I think I’ll never say it enough; diversification is the key to success. It’s true for your investments, but it’s also true for any kind of business. If you depends mainly on one source of income or if you have invested all your money into one company, your chances of failing and losing a lot of money increase significantly.
As a business, if your biggest client is named Wal-Mart and generates 90% of your orders, do you feel good when you go to bed? Do you think that your business is sustainable? Do you think you can last without any problems with your *only* client during the next 25 years? You may be lucky and keep it. But that is also called wishful thinking. In an ideal world, you would get two or three other big clients that would represent each 20% of your sales. Having 3-4 Wal-Mart dealing with you? Yeah… that’s the other side of wishful thinking I guess.
At the beginning of the year when I used to report my online income, the bulk of my online revenues came from private advertisers. This represented a big risk and I knew it. In February, we had what I called The PR Slap; a new Google update penalizing many sites with private advertisers. In fact, advertisers were also penalized. This is why private advertisers started to diminish their budgets and this source of income was no longer considered the easy way to make money with a financial blog.
To be honest, it was also getting ridiculous; I was seeing a bunch of new financial blogs with less than 100 posts making $500+ per month. Don’t get me wrong; I was happy for them and wasn’t jealous at all. But when I looked at it with my businessman eyes, it wasn’t making any sense. It had become too easy to make money. All you needed was a few posts about how to manage your budget or latest credit card and bang! 2 months later you were making a few hundred bucks per month. When everybody makes money without much effort; there is a natural law that comes into play. This law of nature is there to bring the balance back. It’s unfortunate, but there is no free lunch in life. There is no easy and fast way to make money. When you find one, get all the juice you can from it quickly because it will be caught by the law of nature and it will dry up pretty fast. This is exactly what happened a few months ago. Private advertisers’ money dried up and there was a lot less left on the table for the same amount of bloggers.
We knew it would happen sooner or later but we were also part of the bloggers trying to get as much juice from it as possible. In the meantime, we were looking at other ways of generating income. I’ve recently listed my online income sources. Since March, we have been actively searching methods to optimize Adsense and generate more affiliate leads. For the first time in July, private ads is now our third source of income if you look at the chart below:
The good news is that our total income didn’t drop much if we compare what we did last year for the same month. In fact, we are over by more than five thousand when we compare our online gross revenues for the first seven months of 2012 vs 2011.
One of the big changes in our business structure we made over the past few months was to diversify our income producers. In the upcoming months, we should see the eBook portion taking more space as my dividend investing eBook should be ready for September (still in the editing process… man, it’s long!!!). Our major sites still generate 62% of our revenues but we increased significantly the amount generated by our newsletters along with our niche sites. By the end of the year, our niche sites should generate 10% of our revenues. This is great because they were all created to produce Adsense and affiliate income.
Speaking of Adsense, I think this is another reason for our success. We had a record month in June averaging over $100/day and we continue on this trend for July. I’ve broke down the number of sites generating Adsense income and you can see that we have six sites making over 5% of our income. While we have three major players (generating 71% of all our Adsense income), we can say that we are well diversified. The three major sites are switching their ranking from month to month depending on which sites get the more traffic. This is also another great way to ensure that we make roughly $100/day all the time. Our overall traffic is slowing increasing and quite stable over time. This ensures a more stable Adsense income base as well.
After working so hard on this business, we didn’t see all our efforts fade away in a few months just because our business model had to change. Instead of making money the easy way, we concentrated on finding other sources of income in order to maintain the level we had reached over the past 12 months. So far, I can tell that we have been doing better than expected as we are still on track to do better than last year, which was our best year in terms of revenues!
The key here is to change the focus and stick with it. Forget about whining and complaining just shut your mouth and focus on what needs to be done!
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