Online Business vs. Offline Business: Pros and Cons

There are many types of businesses and different channels to reach your customers. One of the first steps you need to take when starting your business is what type of operations structure you want to use.

There are three main types of operation structures: Brick and Mortar, E-Commerce and Brick and Click. In this post I’ll discuss these types of operation structures and some of their pros and cons.

Brick and Mortar

The traditional approach to starting a business is by opening up a physical location where customers come and purchase your product or service.

Pros: Depending on your product or service, a physical location can offer a lot of advantages.

• 1. Develops a sense of trust or authority with customers by showing that you are financially stable enough to have a store or office. Even though consumers are familiar with websites they can still be cautious of web only companies. With service companies it adds an element of professionalism.
• 2. Customers still like to shop before they buy. Having a product on display that they can touch and examine helps the customer to commit to a purchase.
• 3. Walk ins – As much as many of us web savvy businessmen would like to believe there is a large % of people who simply find products and services the old fashioned way. Instead of Googling what they need they’ll see it while driving or have a friend tell them about a store they visited. If you are in a high traffic area you can get a large number of walk ins. It’s the equivalent of getting to another person’s site by following a link or using Stumbleupon.

Cons: Although there aren’t many cons to having a store there is one major one.

• 1. Cost - The biggest problem with renting or owning a brick and mortar business is the cost. Commercial space ranges from $12 – $40 per square foot and maybe more in malls. Along with the high cost is the 2-5 year contract that most locations want you to sign. If you business does not go as planned you may be stuck regardless.

E-Commerce

There are a lot of different ways to make money online but I’ll simply list some of the ways to make money and discuss the pros and cons.
Ways to make money online - Content based websites, Products, sell someone else’s product and Affiliate marketing.

Pros: The main benefits of E-Commerce are the ease of entry. Don’t be fooled by how easy it is to start a business online because it’s easy to start but just as difficult to succeed in as any other business model.

• 1. Relatively inexpensive – For someone who knows how to make websites or is willing to take the time to learn the cost of starting an online business are rather cheap. Your monthly costs are less than $25 per month when just starting out plus whatever marketing budget you set. This could be as low as $25 up to $100,000 per month. A lot of e-commerce businesses spend millions a year marketing their services.
• 2. Customers – it is also less expensive and easier to get visitors to your store or in this case website. If you do some basic SEO you can start getting visitors to your website rather quickly. However, converting visitors to customers is another issue.
• 3. Options – There are endless options when choosing your business online. You can sell scrap booking materials, have a service based business, sell affiliate products or create content based websites that are monetize through the hundreds of different monetization options.

Cons: Although starting a business online is easy it is difficult to become successful and it is work just like any other profession.

• 1. Too many people are lured to online business by the dreams of getting rich quick. Although there are millions to be made and lots of people are getting rich and sometimes quickly, it is naïve to think that you will do so without hard work. If you look at any of the successful internet entrepreneurs they all share two common characteristics.
  A. They are analytical and are strategic in their efforts. B. They work very hard or did. They may not be working hard now but when they first started I guarantee you they worked their asses off.
• 2. Distractions - It is easy to get distracted or lost in all of the options available to internet entrepreneurs. Find something that is profitable and scale / duplicate it. Don’t hop endlessly from one hot new thing to the next. Find your niche and mine it for all it’s worth.

Brick and Click

This is basically a hybrid of Brick and Mortar and E-Commerce. This is a wonderful business model and allows you to take a successful online business offline or vice versa.

Pros: There are too many Pros to list but I’ll try.

• 1. Allows you to solidify your brand. If you were smart when you started your business, you created a brand. Creating another channel for your brand only expands your market share.
• 2. Second Chances – If you don’t sell something offline you get a second chance online when a customer sees it again. Or maybe your customer finds it online but isn’t sure until they come in and takes a look at the product.
• 3. New Customers – If you were successful online and you think that your product will convert well to offline then you are expanding your already successful business. You will reach a whole new consumer base that may not have known about your product. You were able to test it online first with less risk and are now taking it mainstream.

