Best Type Of Web Business To Start (Part Deux)

written by BlogEx on April 9, 2008 in Blog Optimization with 18 comments

Picking up where I left off yesterday regarding the best type of web business to start

4) Affiliate Partner Website

An affiliate website is when the sole purpose of the web business is to promote other companies as an affiliate, and earn a commission for any sales you refer to them. Affiliate sites are very common and they are a pretty decent way to earn money online.

An affiliate site can sometimes be a combination of other sites such as a content site that promotes affiliate programs. Sometimes affiliates will setup entire websites just to promote one company or one product as an affiliate, which is especially good if you are promoting your site using pay per clicks ads. You can better target your keywords and marketing efforts if you narrow your focus.

I like affiliate type businesses as a low cost method of “getting your feet wet”. You don’t need to buy inventory or build complicated websites to start an affiliate business.

Once you start promoting products as an affiliate and start earning commissions, then you will have the skills necessary to start up your own full time business (which is where you should try to end up eventually).

Simply promoting products as an affiliate is pretty easy, but the downside is you only earn a portion of the total sale. Each industry is different as far as payouts go. Physical products such as lawn furniture for example, may only pay a commission of about 5%. So, if you sell a $100 chair in that example, you would earn $5 for your efforts.

Notice how this compares to the dropshipping example from yesterday? As an affiliate, you may only earn 5% of a sale, but you don’t have to deal with customer service, or inventory headaches or credit card fees. The company that you are selling for has to deal with all of that. You just get a commission check sent to you for promoting products.

Affiliate programs can pay out as little as 2% (such as Amazon.com) and as high as 75% of each sale for high profit margin products like information products (ebooks, membership sites, training courses, etc).

There are plenty of affiliate networks you can join to find products to promote as an affiliate. Some of the more popular ones are Clickbank (for info products), Commission Junction, Hydra Network (for pay per lead type affiliate offers) and many others. (notice no affiliate links, I’m not promoting these companies, just think they are helpful to you). Just search google for affiliate network and you’ll find plenty of options.

Starting an affiliate business is probably my second favorite type of web business to start due to its low risk, high profit potential.

5) Electronic Download / Info Product Business

Last but not least is the infamous information product business. There are many options that fall under this business category, all of which can be extremely profitable (that’s why I like this category the best).

Typically when people hear the word info-product, they immediately think of “ebooks”. This is probably the most popular type of infoproduct there is because they get the most attention.

I’m here to tell you I think ebooks are the WORST type of infoproduct there is out of all the options available in this category. Here’s why…

Ebooks are very easy to make. All you have to do is type up a few pages in Microsoft Word, convert the file to a PDF and you have an ebook. Anyone can write an ebook, even if they don’t have a clue what they are talking about. Heck, you can even hire a ghostwriter to write an ebook for you for about $500.

Because of these “issues”, ebooks are getting a bad reputation. They are decreasing in perceived value because they are being abused. How many trashy ebooks have ripped you off in the past?

Not all ebooks are garbage however, so it’s not fair to make a blanket statement that all ebooks are worthless.

To get yourself away from this “cheap stereotype” ebooks are classified as, you should consider a different format for your information product.

There are many types of electronic download products to sell online. Aside from ebooks, you can have software created and sell that instead. Software is great because not Joe Schmoe can make software, it requires some skill to program code. This makes software more valuable than an ebook. Also, since software is all electronic, the profit margin per sale is virtually 100%. Sell software for $50, you keep $50 (minus credit card fees, etc).

If you don’t know how to program software programs and don’t want to hire a programmer to make software for you, don’t worry, there are plenty of other opportunities in this infoproduct arena for you.

Similar to ebooks, you can create audio programs or video programs. Now that technology is so readily available, you can make your own videos or audio programs pretty easily. Audio and video programs have a MUCH higher perceived value than ebooks, even though they are just as easy to create.

Rather than typing out 50 pages of text for an ebook, just record your voice reading the ebook and save it as an MP3 file for people to download and listen to. Audio programs are great because your customers and listen to them on their Ipods or put them on a CD and listen to them in the car on their way to work.

Videos are great for showing people how to do things. I don’t know about you, but if I SEE someone doing something, it’s much easier for me to learn how to do it myself (vs reading about how to do it in some ebook).

Here’s an idea you can immediately take advantage of that is pretty simple and can make a lot of money. Take any ebook that is selling right now, and turn it into an audio and/or video training program and you have an automatic best seller. It’s not only easier to sell a video or audio program, but you can also charge more money for it because it has a higher perceived value.

And finally, MY FAVORITE type of web business…

The membership website

I think membership sites are hands down the best type of business you can start for many reasons. Since they are electronic/infoproduct businesses, each sale you make is 100% profit. The huge profit margins allow you to spend more for advertising, pay more to your affiliates and hire people to help you.

There are many pricing methods available to membership sites as well. You can charge a one time lifetime membership fee, an annual membership fee, a monthly membership fee or even a 3 day trial membership option.

Because you can spread out payments over several months, it’s much easier to “sell” a membership than an ebook or audio/video program. Think about it, would you prefer to spend $100 on a video training course or signup to a $15/month membership site that offers the same training?

Well, if you chose the $15/month option, you’ll end up paying $180/year for that product, even though it “feels” less expensive. That means more money to you as the website owner.

The biggest reason why I love the membership website concept is when it’s time to sell your website (you will sell your website, right?)

Membership sites are the only type of internet business that has a predictable income stream. If you have 100 members each paying $15/month, you are making $1500 per month. A potential buyer of your website can reasonably assume that your website will make roughly $1500 the next month as well just from the current customer base. Granted, there will be some people dropping out of the membership site, so the income is not 100% guaranteed, but new people will also be coming into the program, so it’s pretty predictable.

When a website has a predictable revenue stream, that website has a MUCH HIGHER value to a buyer because it is seen as being LESS RISKY. If Google changes an algorithm and your website loses all of its free traffic, your membership site will still be making $1500/month since the members are paying a recurring membership fee.

Since your membership site is less risky to a buyer, the buyer will PAY MORE for it. This is one reason why our websites sell for 20-30 times their monthly profit while most other websites sell for an embarrassing 10 times their monthly profit. By changing your website from an ebook site to a membership site, it has the potential to sell for 2-3 times as much money or more! I’ve seen good membership sites sell for 4-5 times their annual profits (that’s 48-60 times their monthly income if you are keeping track)

It doesn’t take a lot of revenue before that starts adding up. Again, being conservative like I usually am, if you have 100 members each paying you $10 in your membership site, you will make $1,000 per month. That doesn’t sound too impressive, does it? It’s also not very difficult to do.

On the other hand, if you can sell that membership site for 3 years’ worth of profits, you can get a nice fat check for about $36,000 cash! Hmm, how hard can it be to find 100 members to your website? Think that effort is worth $36,000 to you?

And that’s a conservative estimate. If you run the numbers for more members or a higher monthly membership fee, the sale price when you sell your website can get astonishing, very quickly…

So, there you have it. All the different types of web businesses you can start, and the possibilities each one can provide to you.

What do you think?