Making Money Online Successfully

So a while back we wrote about how it is better to earn offline than it is to earn online. Part of the reason why we wrote that article is that many people are trying to build revenue around models that will either:

1. Not be around in 5 years because the powers that be (ie: Google) have changed their operations to make the strategy unprofitable
2. Replaced by another method or competitor with a new perspective or method to attract customers.

How can we define online success?

How Much Money are You Making Tomorrow?
I think there has to be a certain measurable criteria as to what makes someone successful online and that can be as simple as the ability to make Kshs 5,000 per day, Kshs 10,000 per day, working full-time independently, etc. that a lot of people like to use.

However, I think there are less measurable means to determine online sucess as well. If I were buying a business, I’m not buying the business on how much money it made today, I’m buying it based on how much I think it will make in the future. Because of that, there are some criteria that I would like to add to what I consider online success:

1. Is the business defensible? Is your business model based on arbitrage of PPC ads or is it based on a steady amount of traffic from a variety of sources (PPC, SEO, direct referrals, repeat visitors, etc).
2. Are you too reliant on 1 supplier, customer, or web site? Supply chain issues are a reality of any business. Now it’s much more of an issue in a manufacturing or product based business but it’s a reality in the online world. If you have just one web site or one source of income, then your success is at risk. If you have just one product or one major client, an innovative competitor could very quickly and easily sink your business.
3. Is the Product commoditized? This is one of the biggest mistakes that many people make who are trying to make money online. The web sites that they are offering are, in essence, a commodity. There are thousands of other people or web sites out there who offer the same product (or could easily offer the same product). And the problem with a commodity business is that lowest-price wins. And those hyper-efficient markets are very difficult to win in.

My Definition of Online Success
A. If you are looking for some extra disposable income, Kshs 5,000 per day is a great goal to have and I would consider that a huge success.

B. If instead of just disposable income you want to work for yourself, things are a little bit different – instead of considering 5,000 a day a success, we should look at a number that permits you to live comfortably. If that is 30,000 a month, and you are earning that regularly, that’s awesome. Now if you make 50,000 one month and nothing for 3 more months, that’s not really successul.

C. If you are building a business, that’s much tougher to define. To have a successful business, you must have systems and processes, and if you have systems and processes, then you can have employees. So I think that when you get to a point where can support yourself with company profit and you have an employee on board, then I think you are moving in the right direction.

Successful Online Entrepreneurs
There are a lot of people making money online who make more per month that I do and most people would consider them to be successful. These are often people that are in the top 1% of their market. The diffference between them and the rest of the online entrepreneurs is that they have differentiated themselves.

If they run a successful blog, their differentiation is the personality behind it. If the content was written by a bunch of no-names without the personality, I doubt they would be as successful. And some of the other successful entrepreneurs have built up a portfolio of well-performing sites. They have created processes and eliminated the dependence on any one web site/asset.

Ideas from the Masters
I am a big fan of the ideas of Warren Buffett because I think they can be applied universally. Warren Buffett doesn’t follow the stock market on a daily basis and he doesn’t follow quarterly earnings reports. He’s not even a big fan of annual reports – he doesn’t think businesses should be judged based on the amount of time it takes the Earth to circle the Sun. He believes in looking at businesses over a much longer term.

I think that people looking to make money online need to look more at where they’ll be in 5 years, and not just based on the projects they would like to be working on at that point. If they have a collection of a variety of web sites with increasing traffic from a variety of sources, which have a differentiated advantage, I think they may be much more successful than someone who is making more money right now but with no prospects of growth.

So if you have a software product that you are selling online that only a few people that have discovered so far but they love it…Or you have a community web site that is very small right now but has a strong, but growing base….Or you have a collection of websites with unique content or a unique, driving idea behind them

Then I think you are well on your way to being succesul. Just make sure you have implemented the processes to really grow it successfully.