Cons: I can think of just one.

• 1. If you are offering a crappy e-book that you sell on business or webmaster forums to noobs this probably won’t convert well at the mall.

Examples of each model

I’ll use the movie rental business as an example.

1. Brick and Mortar: Hollywood Video only has store locations.
2. E-Commerce: Netflix offers to mail you movies you’ve selected to add to your library from their website. Although they have warehouses and such they don’t have a physical location where a customer can come and rent a movie.
3. Brick and Click: Blockbuster Video offers you store locations and a video rental service, like Netflix’s, that sends you rentals in the mail from their website. They’ve even tied the two channels wonderfully by allowing you to return the online rentals to the store location in exchange for free rentals.

Buying And Selling Domains: A Quick Guide

Domaining is becoming a very popular investing and business opportunity. Although the business of investing in high quality domain names has been operating quietly for almost 10 years, it is now gaining notoriety. Recently there have been many articles in highly respected newspapers and magazines regarding the practice. In the past year I’ve become an amateur domain investor and although I’m not an expert I’ll share with you what I know so that you don’t have to make the mistakes I made.

What makes a domain name valuable?

1. Keyword Generic. Domain names like www.phone.com or www.cellphone.com are great keywords because they tell you exactly what the site is about and users are likely to type in that name directly into their navigation bar. Also if you create a valuable website you’ve made yourself an instant authority on the subject.

If you can’t get a 1 word generic then try and find 2 or 3 word ones that are relevant to the subject you are searching. Like Self Defense - www.selfdefense.com is obviously taken, but I found www.selfdefenseinstructor.com was available and I’m creating a website on it.

2. Length. The shorter the domain name the better because users are more likely to remember and directly type in the name instead of searching for what they need on Google.

Pretty much all of the valuable domains are taken if not all.

Example: www.Phone.com.

• a. 1 word domains are premium domains
• b. 2-3 word domains are good but not the best
• c. 4+ words are not great quality domain names and you should avoid them.

3. .Com is King – Although .net and .org are not bad when it comes down to it the highest value is always given to .com. It’s simply the extension that everyone is the most familiar with.

4. Buying and Selling Domains - High value domains are almost always sold at auctions that bring out investors that have deep pockets. Some of these auctions include: Moniker.com, t.r.a.f.f.i.c., Afternic.com and Sedo.com. However, there are a lot of private party sales that no one knows about and those are mostly done through contacts that sellers have with investors or are able to find end user buyers for valuable domains.

For example if you own: alcoholtreatmentclinics.com, which I do, it’s probably not that valuable to an investor. However, to an alcohol treatment center it could have great value.

a. Warning: Don’t buy trash domains in webmaster forums. If it’s a quality domain name then great but otherwise don’t even think about it. It’s not worth wasting your money. There are too many wannabe investors regging crap domains and reselling them to ignorant wannabe investors in webmaster forums. I’m speaking from experience and am looking to let a lot of domains go when its time to renew.

b. Now that I’ve said that there are honest opportunities in forums to buy and sell your domains. Just be wary of what you are buying and selling. Some forums are: www.namepros.com, www.dnforum.com and www.forums.digitalpoint.com.

To rap things up I would say that this advice is simply for those who want to invest or purchase and develop high quality domain names. I know for those who are developing for SEO may disagree but this post is not addressing those issues and many domains that a domainer would not find valuable can be very profitable by an experienced SEOer.

Another hybrid form of Domaining is a SEOmainer, or one who invest in and develop quality keyword domain names. I am personally trying to become an SEOmainer as the domain market seems to be slowing and is for more long term investors at the current state.

This was a guest post by Aaron Kuroiwa owner of a Website Translation service that improves SEO and Tattoo Translation service for Chinese and Kanji tattoos.

