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Not sure if you guys are interested in a financial journal, but I figured it would be worthwhile to document my efforts to grow a small business and retire early. In 2015 I lost my job in the oilfield and started a digital marketing company. At first, I was just freelancing and helping other people with their websites. But once I started to understand the industry, I partnered up with a friend of mine and started launching my own sites. Business Model Our primary business model is affiliate income. We write product buyers guides, use SEO to get these guides to show up in a google search, then earn comissions on any sales resulting from these articles. From launch, it takes about 1.5 years for these websites to reach maturity and start bringing in significant income. Currently, we have one old site that is bringing in around $6k per month in revenue. We also have three new affiliate sites aged 1 year, 6 months, and brand new. The one year old site was a failure. It brings in a small amount of income but was never really profitable and so we are just ignoring it now. The 6 month old site is bringing in around $200 a month, and the new one has no revenue yet. We are financing these sites with the revenue from our main website. Although we have established a bit of a system for these affiliate sites, this niche is getting to be very competitive. Everyone and their dog is doing amazon affiliate now. This also means that it's getting expensive. We expect to spend close to $80k on the newest site, although a large portion of this will be paid by reinvesting it's early revenue. That being said, we are now exploring a new business model known as lead gen. Lead gen is very similar to amazon affiliate sites. We build a site, get it to show up in a google search, and then earn money by directing the traffic to a third party. Only instead of product sales, we are drumming up leads for a local company. So, for example, we might launch a website for a local plumbing company. Once we start getting calls for people requesting a plumber, we'll reach out to local businesses and offer to send them all of this business in exchange for a per-call fee. This is far from an untapped industry, however we are able to get an edge by doing face-to-face sales and focusing on clients in our local area. The advantage of these local sites is that they are cheap to set up. Only a few grand per site. SEO has quicker results (around 6 months) so there is less time to become revenue positive. Additionally, we can use google adwords to start generating leads as soon as we sign somebody up. With adwords, our profit margins are much lower - likely around 25%. however, we can reinvest this money into SEO to get the sites to basically pay for themselves, then scale down the adwords campaign as search traffic increases. End result is consistent business for our client, and lower operating cost for us. Currently we have 6 sites live, although 4 are still in the process of being established. 2 sites are ready to go, and my business partner is spending september landing our first few local clients. The Job I used to do this full time. But building websites is expensive and risky. And when myself and my partner were drawing a salary, there was very little money left over for reinvestment. To mitigate the risk and facilitate better growth we both went and got jobs. I work at a remote copper mine and earn a salary of $98k plus bonuses and overtime. The shift is 7 days on and 7 days off. So for one week I work 88 hours at the mine, then I get 7 days to focus on the websites. This definitely slows down progress, but we've used a portion of our revenue to oursource tasks that used to take up a lot of time. I started the job a year ago, and spent the next 5 months paying off all my debt. Now i'm focusing on savings. Here's my financial stats: Liquid Assets: $2000 - Chequing Account $4721 - RRP (50% accessible to me, 50% employer match) $23,970 - TFSA (invested primarily in XAW) $17,824 - My half of the corporate cash assets (this is a pre-tax account) $48,515 - total liquid assets Non Liquid Assets $138k to $173k - Price range (after brokerage fee) for our primary website $10,000 - selling price for all remaining websites Selling Websites: There is a very well established marketplace for profit generating websites. In particular, amazon websites are very easy to sell. The selling price generally ranges from 24 to 30 times the average monthly profit over the last year. Sites showing growth can sell for up to 40x in rare cases, while sites in decline or with issues will get less. Another major factor in the selling price is how much time is required to manage the business. For the last year we had done virtually nothing to our main site, primarily to prove that it could do well as a passive income source to increase our multiple. However, we have decided to keep the site and do a revamp and expansion. This will drop the multiple in the short term due to increased expenses and effort required, but should increase the total selling price the future. It just pushes the selling horizon back another 2 years. Long Term Goal: Our lead gen sites (once profitable) will be sellable, but the market is much smaller than amazon sites. Companies need to be able to manage clients and deal with the additional volatility that provides, but if you can find a buyer then sales are possible. I personally know of several $1M+ deals that have gone though. The ability to sell sites is a major component of my stretch goal. Best case scenario, i'd like to build this company to the point where we have $3.6 million dollars in post-comission/corp tax assets. Once liquidated, that gives both me and my business partner $1.8M each - enough to earn $72k per year at a 4% withdrawal rate. On top of this, i'd like to have a house paid off. To reach this goal we'll need three affiliate sites earning $8000 profit per month each and 100 lead gen sites earning $1000 profit per month each. That's a total monthly income of $124k, and a selling price of 3.1 million combined. The proceeds from selling the sites gives us our investable assets, and the monthly revenue during the year or two we'd need to sell them all would buy a couple of houses. We are still a very long ways away from reaching this goal. But I do have a plan to get there, and I can elaborate on it more if people are interested. Short Term Goal: With our latest affiliate site just launched, i've gone through and trained a freelancer on how to manage and execute our launch plan. So he'll require a little help while we get that rolling. In the meantime i'm working on getting the adwords campaigns set up for our two completed lead gen sites, and my business partner is getting his sales pitch sorted out and qualifying potential clients. My Personal Budget: $8166 Income $2166 Taxes $250 RRP contribution $1000 Travel expenses $600 Food $500 Rent $250 Fun $100 gas $85 car insurance $65 Utilities + cellphone $150 random money I have no idea where it goes $3000 savings In general i'm saving about 50% of my post-tax income. Some months it's less as i'll blow it on something, other months it's more if I get a bonus or some overtime. Really the biggest expense that I could cut is travel. The mine I work at is located in a somewhat isolated northern community, and I live on vancouver island. I could save a ton of cash if I moved, buuut I love where I live and all of my family and friends are there so I don't have any plans to do this unless I need the cash for something. If there are any particular aspects of this you'd like to hear more about, let me know! If not, send this bitch to the gas chamber and i'll leave y'all alone.
