Why It’s Better to Make Money “Offline” than “Online”

There’s a lot of friends and fellow Kenyans who are looking to make money online. Is it possible? YES! But you need to get into it knowing full well what you’re going in for. Hence this article.

There are ton of great websites, blogs, and programs out in the Internet about how to “Make Money Online“. Many of them have great ideas, and I read some of the better ones on a regular basis. While there are many different variations on this, there are basically 3 different ways to make money online:

1. Content Sites – Having good content and a lot of visitors and then selling advertising on the site. This is the reason for 90% of the blogs out there (my own guess)
2. Affiliate Sites – Sites set up specifically to refer visitors to purchase products sold by other people/companies, in which the referrer gets a percentage of the sale.
3. eCommerce Sites – Sells niche products and often through drop-shipping. This way, the operators don’t have to handle any inventory.

If it Looks Too Easy, It Probably Is
The problem with these methods isn’t that they are bad ideas. The early adopters for most of these methods made (and continue to make) a decent amount of money because they were there first. The problem is that they are TOO easy to implement and get started. In economic terms, the barriers to entry are extremely low, and there becomes a flood of “entrepreneurs” who are looking for a quick buck.

When looking at new ideas or tools, one of the first things I take notice of is how easy it is to implement. If anyone can do it in almost no time, then it’s not worth doing. For example, there are tools that allow you to create niche websites based on a list of keywords that you have. It can literally create thousands of sites/landing pages for you. The problem with a tool like this is that if you can easily use it and implement it, then so can thousands of other people – thereby eroding any possible value in the tool. (Not to mention the fact that this “spamming” will quickly be a “no-no” in the eyes of Google and if it’s not already detected and blacklisted, it soon will be).

Defensible Position
The problem with tools like I just described is that you have almost no “defensible position”. What I mean by defensible position is something that others cannot easily copy. If someone else can easily (and cheaply) buy the tool I described above, you have virtually no defensible position. Google or Amazon are examples of companies with extremely strong defensible positions. While they compete against the likes of Yahoo and Buy.com respectively, it would be next to impossible for all but a few people in the world to create something to compete against them. And to do that would require an incredible amount of resources of time.

The Advantages of the “Offline” World
When I refer to the “Offline” world, I use the term pretty loosely. I’m really referring to any type of company that isn’t making money via the “Online” methods I listed above. Often times, these are more traditional companies with more traditional structures. For example, Salesforce.com is totally web-based but I consider that an “offline” company and the same goes for small software companies that sell some sort of product or service on the web. Or you could just sell something old economy – like paper.

1. You Have a Defensible Position – Usually this is some sort of product or service that someone cannot create by spending 3 hours on a Saturday to set-up. This doesn’t mean that there are no competitors but it also means that hundreds of people can’t start up a web-site just to test the waters.
2. You Have Real Clients – With online marketing, you do have “clients” but they are very fluid. You can use methods to get them to your site quickly and easily but there is no strong relationship formed there. Real Clients are those who chose your product or service for a reason and you have established your “brand” with them. They may recommend you to other customers or hopefully are repeat customers.
3. You Aren’t at the Mercy of Others – Every business should have an exit plan. That exit plan might be to use the business as a cash generator for years or to sell it once it reaches a certain income level. If the business is at the mercy of suppliers, which is really the case of all the ways to Make Money “Online”, whether it’s supplier of the products you sell or the supplier of the traffic and ads for your content site, then any future is very uncertain. But if you have a regular business that cannot be easily disrupted, it is much more valuable and more likely to be viable in the future. It is a much more valuable business.
4. You Can Make More Money – This one can vary a bit based on what you’re trying to sell. I know a lot of Internet Marketers who make a ton of money selling products and services offline and probably more than if they sold it as an offline product. The reason I say this one is that an online world, the easy of entry invites more participants, and with more participants, it in essence becomes a commodity product, and with a commodity product, it just becomes a race to the bottom (look at web hosting since that is so easy to become a reseller).

Will I Still Continue to Make Money Online…. Of Course!
Our main business and main ‘strategy’ of making money online in Kenya is to use the internet to drive up sales…in the offline world. This article describes it somewhat. It is sort of an online-offline hybrid of a business and we are always continuing to make it more “online” because we believe that if you can build an online business with a real defensible position, you’ve hit the jackpot!

But will I base my livelihood around a single content site or some affiliate Adwords arbitrage site? Of course not. Not because I don’t think there is any potential value in there. But because I know there are thousands of people out there who can easily come up with a better mouse-trap with very little time and effort and erode any possible value there for me.

I would rather spend most of my time focusing on the things that will create the most value for me in the long run. Those are the things in which I can gain a strong “defensible position” and more often than not, they are “offline” and not “online”.

How about you? I love feedback!