I Blog - You Blog: For Ambitious Entrepreneurs Only

In the past I’ve been lucky enough to review a few entrepreneurial and blogging related blogs, such as NorthxEast (which has since gone on to become an industry-leader in its niche) and WRevenue (another wonderful blog by Scott Wainer). So when the opportunity arose to review I Blog - You Blog, I jumped at the chance.

First, let’s take a customary blurb from the About page to see what the site is about:

I Blog - You Blog is an effort to help people make money and a successful presence online through blogging, online entrepreneurship, SEO, and much more…I only write what I believe. I hate recycled content and my posts always come from my own mind, not from anybody else’s ideas. This is what I believe makes my blog different from most others.

This is certainly a bold opening statement to read, and it’s one which I like to hear, especially from newbie bloggers trying to make it big in an ever-widening and difficult blogosphere to gain respect.

Credibility

The claim that the owner also makes an average of “2750$ each month” is very promising to read too, but aside from the fact that no proof is shown (maybe a good-looking screenshot a la UberAffiliate?), there is also no name to refer too.

Now whilst I don’t make it compulsory to have a full name to reference, it’s beneficial to list just your first name (or an alias if you so prefer), so that the reader can connect with someone or some figure who is behind I Blog - You Blog. The other background information is great other than that and really sets the scene for something special.

The Design

Above is a screenshot of I Blog - You Blog. What is nice to see on websites these days is a little bit of white space which is left free of advertising and which, if added tastefully, can really add to the design element. Whilst the site in question does use white space effectively around the edges of the template, I feel that valuable estate is being wasted.

The header is a good example of this. The image of the pen is relevant to the theme of the website in a subtle way, however, it seems out of proportion with the rest of the site. Perhaps if this image was scaled down in size, it would shift the content further above the fold, attracting more visitors to read the content - the aim behind such a site.

Apart from this however, the skin is clean, simple and visually appealing.
Read more

Website Buying Tips and Insider Secrets

The potential sale of Blogtrepreneur is causing waves around the Internet, so today we have asked website buying and selling experts Barry Dunlop and Dean Hunt to give their thoughts on buying and selling websites, and a look into the exciting world of virtual real estate.

Hi all, we have been buying and selling websites and web businesses for over a year now, and we have bought and sold numerous web real estate in that period.

We have bought anything from webmaster blogs, to celebrity portals, and everything in between. We have bought and negotiated sites from as low as $200 and as high as $90,000 and one site in particular was bought when it had 23,000 visitors per month, and within 3 months it had over 250,000 per month.

So today we are going to share our tips and advice on buying websites and blogs.

Stay in your Industry

If you are going to buy a site, look for websites that match your current niche or industry. You can use the traffic, the link strength and the contacts to feed into your current site, thus making both sites stronger.

For example, if you own an online affiliate store that sells “shoes”, why not buy a forum about shoes and use the forum to build your brand, make sales, and feed traffic into the store?

Consider Site Flipping

This is essentially the art of buying a site, doing some work to improve it, and then selling it (flipping it) for a profit. Site Flipping is not for beginners, but you can make large profits very quickly if you do it correctly. We are going to be releasing some free site flipping guides very soon, so make sure you are a part of that.

Build a portfolio of websites

Do you think people just invest in one type of stock? Of course not! They spread the risk and build a portfolio. Do you remember the rules you learnt from playing Monopoly as a child? The same applies here, invest, and spread the risk.

You can do the same with websites and blogs, don’t put all your eggs in one basket, if you currently own just one active website, you really should look into building your portfolio ASAP.

Don’t use eBay

eBay is a great place to find a bargain, but don’t bother looking for websites there. From my experience it is like finding a needle in a haystack, there are thousands of terrible script based websites on there, and there can be some sneaky site sellers who may be out to trick you out of your money.

Don’t just use Sitepoint.com

Sitepoint is a good marketplace for websites, much better than eBay. But everyone knows about Sitepoint, so your chances of getting a good bargain are slim. Check some smaller sites like for buying and selling websites

Don’t be afraid of emailing site owners

A website doesn’t have to be listed in a marketplace, sometimes site owners will happily make a deal, even if they had no previous intentions of selling. So if you see a website or blog that you like, contact the owner.

