Thursday, October 12, 2006

Business Startup Plan - 2 For 1

I was visiting one of my favorite sites for entrepreneur information and news this morning and they had a good article on business startups. In particular I enjoyed reading the note about buying an existing company with an existing cash flow. I would like to add a little to this idea.

When I first started out trying to make money with my online and off-line business model, I never would have opted for buying someone's existing web site or blog. I would never have put up money to start my business because I was like most Internet entrepreneurs in that I was a coward. Sounds like a sick comment to say that Internet entrepreneurs are cowards, but let's face it; when your expenses and overhead for startup are only 7 dollars a month (if that) for your web hosting and domain, you aren't taking any risk.

If I had to do it again, I would have considered buying an existing business, but this is how I would do it.
  • I would only buy the business if it came with training
  • I would only buy it if it had a proven and consistent cash flow that I could monitor

On the first bullet I'm getting at the learning curve. The old saying applies to my own experience; "if I knew then what I know now I would be further ahead". If you can arrange to tutored or taught how to run the business as part of the deal for buying the business, you are WAY ahead. As a matter of fact, even if you learned the art of that business and then flipped it back on the market, the education would have been MORE than worth it.

  • in the end, it comes down to your knowledge on how to build a site or blog (or bricks and mortar business)
  • how to maintain traffic flow
  • how to convert that traffic
  • how to choose products and services that convert well
  • how to utilize resources for the lowest possible price
  • how to best utilize resources for the biggest possible gain for all of the above
  • how to choose a business category
  • how to understand the market's vectors
  • how to understand a markets potential
  • how to diversify any business that is up and running
  • how and when to outsource

If I've learned anything since I've been online, it's that the education and knowledge we gain is far more important that than present cash flow of your business. Once you understand how to repeat a successful startup, you can basically print money.

So when you are shopping around for a business model to buy into, get a 2 for 1 deal. You buy only if it comes with expertise they are willing to bring your way.

Thursday, October 05, 2006

From Employee To Self Employed

First of all, when you become self employed you need to look at debt with a completely different lense. If you run your business in debt during the slow part of your business season, it's not really time to panic. At least that is what I try to tell myself ;-)

The interest you pay on your line of credit, or operating line, can be written off at different percentages, depending on the tax laws in your, state, province, or country. If you are used to being an employee, you will likely squirm at the thought of having a red balance on your line of credit, but you need to get over it and start thinking in terms of running a company.

Many companies, large and small, service a large debt and they service that debt sometimes until they sell off the company. Yep, sometimes they run in the hole during their entire existence. That is why we refer to some folks as being rich on paper, but can't really afford to be summering in France. Of course when a healthy company is sold, the owners are often green with wealth.

The main thing is that your company has a cash flow that is healthy over the year. Try not to get too wrapped up if your cash flow does not cover your expenses for one particular month. As long as the busy months make up for it, you are doing just fine.

What ever you do, don't look at your business based on one day. When I first became self employed I would sometimes judge my business based on ONE HOUR! Now if that's a not a recipe for self-induced stress, especially when you are on your own and you've been used to getting a check from an employer every two weeks. Personally, I'm starting to understand how the self-employment gig goes, but it's been an adjustment for sure.

Make Sure You Hire Professionals For Your Accounting

One thing you can do to reduce your concerns, is hire professional accountants and bookkeepers. I know that many people become self-employed try and do their own accountanting and bookkeeping, as well as their own tax return preparations. I'd advise against that choice.

In the long run, these professionals can save you much more than what you save doing all the bean counting yourself. Besides, the time you spend pulling your hair out with a calculator and a mountain of paper, you could be creating more revenue streams. Do what you do best and hire someone to do what you despise doing. Of course, if you enjoy doing books and tax returns, that's a different stroy - fill your boots. Personally, I would rather pay experts for that work, and spend my time increasing revenue.

When you are done at year end you can see all of your expenses and all of your income meticulously prepared for the taxman. You can see how a large percentage of your costs are legitimate tax write-offs, and how the interest you paid on your line of credit can be part of those tax write-offs.

It Takes Time To Really Judge Your New Company

Once you become fully self-employed, you'll need to be operating for some time before you see where you are at. Until you've had a year end, you won't really have an accurate picture of where your business's financial health is at. Sometimes you just have to put your head down and work hard, when you feel uncertain of your business future. Sometimes is just luck, so we have to bear down on the tasks of the day, and go for it!

If you find that in the first couple of years you don't make any profit, but barely keep the lights on and food in the fridge, try not to panic. This is normal - actually it better than normal - some businesses run deep in the red for many years, before they see a cent of actual profit. If in the first year of running your business, you are paying down all your costs and you have enough to live off, and don't run any personal debt, YOU ARE WINNING BIG TIME!

Don't burn yourself out with over-work and over-worry. Just work smarter and not harder as you go along. Focus on what avenues really make the money, and maintain a consistent level of growth.

Tuesday, October 03, 2006

Keyword Market Vectors - Blogging Markets

The law of life is that when someone is flying high, others will be crawling slow - and all fortunes can be reversed in the blink of an eye.

I've been spending allot of time lately studying the different traffic levels for the most popular product and service keywords. There are literally thousands of extremely popular markets (and keywords) making the decision which keyword market to compete for is difficult. Yes, there are fancy (and so fancy) databases available that supposedly tell you which keywords pay the most in the Adsense realm, but you really don't know until you have launched a site and tested it for real. Meaning real traffic from real people who really looking for a product or service.

What I've found interesting is watching the popular keyword searches fluctuate from month to month. For example; school supplies is a query made in massive proportion during August and September, but drops off considerably in October. I could list many many more, but you get the point. This is why diversification can be so important.

If I was to start all over with this Internet income challenge, I would have built maybe 4 big blogs (instead of 40 little sites or blogs) and I would have chosen 4 keyword markets that cover the seasonal patterns. Now I know those reading this would say the flies directly in the face of our initial tutorials on Money Traffic, but those tutorials just demonstrate a method of testing various keyword markets. Yes, you can also make some good money using the tutorial method (using Blogger accounts to create high quality blogspot blogs), but when you are really going to build a massive resource you should be using a domain name you own, and a quality web hosting server.

So I would suggest newcomers use the Money Traffic tutorials to get started with an all free option, so they can learn how to blog easily, learn how to create partnerships with other bloggers, and learn how monetize their pages. I would test a handful of keyword markets, and then find one that pays very well with Adsense, and perhaps as high converting merchant. Then once you have the winning blog established, buy your own domain name and hosting, and run a MONSTER blog on that topic. I don't suggest trying make a blog that just talks about how to blog for money though - people who visit sites like this one don't often click ads and they don't usually convert sales. I would build your monster blog around a basic product or service that normal people look for, and not around products or services that us Internet savvy types seek. (just my opinion here folks - to do well selling to people who are learning to sell, you have to have some serious clout)

Anyway, off to my other blogs. Got a ton of work to do today!!!