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Aug 20, 2019 19:51
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| # ? May 9, 2024 16:20 |
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What are the more significant costs of building a site?
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Sep 18, 2019 17:17
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A new spine.
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Sep 18, 2019 17:26
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IdealFlaws posted:What are the more significant costs of building a site? mostly labor cost
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Sep 20, 2019 19:53
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What do you do at a copper mine to make $100k a year? What country are you in?
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Oct 11, 2019 23:21
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IdealFlaws posted:What are the more significant costs of building a site? For us it's mainly links. One of the primary things Google takes into consideration when deciding where you should show up on a search results page is the number of links you have. you want more links from popular and relevant blogs. So the costs in getting those are either a per-link fee of $200+, or the labor cost of having somebody reach out to hundreds of blogs and trying to get a guest post. Plus the blog owners usually charge a fee for themselves as well. Second biggest cost would be content. With our latest affiliate site, for example, we have 150,000 words of content planned out. That's longer than the average book. We'll pay our writer $6 to $8k for that. Fozzy The Bear posted:What do you do at a copper mine to make $100k a year? What country are you in? I'm in Canada, and i'm an automation technician. As for an update, we just acquired a new affiliate site for $5000 and might close on a second one if they will accept $2500. It's not a big site, still ranking at the bottom of the page for most searches and earning an average of $150 per month. But it has a lot of room for growth. I'm pretty confident we can get it to $500 / mo, maybe $1000 if we are lucky. Our new website is rolling along nicely. Started to get indexed for some of it's search terms, and we've got a guy working on getting us a few links to start. 10 so far, more to come. Will be at least another 4 months before I have anything significant to report on this site. We also closed 1 client and have another guy on a trial. Not as much as we'd hoped, an extra $600 a month. But it's a good start for our local sites. We've planned out 10 new lead gen sites for the coming months. The last ones were all in smaller cities. Small cities have very little competition, but much less traffic. It was a good way to test the business model, but now we are ready to hit it hard. Our plan was to launch minimum of 1 new one every month. The first one is already live, and work has started on getting it ranked. It's a semi-seasonal niche, so the spring is when it's going to start to bank. The second site is about half way along. This one i'm really excited about, as it's a service that we can offer in-house. So while it's a lot more competitive than we usually go for, the profitability is much more than the usual sites we'd build. Current net worth was sitting at $56,542 as of Oct 1st. +$8k in about two months. Haven't factored in the purchase price for the new websites or our end of sept payments, but it will probably drop a bit because of the site purchases + tax time.
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Oct 15, 2019 03:38
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Is an affiliate site just a curated (or maybe not so curated) collection of Amazon affiliate links to products?
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Oct 17, 2019 00:25
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Primarily. We link to other suppliers as well.
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Oct 17, 2019 02:58
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this thread is relevant to my interests! I used to manage adwords spend for one of google's top advertisers, but I never understood the SEO side of the game.
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Oct 17, 2019 17:03
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Has this work gotten a lot harder over the past years as more and more people outside the west get into this work? I deal with a lot of people from Asia and Africa in this and related fields, and it feels to me like they've flooded the market. They've all gotten it into their head that this is a low effort business, but it's very clear that they lack the cultural understanding that is needed to properly produce websites and content that work for end users in the most lucrative markets. It's also very clear to me, as a normal internet user, that the crappy content they produce clogs up every part of the internet.
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Oct 23, 2019 11:38
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| # ? May 9, 2024 16:20 |
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EricBauman posted:Has this work gotten a lot harder over the past years as more and more people outside the west get into this work? Yes, it's absolutely become more difficult and expensive to launch an affiliate site over the past few years. There are tons of gurus hyping this industry up and that floods the market with noobs who think that they can print a 6 figure income just by slamming out a handful of blog posts. And the more content there is, the less profit each piece of content is going to make. And I think that it's this saturation of content is the main reason that there is so much low-effort junk on the internet these days. For example, with my first site, I found a search term about a DIY project that had pretty good volume. There was a forum post ranking in the top position and I knew it wouldn't be hard to out rank. So I bought a bunch of supplies, did the project myself, took a bunch of photos, and wrote up a blog post to document the process. After slapping affiliate links on the parts and ranking the article I was earning about $200 / month off of it. With that kind of return you can afford to produce something of value. Now there is at least 10 different blogs with tutorials for the same project, all ranking for different variations of the same search term. My post earns about $15 a month these days. How much work would you be willing to put into something that makes $15 a month? Not much. If it was this competitive when I first wrote the post I probably would have just sat down for an hour and slapped out a generic tutorial. And that's the business model for a LOT of affiliate sites. Just crank out content as fast as you can and hope that you can make a few dollars per month on each one. It's not a lack of cultural understanding that causes all this low-value content. It's just easier to produce it on a mass scale. Even now i'm investing a pretty significant amount of my resources into a website which I consider to be pretty high quality. But that's only because I had some success early on that gave me the resources to do so. My original site is still being kept afloat with quick and dirty content that i'm not exactly proud of. but it works.
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Dec 22, 2019 07:48
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