an online millionaire. Of course there will be a YouTube sold to Google every year or so, but I wouldnt put to high expectations on it happening to me. In this article I will think out loud about starting up your own small online business.
It is not all or nothing
Whenever you end up in a discussion whether or not a solution would fit as an online business and make you money, a lot of people end up saying “That has already been done”, yes of course, but that is not a relly good argument, look at the shelves at your convenient store, there are more than one brand of cereals, right? The good thing with online businesses is that you can choose to target any market you like, even ultra competitive markets can be targeted. With the right online marketing techniques, long term dedication, geographical location and niche you should be able to monetize both short term and long term, but with the possibility to expand geographical location and niche as a long term goal.
Set up close to realistic goals
Without goals you do not know if your business is running good or bad. You have to have detailed goals; economical, traffic growth, service evolution, budget for online marketing etc etc. It is crucial that you know your market, your future customers and you competitors. By analyzing the competition and competitors offers, you will get better information on how to set up your long term goals. Tools and techniques you can use for evaluation of these things can be:
- Web services such as Alexa.com and Compete.com
- Set up comparative analysis tables for 3-5 competitors to see if there is a niche not yet covered/focused on by competitors.
- Keyword analysis, to find bargain keywords to focus your SEO and PPC efforts on.
- Check with Commission Junction, TradeDoubler and other Affiliate Networks if you can find affiliate programs that easily can be monetized on your online business.
- Try to buy adspace on competitors to get an idea of what they are charging for advertising space.
When you have identified the competitors and economic possibilities, try to set a short term goal and a long term goal. The short term goal must in no way compete with the long term goal. My suggestion is to set up goals that are realistic + 20%, that way you are pushing your self. A typical short term goal could be to say “In three months my business must have 5000 Unique Visitors per month” and a long term goal could be to say “Within 3 years my business should generate enough income for me to pay for my car, phone and apartment”.
Measure and evaluate
Set up different measure points, that will tell you wether or not you are going in the right direction towards your long term goals. These measure points is often called KPI (Key Performance Indicator) and is used to get a health score on your business. What you need to do is to identify things that can be measured and set a value on those kind of things. A typical example could be:
- A user signup is worth $10
- A new unique visitor is worth $0.05
- Conversion rate vistors-to-users, users-to-buyers, buyers-to-returning-buyers etc.
The value of these different actions is of course an equation based on how you convert your users to paying customers, and by tuning conversion rates, values of different actions may increase in value. Of course you can measure “soft values” as well (design, first impression, brand recognition) but for that you need some kind of interaction with the user through interviews or surveys on a regular basis.
Baby steps is better than no steps at all
By taking the scientific approach to your business, you are going in the right direction, and sooner or later you will start seeing result on your daily income from your online business. It can be very frustrating to see that you only make small number of sales and leads early in your business, but the fact that someone is actually doing something making you money, is an evidence that you have something that works for someone. Now you just have to use all your evaluation tools to identify when it works for who. By doing this, you will increase the chances for earning more money, but it can be a time consuming job, that is why long term is the key. Try to identify what works, and tune that, try to identify what do not work and redo that. But remember: What works short term, may not work long term. Adsense ads all over your website may work for unique new visitors, but I bet you see a high bounce rate and low pageviews/visit.
Do not expect wonders
If you have competition on the business you have chosen to focus on, you will have to fight hard to gain market shares and traffic to your business. Sometimes people find a niche where competition is low and traffic is great, but I do not think it happens too often nowadays. Hard long term work will make it work for you, but do not expect short term miracles when applying a long term strategy to your online business. Sooner or later traffic and earnings will explode if you focus hard. There are no easy ways to success (except luck and exceptional timing)
Conclusion
There are no shortcuts to making huge amounts of money online. But you can gain leverage on your competition by setting up long term goals, KPI:s, evaluate daily, weekly, monthly, tune your product, listen to your users and have faith in your business being a success long term. Avoid setting short term goals that may harm your long term product strategy.