We have prepared some questions that you will need answered before doing a deal:

- What is your current revenue?
- What % of this is profit?
- Do you have any ongoing liabilities?
- What methods do you use for revenue? (revenue model)
- What is your position in the industry?
- What is the value of the industry?
- How many unique keywords do you rank for?
- Do you use PPC? and what is the CPC average?
- How many major competitors do you have?
- What is your Alexa rank?
- Are you in a niche with Alexa bias? (e.g webmasters, SEO etc)
- Do you get any traffic from type ins?
- What are the current traffic levels?
- Do you have an estimated value per visitor? (uniques per month divided by monthly profit)
- Have you built a brand (reputation)?
- What are your conversion figures?
- How hard would it be for a competitor to re-create the site?
- Do you have a members base? (opt-in, registered members etc)

Use these questions to help build a realistic valuation.

There is no exact website valuation multiple

People like to use monthly revenue multiples to value websites.

Example: Site earns $200 per month, x12 = $2400 valuation.

This is a flawed model. For instance, it is possible that a site has $200 revenue per month, but it spends $199 on Google Adwords, so then what is the valuation?

That said, if you are looking for a VERY rough estimation, I find that x10 for small sites and x36 for huge sites is a rough indicator. There are always extremes, but applying offline business multiples (e.g x5 years) to an online business, is simply naive and unrealistic.

Never, and I repeat NEVER use a domain or website appraisal tool

Have you ever seen a blogger who says something like. “hey, according to this site, my blog is worth $38,900″?

It happens all the time, and it makes people look very stupid! Often the sites are worth x100 less than these tools predict.

This is a trick designed to boost your ego, so that you go and tell your friends about how much your blog is worth, and therefore you give them a free backlink.

You can read more details on this here: Domain Appraisals but in summary, anyone with any knowledge of the marketplace should never use these gimmicks. There is no way any tool on the Internet can value your sites, they simply don’t have access to enough data, so don’t fall for this scam. It could make you look very silly.

Future potential is not very relevant today!

One of the most common things we hear on a daily basis is “my website is not making any money now, but I believe in three years it will be making a LOT”.

Here is the thing, if you are buying or selling a website or blog, then the value is the value from today, not in 3 years, not even in 3 weeks, if you want our money today, then you use today’s value.

That is not to say we don’t factor a small % for future valuation, but basing your site’s value on some dream of future riches, is irrelevant and time wasting.

Another common myth we hear regularly is this: “Well, I could sell my blog, or I could just continue making $500 a month for life”.

We all know that blogs are very volatile, you can be a hit one day, and have a dead blog two weeks later. It only takes a hacker, some neglect from the blog owner, a change in Google rules, a form of revenue becoming dangerous (e.g selling text links) etc… and $500 could become $5 overnight.

Do not presume that your website will continue to earn the same amount for years to come. Unless you are willing to work on the site every single day, there is a good chance it will be neglected, and neglected sites are almost worthless.

Do your research before you pay for the site

There are many areas you will need to look into before you hand over your hard earned money.

For example, here is a list of trademark and legal issues tools. We personally bought a blog in late 2006, and two months later it was shut down by a major drinks company. Learn from our mistake and check for trademark issues etc.

Also check for things like the WHOIS of the site owner. If the details seem suspicious, then be careful.

Summary

Site buying and selling is red hot right now, but there is a lot of inaccurate information on the Internet. If you are interested in selling your website to raise some funds, then we may be interested to hear from you: contact us.

We are also happy to answer any of your questions.

Oh, and we would be happy to list your websites or blogs in our website marketplace 100% FREE from now until Christmas.

We look forward to your feedback.

Dean Hunt & Barry Dunlop from MidasCode Ltd - Buying and Selling Website Specialists.