Internet Money Making Principles
I have seen a lot of interest lately with making money on the web, from frustration to hint dropping from those who have had success. Thought I would throw out a few principles I follow regularly to help clear away a bit of the enigma of becoming profitable on the web.
1) Distinct products or services. Everything sold can usually fall into these two categories. Services might be web design, web hosting, consulting, etc. Products are self explanatory. Products are the way to make big $ but may be harder to get going at first and have risk unless demand for the product has already been proven or carefully researched. Either way, you must differentiate yourself from the competition, not merely copy. Copycats have a hard time wrestling away consumers from already established businesses. It is harder to get a customer intially than keep them. If you have no competition, you must set and keep the standard with your company. Just because you don't have competition now doesn't mean you won't have it within a few months.
2) Understand margins. A margin is the amount of product expense verses profit. If it costs you $10 to make and ship a t-shirt and you sell it for $15, you have a $5 margin. Low margin items require a very high volume to make money. High margin items require much less traffic but depending on the price of the item, may require more skill in getting people to part with their cash. Low retail price products with high margins are gold. Next time you get spammed over and over again by a certain product, think about why they are marketing it so aggressively.
3) Understanding markets. Competition is fierce in some categories (travel is a recent example). Carve out a niche in a competitive market (i.e. target a city, region, or state) for more viable results. Low-competition markets (new or emerging markets) require you to set your own boundaries. How broad or narrow will depend on your goals and viability of servicing an audience and staying on top in that market.
4) Spend the most time on the most profitable ventures. If you are confident you have spent ample time on a market and the money isn;t there, don't be afraid to walk away or put the project on hold. Don't beat a dead horse…it is dead. On the other hand, if you tap into a vein that is producing very promising income, milk it for all it is worth and don't get distracted by other potential ventures.
5) Diversification. Once you have found an income stream you can tap into, you can't expect to last forever. Like a good stock portfolio, you shouldn't put all your eggs in one basket. Minimize risk through diversification. Multiple revenue streams, multiple products, multiple services, multiple businesses…whatever. Dont' overdiversify beyond what you can handle. Leave enough time to sufficiently develop promising current projects.