One of the first questions that pops into your mind when starting an online business venture is how much you can expect to make. That is a very right question that should be one of the main factors to decide whether you should start a particular project or not. As you gain experience that’s how you plan a project to begin with.
But I want to direct this post more to the beginners. When you have never done any business online, you don’t know what to expect. Will you make $1 per month or $1,000? It is very easy to get overly excited if you stumble upon a get rich quick product, or get discouraged by people who have failed. However, the matter of fact is that people do business online, that’s why we have all these great sites we visit for fun, to buy stuff and spend our time online.
So how to set your expectations to begin with? There are three ways:
- Your own experience
- Asking around
- The marketplace (Flippa)
As you gain experience, you know what you can expect not only in theory but in practice and according to your own ability. That’s an invaluable information, but it’s not available to beginners and takes years to gain.
The next logical step would be asking around the forums, blogs, keeping an eye for the clues. Not everyone is willing to reveal how much they make, but if you make friends with some of the successful people, they might reveal some of their cards.
A sure way to get this information is the virtual real estate marketplace. People buy and sell websites, established and new alike. The information about the marketplace listings can be very detailed and valuable. Often a seller goes out of their way to provide as much information as they can to sell their website. That means there’s such information as the exact business model, traffic sources, income sources for the taking. Visit Flippa on daily basis and you will not be short on ideas.
With that said, let me share you my experience about the most realistic exceptions of online business. To better explain, I’ll break it down to the types of the most popular online business models:
- A niche website/blog monetized with ad/affiliate revenue is one of the easiest ways to start making money online. I often see experts recommending the beginners to start a blog first things first. You can expect to make from under $100 per month in the beginning to mid $100s as your site grows and even over $1k monthly if you do good. However, I very rarely see such sites making much more than $1,000 monthly.
- An alternative to the above is article (“bum”) marketing which involves posting your content to high (at least moderately high) quality article directories and directing traffic to the affiliate offers. It requires less initial work but is also a lot less flexible. It’s also hard to evaluate someone else’s business based on this model because it’s scattered over a number of sites and mixed up with other content.
- Selling your product (or retail products) or service is perhaps the most lucrative online business model and not necessarily that difficult if you know what you’re doing. Obviously your product or service has to be valuable to your target market. You can easily make from a few $100s to over $1k a month. On Flippa, you’ll often find such established businesses being sold that make several thousands (and sometimes tens of thousands) per month.
- Finally there are those models that don’t include creating any websites (except landing pages). There are many of them and most include buying traffic via PPC, CPV, banners and other methods and sending that traffic directly to affiliate/CPA offers for instant revenue. These can have as big potential as your pocket. The rule of thumb in my experience is to expect a maximal ROI of 100% (meaning if you spend $1,000 you earn $1,000 in profit). I don’t recommend this to beginners as it requires experience more than anything and your mistakes can be very costly.
There’s one thing I haven’t mentioned that can increase the profitability of any business on the “back-end”. I’m talking about email marketing and lately social networks. Building a relationship with your clients/visitors can create a huge asset – the potential is endless.
Also note that your real life results can dramatically modify your expectations. You can make a lot less, or you can make a lot more if you’re lucky with any particular business model. My experience is very similar to the data I see on Flippa – that’s what prompted me to write this post. Chances are yours will be too, especially when you gain some experience.