Turning Small Niches Into Big Business
Following on from the Thirty Day Challenge, I have decided to really go for it with niche marketing and I am currently working on three niches at once and documenting the progress on this blog. But at the back of my mind I have often wondered where I can go with this. Am I doomed to be spending my days writing articles about toenail clipping? The last week or so have brought me some new insights into how small niches can be turned into serious business with the income to match.
I Need a Plan, Gimme the Plan
I am very much a thinker and a dreamer. I lie awake at night mulling over ideas and possibilities in my mind. I get an idea and I project it forward into the future thinking about the potential that it has. One of the reasons that it has taken me so long to really get started on my 3 niches is because I had to know up front that I had the ability to generate a large amount of content in each niche.
I quit my day job as a software engineer so that I could follow my dreams and I’ll admit that when I first handed in my resignation, I didn’t really have a clue what I was going to do. I just knew that I had to quit. Thankfully, in the weeks following I started to formulate a plan in my head and I now have short, medium and long term plans for my future. The short term plan is this niche marketing.
What Exactly Do I Mean by Niche Marketing?
A niche is a small (or not so small) segment of a market. Health is a market. Foot care is a niche within the health market. Toenail clipping is a niche within the foot care market. The idea of niche marketing is that you create some kind of web property – a blog, a website, or even just externally hosted pages, such as Squidoo lenses (that’s the technique I am using as taught in the 30DC) that provides content related to that niche. So I could write a guide on how to clip your toenails.
By picking the keywords that you use carefully, you should get traffic to that page. Now all you need is something to sell. You may have your own product or you may sell somebody else’s as an affiliate. I might sell some toenail clippers for this example. That is the very basics of what I mean ny niche marketing – selling some product in a tightly focused niche.
Turning Those Web Properties Into a Regular Income Stream
If you followed along with the 30DC you’ll know that many people made money from just having a handful of pages of content in a niche selling somebody else’s product. But I remember at the time that as the month went by many people were asking in the forums how this grows into a sustainable business. After all, just finding a niche in which there are good enough keywords for you to get traffic for can be a huge job in itself. If the page you create only gets 50 visitors a day and you need perhaps a few hundred to get one sale, it doesn’t seem like there’s any big money to be made.
Let me make one thing clear – working in this way is hard work. This is not some get rich quick scheme. Now if you are prepared to put in that hard work then the next stage is to really expand on this technique. Target multiple phrases, create lots and lots of content and put it all over the web on different platforms. Link those pages together to get more backlinks. If you put it enough work, perhaps you’ll get a sale every day. Now you have a decent income stream. All of this is taught in the Thirty Day Challenge training page – go sign up and join in, it’s free.
Growing the Stream Into a Business
At this point, you have a bunch of web properties out there that are all driving traffic to some affiliate page and making you some money. But you’re leaving money on the table here because once the traffic is gone it’s lost forever. As the saying goes, “The money is in the list!”
If you’ve hit a good market that is profitable then you’ll want to develop your own content site (ie your own domain, not just a Squidoo lens), and start building a list. Perhaps you’ll even make your own Info product. Now during your research you may have found several niches that relate to each other. For example in my 3 niche experiment, the last two are highly related and last week whilst researching content for one of them I stumbled across a third related niche that has its own products and good traffic numbers.
From here you can start taking the next step towards building your own mini empire in the niche. Your content site can sell it’s own products, or still sell affiliate products but now all those pages are linking back to your site so over times it becomes an authority site which will draw more traffic from the search engines. You can be building email lists on all those pages and you can begin to cross-market your products to the related niches.
Now you’ve moved from having a small income stream from a few pages of external content into a thriving business. This is all taught in the Immediate Edge site. Dan posted a diagram from the Immediate Edge to the Thirty Day Challenge training pages that shows how all of this fits together. This is the affiliate marketing network diagram, you need to be registered on the 30DC site to grab the full sized version, here is a snapshot:
Take the Small Business to the Next Level
There was one thing that still bothered me about this whole idea – unless I have a huge personal interest in the market in which these niche sites are operating, it’s going to be tedious work maintaining them. If one of these business brings in a revenue stream of say $1000 a month, that’s decent money but it’s not enough to pay the bills on it’s own. You could replicate the process and create half a dozen similar businesses but then you’re going to be giving yourself a full time job looking after them all.
I’m subscribed to the StomperNET newsletter. I’m not really sure why, as I can’t afford a subscription to it but at the moment Ed Dale is doing a series about buying and selling websites. In today’s edition he put together a rather cute comic book that explained the process. I’m sure he wont mind me promoting this for him!
