May 25, 2011, 5:00 am

Why Our Online Business Model Is Safer Than The Stock Market

by: The Financial Blogger    Category: Make Money Online
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stable incomeAfter disclosing my online cost structure and my blog revenues, I have received many questions regarding the “profitability” of my online venture. At first, I started disclosing how I was now earning close to $10,000 per month through my blogs. Most people were very impressed and also very intrigued about my cost structure. When I disclosed that it costs me about $6,000 per month to operate my business, there were several individuals thinking that my company wasn’t that impressive. On top of that, I do have a business partner. This means that I have to split my profits (roughly $4,000 per month) in 2. So we are now down to $2,000 per month… one of my VAs is almost making more than us! Lol!

In the past, I’ve explained the overview of how M-35 is shaped. As you can see, most of our income is generated from our blogs. This year, we are starting new projects in order to diversify our income. Among them, we are creating niche websites and we are about to launch a series of E-Books (the first one will be launched within the next 2 weeks!). But today I want to go a little bit deeper on how our business is built from the inside and explain to you why this business model is safer and more profitable than you think.

A Closer Look at my cost structure

6K per month is clearly a lot of money. However, when you take a closer look at how it is spent, you will notice that more than 50% of my expenses serve to grow my business. I guess this is the most important statement of this article. If I wanted to stay with the same level of income (e.g. 8K to 10K per month), I could drop the following expenses:

– Reduce my VA budget to $2,400 per year

– Reduce my writer budget to $6,000 per year

– Cut on software investment (0$ per year!)

So in about a month, I would be able to drop my expenses by $37,400 without affecting my current business activities. Then, I would be generating a net income of 6K to 7K/month. So 3K to 3.5K in my pocket per month for 10 to 20 hours per week, not bad huh?

A Closer Look at my Online Income

Last year, we made 125k and our operating costs were below 30K. However, we did sell website properties and had the chance to participate in a one shot deal in a separate online venture with other friends. This year, I expect our income to “drop” to roughly 80 to 90K as we won’t sell any of our sites. Therefore, it is a “real” jump in income as we made about 60K of steady income last year.

The major increase of income came after hiring 2 VAs and going full speed with our expansion. We bought another site and spent significant resources on developing our business.

This year, we can count on a solid network producing income from various sources. Our biggest income earner is Adsense for roughly 30% of our income. This is why our income should be pretty stable over time; because it’s diversified and it’s constantly growing.

With the growth of our niche websites and the arrival of our first E-book, I expect revenues to be even more diversified and stable over time. Chances are that we will reach higher levels of income later on this fall when we start selling our second E-book.

Spend in the name of growth

About a year ago, during our annual meeting, we took a big decision; it was time to grow! This is when we decided to reinvest all our profits and not take any cash out of our company. As I just explained, we both know that we can cut our expenses at any time and keep generating the same level of business. However, if we want to launch more sites and create E-books, we have no other choice but to pay people to perform the routine stuff while we work on value creation for us and the company.

So far, it has been the best investment of my life. When I look at the dividends it could pay me while I would not be doing much; my company shares definitely beats the yield any dividend stocks on the market! On top of that, because I know what I am doing and I master our online business model, I know that it’s a safe investment.

Since I was 22, I have leveraged my life to the maximum in the name of growth. So far, it is a great success on all counts. I hope to be able to leverage my company for the next 5 years and then, I can enjoy life as it should be!
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Comments

This is great information, and I appreciate your willingness to share. It sounds like you have put a lot of work and effort into this business. It is only fair that you have reaped some reward.

Man you inspired me to take more risks. I’m often conservative when it comes to investing my money/business risks. I think that with my age and flexibility (being single and totally free) I need to take more risks.

Controlling your own business is quite a bit safer than the stock market. With the stocks it’s more difficult to understand or impact what you own, but with your own business you can take whatever actions are needed. Also, with the stock market, basically all the risk is disproportionally offloaded to the retail buyer while at least some the sure-benefit is kept by others like insiders and the high level employee-shareholders running things.

I don’t know of many businesses that have a 40% profit margin! That was before you made the changes in your cost structure.

@krantcents: You could make a killing with free labour as well 🙂

by: The Financial Blogger | May 25th, 2011 (1:49 pm)

@OptionDude,
unfortunately, it doesn’t always work this way! I am somewhat lucky that our venture is turning on the right side 😉

@MD,
there is not much risk as long as you know what you are doing 😉

@Alex,
I also think that there is less emotion influencing your investment return when you are managing your own business.

@Krantcents,
I know, the investment return on internet websites is HUGE! but everybody is scared of it. this is why I love this business so much!

Ok, this was the final evidence. Unsubscribed.

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I’m definitely interested in hearing more details about how you made your website profitable. There’s lots of advice out there, but the best advice comes from people like you who have actually done it and are willing to share the details.

@Paula,

I suggest you check around in the following categories of my site:
alternative income
blog income report
make money online
niche website

you should find most of my advices.

don’t hesitate to send me any questions by email too!

not reinvesting business earnings back into growing the business is one of the biggest momentum killers i have seen. that is why having a day job (sustainable income stream) helps – alleviate the stress of money and focus on growing the business. well said TFB