Whether it’s a recession, a pandemic or any other kind of economic crisis or downturn, you can still thrive. But how?
With the amazing number of online tools and resources available today, starting an online business is not difficult. You really just have to know where to start.
Building an online business is available to everyone. All you need is an internet-connected PC, some knowledge that you’re passionate about, a willingness to work hard to get it established, and the right tools.
The Silver Lining in a Dark Cloud
We’ve just experienced the effects of the pandemic of 2020 and 2021. Thankfully, most of the world seems to be coming out of it, but the economic repercussions of that time period may be felt for years to come.
And yet this contrasts dramatically with the positive and upbeat headlines coming from researchers, analysts and companies in the internet sector.
These headlines are supported by very upbeat forecasts about revenue growth across all areas of online business …
… advertising …
… eCommerce …
… and paid content.
Therefore, it follows, that if you want to start a successful business during any kind of economic crisis, an online model is the way to go. Specifically, a membership website has the structure in place to allow you to actually thrive in uncertain times.
One word of caution.
Because the internet will prosper, as other sectors struggle, it will attract a lot of opportunity seekers. To succeed, you must be totally committed to creating a website and business that is a leader in your niche and that stands out from the crowd.
The Perfect Online Business
There is no such thing as a perfect business, but there are some characteristics of an online business that reduce costs and improve its chances of success.
These characteristics include:
- Niche subject with unique content – Specialist websites with unique content can become leaders in their field. The niche you choose for your membership website should be something you are passionate about, and have more knowledge about than the average person you will market to. You don’t have to know everything – just enough to be one or two steps ahead of your clients. As you interact with them and provide valuable content, you will emerge as a leader in your niche.
- Provide digital products or services – A membership website is the ideal model for selling online content – videos, audios, e-books, free trials, demos, white papers and much more. In most cases, you will be creating your content yourself using inexpensive or even free tools (think videos on your phone, recordings stored in Vimeo.com, PDF e-books on your computer…and so on.) Overhead is minimized as you are selling your expertise, not a physical product that you had to produce and pay for. And that is great news for your profit margins.
- Global potential audience – We all have the same issues and problems, no matter where we are in the world. Whatever field your expertise is in, there will be an audience. Worried about language barriers? Most membership website software platforms (including SubHub’s) offer language settings to let you translate English-only labels into any language.
- Multiple revenue streams – Just by setting up a membership website, you also have access to several other revenue streams. On the SubHub platform for example, you can generate income through membership content, training courses, an e-commerce store, paid downloads and pay per view articles. And you can offer this content via different membership levels sold at different price points.
How to start a recession-proof online business
If the economy hits the doldrums again, with a membership business, you have some distinct advantages, as illustrated above. The next step is getting started:
- Choose the site’s subject
- Decide on your target income
- Define how you will make money from the website
- Create a plan that shows how your site needs to function to hit your target income
The Trust Funnel Model
Successful websites focus on attracting relevant traffic, building a relationship with visitors and then … and only then … making money from them. In other words, building trust.
- Freemium Content – “A website without visitors is like a car with gas”. As an online entrepreneur, your overriding focus must be attracting people to your website. The best way to do this, without having to pay for traffic, is to provide free premium (or “Freemium”) content. This content will get found and indexed by the search engines, which in turn will drive free traffic to your site.
The freemium content should be written based on the guidelines of the HEART rule … it should be Honest, Exclusive, Accurate, Relevant and Timely. It must engage and excite your audience and make them want to stay on your website.
- Eyeballs – Once a visitor arrives, they should be tempted and encouraged to look around the website. The more time they spend with your content, the greater the chance you will have of convincing them of your expertise and authority. If they value what they see, you will have a chance of developing a relationship with them.
- Relationship – Your single most important goal once you have someone on your site is to get their email address. When you have this vital bit of information, you can start to proactively build a relationship with them. As the relationship develops, so will the trust
- Monetize – Only once you have developed a relationship with your audience and they trust you, can you start to make money from them.
The most successful and profitable websites have multiple revenue streams that follow a similar sequence of building trust over a period time. The greater the trust the more money you can potentially make from each visitor, prospect or client.
- Advertising – Displaying ads requires the least amount of trust. Visitors can choose to view and click them or ignore them. This is the easiest and quickest way to make money from your Freemium content, but the value of revenue per visitor is very low
- Affiliate Marketing – Affiliate marketing is where you recommend a product or service via your website in exchange for a commission on sales. This requires more trust than advertising because to influence your visitors to follow an affiliate link, you need to review and recommend the products or services. If you lie or mislead with your recommendations, the trust will be wiped out
- Ecommerce – Selling products, such as ebooks, reports, software, and branded merchandise, requires your visitor to enter their details and credit card information into your website. Your customer must trust you enough to provide their personal data and believe that you will deliver what you have promised in a timely way.
- Subscription – Selling subscriptions to premium content or for use of a web-based service is one of the best income streams you can make from an online business. Recurring subscriptions can provide you with a long-term, sustainable revenue stream, which is whatever business owner is looking for. However, to persuade your customers to part with their money for content you are promising to deliver in the future requires a further and significant level of trust
- Events & Webinars — Online events like workshops and webinars are a great way to generate excitement among your audience for what you have to offer. If you are selling an upcoming live event or a more extensive online event, an initial webinar or masterclass can provide just the introduction to your services you need to solidify trust.