When I saw this, the bigger picture fell into place. You don’t maintain those sites forever, you build them up and then sell them! In Ed’s comic book he uses an example of perhaps taking two months to take a site and build it up to a monthly income of $1000. He then presents a simple formula for valuing a site – two years income. So if it is generating $1000 a month, it’s worth $24k.
I don’t know how that works if you have a whole network of sites, I imagine that you’d build one authoritative site in each niche which fed off all the smaller pages that you built first. As you can see I’m thinking out loud here.
If you build the sites and then sell them, it frees you of the time it would take to maintain them. Of course, if you sell the sites then you no longer have that revenue stream, but you have a lump sum instead. Now what Ed does, is not only sells sites but he buys them too. I’ll talk more about that in a minute.
To Sell or Not to Sell, That is the Question
It comes down to that old adage that time is money. If you have a site that is now earning $1000 a month, you have to ask yourself how much time it takes to maintain it. Let’s say that it takes an hour a day to maintain. Then assuming you had absolutely nothing else to do with your time, and assuming an 8 hour work day, you could maintain 8 similar websites which would give you an income of $8000 per month, or $96k a year. Nice.
Hitting the Earnings Ceiling
But here you’ve hit a ceiling. You’re now spending all of your time maintaining these niche websites and you don’t have any time left to build more. You are in essence back to the day job mentality of trading your time for cash and you just ran out of time. $100k a year is a nice income, but we want more than that don’t we :-) Of course we could always outsource the maintenance but that’s more to manage in itself.
In Ed’s example, he assumes a time period of 2 months to develop a site to $1000 a month in revenue but that is from buying a site that has already been partially developed. Let’s assume for now that you’re still developing sites from scratch and it’s going to take 3 months to go from $0 to $1000 a month. Note these are purely speculative figures – I’ve still not made my first sale yet so I don’t know how long it takes.
So, in 3 months you have a site worth $24k that you can sell. Now if you keep it, it will suck up some of your time in maintenance so if you wanted to repeat the process it would probably take you longer to build up the next one. So let’s assume that you sell it. $24k for 3 months work. If you are able to repeat that 4 times over throughout the year that’s also $96k for one year but this time it’s $96k in a single year. If you were keeping your sites it would take longer than a year to build up to that ceiling because every new site would bring extra maintenance costs which means the next site would take progressively longer to develop. I could do the math, but you get the idea. The essence is, selling gives you the money NOW.
Selling = Buying Power
In my example, I am assuming that you are doing all the work from scratch and as you can see from the example, you still hit a ceiling of $96k a year but what Ed is advocating is to BUY and sell. If after 3 months you have a site that’s generating $1000 a month, you now have an income but you have no buying power. It will take you a long time to generate enough spare income to be able to be able to re-invest it.
n the other hand, if you sell that first one once it’s developed you have $24k cash in the bank and that gives you buying power. If you buy a site that has already been started you save yourself a ton of time, and time is our bottleneck. The more money you have, the bigger and more powerful sites you can buy and the more profit you can turn over all.
Of course there are risks – what if you shell out a load of cash for a site and then you can’t improve upon it? Well then I guess you suck as an Internet marketer :-) But in all seriousness, if you get to a position where you are able to pay big money for sites then you will have already proved yourself wouldn’t you? You wouldn’t be there if you hadn’t already done it several times over.
The Money is in the Multiples
The standard formula for valuing a website is value = 2 years income. You may have heard how Ed sold 38 websites for $5m. The cool thing is, the sites did not sell for 2 years worth of revenue, but 8 years worth! Obviously this is where Ed’s expertise in this area pays off and that’s why he charges so much for Dominiche! But imagine the possibilities if you can buy cheap websites, rejuvenate them and them sell them for many times the revenue they earn. It’s like real estate but for the web. That’s a nice way to make a living!
Looking Forward to the Future
This whole idea excites me because I see it as a way of investing time and energy now into creating some capital that can support me while I try out other ventures. My ideal goal is to make a living developing software but software takes a lot of time to build and I have to eat and pay the mortgage in the meantime. But what if I was able to use these techniques for a year to bring in some up front cash? If I could get to a point where I had generated enough income to support myself for a year, I could dive into the software development business knowing that I could support myself along the way.
What do you think? Does this sound like a bunch of marketing hype? Do you think it’s better to keep the sites for yourself and outsource the maintenance of them? Do you think buying and selling is just a mugs game?
Want to Make Money Blogging? My free course, The Bloggers Bible contains everything you need to know about building a highly popular and profitable blog from scratch!
Just fill in your email below to get your first lesson immediately:
Caroline Middlebrook
October 4, 2007
@Kim, I had never thought of it in terms of assets and liabilities, that’s a good way of putting it. I’m not sure how the branding aspect applies though as at the moment I am using psuedo-names for the niches, not my own.