This is an “interesting” moment for my blog and whole online company right now. The blogging industry has moved, once again, towards another business model. I’ve discussed how I intend to survive Google. In a few weeks, my partner and I will be discussing how we will “attack” 2012-2013 (our company fiscal year ends on June 30th, this is why we meet in May-June each year). This is always a very important moment in the year as we determine which projects will be developed and how we will use our free cash flow. The interesting point with our company is that we don’t really need to withdraw money from it to live. Therefore, we can do pretty much what we want with the money. My perception of things has changed slightly over the past few months though…
There are 2 things that have drastically changed my perception of the business in early 2012. The first thing was the major purchase we made at the beginning of the year. Everything was running smoothly and we were on target to achieve our best year in terms of gross income. Revenues have never been so high and expenses were kept relatively low. I was ecstatic to buy another site and once again grow our online empire. For us, we were going to make $15K/month in no time with this acquisition. We even borrowed money to complete our acquisition.
Then, there was the Google PR Slap in March. This has created a huge commotion in the PF blogging industry. Several bloggers were penalized by losing their Page Rank or by a drop in traffic from the November 2nd Panda Update (there was also the Penguin update in April… is Google starting a zoo?). Fortunately, our sites have been spared from these modifications. Even better, our traffic has never been stronger than of late!
But this was a huge warning sign for our business model. Private advertisers were going to drop significantly in 2012. That was the message we understood and have since acted accordingly. This is why we decreased the number of private advertisers significantly and I guess they will eventually fade away. Obviously, this comes with a drop in gross revenue! To be honest, our gross revenue is now back to what it was at the beginning of 2011. We lost approximately the equivalent of 1 year of gross revenue progression. The good news is that we are making a lot more money with other sources of income and we have diversified our business even more.
As is the case with my own personal finances, one of the goals for our online company in 2012-2013 will be paying off our debts. Since February 2012, we started an aggressive debt repayment structure. This is why we are reimbursing $3,000/month on our corporate debts. At this pace, we will end-up paying them off pretty fast J. We have decided to do this because I think it’s time the company starts to pay us a little bit more to our pockets. Since we can’t do it as long as we have debts, it’s important to clear our loans before thinking about ourselves (no iPad for me in 2012! Doh!).
These aggressive payments combined with a revenue drop are no very good for our free cash flow. This is why we are looking at cutting down on expenses. For 2 years, we have been investing massively in our sites. This was a smart move as they grew significantly. However, we noticed recently that some of our expenses were now used to “maintain” some sites that don’t necessarily generate enough income to justify our spending. This is why we will cut $500/month in expenses in the next 12 months. We have already started to examine our situation and will be cutting in content and servers.
The interesting point is that both content and server quality are super important. We can’t cut on quality… but we surely can cut on quantity! I noticed that most of our blogs would do just fine with 2 updates/week (don’t worry, I’m not cutting on TFB! I just love to write on it!). This is why we are cutting the number of posts and will generate the same traffic and the same income. We have tried different things to improve our sites over the past 12 months and noticed that some didn’t work (like increasing the number of posts). This is why we can cut back and make our company more profitable!
I mentioned it on this blog, 2012 will be an important year for our company. This will be the year where we will finally know if it can be a successful company or a great sideline. The latter will make me work my day job longer ;-). I truly enjoy what I do but the perspective of being semi-retired at the age of 35 sounds better… no kidding! We absolutely need to find other ways to make money and the solution lies within products and affiliate marketing. Today (yeah… as you are reading this very article), I’m trying to monetize one of my newsletters. I hope this will show a better result than my $463 email. This time, I hope to write about my $1,000 email ;-). My partner doesn’t like when I go crazy with my “astrological predictions”, but let’s just say that if I convert my offer at a 3% rate, I will make $2,000. 3% is usually the average conversion rate in the industry… I just hope that I’m on target with “the industry”! The problem is that the “industry” range is quite wide when you talk about the blogging universe! Oh well, I’ll let you know shortly!
Most bloggers probably wonder if the Google storm is over or if there will be other updates or slaps that will jeopardize their online money making machines. In all honesty, I don’t really care. I don’t care because the latest changes forced me to think differently about my business. Those events pushed us to develop our own branding, our own products and to keep our own traffic by providing great content. You follow The Financial Blogger most likely because you like my writing and like to follow my entrepreneurial adventures. You didn’t find me through Google anyways ;-). I think we are only at the beginning of the storm and those who think it will just slow down are blind. I was blind for a while too… and I thought I could make over 15K/month this year…. Now I have opened my eyes and know that the storm is not over and that 15K will be darn hard to make…. But only for this year!
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