- Online training & courses — Everyone loves to take an online course from the comfort of their own home, maybe even in their pajamas! To keep that trust factor going, offer an iron-clad money-back guarantee. You can protect yourself by offering the guarantee “no questions asked” for the first 30 days (as an example), and then a 50% refund after 60 days with some stipulations. If you audience knows they really aren’t taking a risk as long as they are prepared to participate in fully for at least 30-60 days, you have given them yet another reason to trust you.
As you move your visitors down this Trust Funnel, you should make more money from each transaction.
The income generated from advertising per visitor is very small; it increases slightly with affiliate marketing; e-commerce can be a significant step-up; subscription can lead to a long-term income from each member which can be hundreds or thousands of dollars, and participation activities can make you thousands of dollars per event.
Choose a Subject for Your Website
You MUST choose a subject for your business that you are passionate about. On the internet just about any niche, however specialized, can become a successful business is driven by passion.
For this article, I’m going to imagine creating a website about Pond Building.
“Why pond building?” I hear you exclaim!
Because I want to pick an obscure, niche subject to demonstrate how any topic can become a successful online business.
This is the scenario:
I’m a passionate gardener with a particular interest in building ponds. I’ve been building ponds for years for friends and family and now want to turn my knowledge and expertise into an internet business.
I have worked out a revolutionary way to streamline the pond building process so instead of taking over a week to build a reasonable sized pond, my process enables you to build it in just two days. I don’t have any products myself; I just recommend combinations of standard products that can be combined to achieve the desired results.
I believe that my process can revolutionize the pond building business. It means that pond building companies and gardeners can double the number of ponds they can build with the same effort and number of people.
To share this information with my target audience, I plan on building a website.
My plans for the website are:
- I will create free articles, images, and videos to drive traffic from the search engines. This content will demonstrate my knowledge and expertise as a pond builder so that I’m viewed as an authority on the subject. The information will be targeted at hobbyists and professionals alike
- I will ensure that I create links between content so that visitors are encouraged to spend time reading and viewing multiple pages each time they visit. I hope that this will make people see my site as a valuable resource which they want to return to regularly
- On every page, I will encourage visitors to sign-up to a bi-weekly email newsletter which will be a summary of the articles I’ve added to the site. This will enable me to build a relationship and start promoting membership and paid events to my loyalist followers
- The website will have a membership area targeted at professional pond builders or people thinking of setting up a pond building business. In this area there will be detailed pond designs with build instructions based on my speed construction process, video guides, business marketing material, etc. It will also have a forum where members can meet and exchange expertise. It will be the most comprehensive and valuable online resource for pond builders on the internet. As membership numbers grow I would negotiate products discounts with manufacturers and retailers
So how will I make money:
- Advertising will be served on all free content pages. This will be a combination of Google Adsense (www.google.com/adsense) and an ad network. By using these services, I can put them on the site and forget about them; just log into my account at the end of each week to see how much money I’ve made. I don’t have to worry about selling ad space or managing the relationship with advertisers. As the site becomes more popular, I may decide to sell direct to advertisers, but at launch, it’s not worth the time and effort
- I don’t want to hold any stock of physical products so I will promote the stock from other companies in exchange for an affiliate commission. This will include books from Amazon and pond equipment from a major online pond retailer, such as Aquascape (www.aquascapeinc.com)
- Over the years I have created a book of pond designs and techniques for building and maintaining water features. I plan on putting this information together in a downloadable ebook. It is unique and valuable information not available anywhere else in the world
- A very important part of the website’s revenues will be selling membership for access to the premium content. This will be unique and exclusive information aimed at individuals and companies who want to increase their profits from their pond building activities
- Finally, I plan on running four courses each year which will take the participants through the whole process of designing, building and maintaining a pond. It will be targeted at enthusiasts and professional gardeners
Set a Target Income
For this case study I’m going to set my target income at $60,000 a year, or $5,000 a month.
I will assume that the costs of running the website, marketing and some additional writing support are $24,000/year.
Therefore I need the site to make $84,000 a year, or $7,000 a month, to give me my target income and lifestyle.
Target income from each Money Making Activity
There is a simple formula that you can use to forecast your revenues:
- The number of unique visitors coming to your website, multiplied by
- The percentage of these people who buy your product or service (The Conversion Rate), equals
- The number of sales. Multiply the number of sales with
- The average sales value and you have
- The revenue you will generate from your site
Based on this formula I will estimate the target revenue from each of my money-making activities (except advertising which is calculated in a different way):
On the internet, advertising tends to be measured in terms of the amount of money made per 1,000 pageviews. A pageview is counted every time one of your visitors looks at a page on your site.
The industry jargon for this is dollars per CPM, where CPM stands for Clicks Per Mille (Mille is French for 1,000) e.g. if you were receiving $10 CPM it means you would receive $10 every thousand times you displayed an ad on your website.
It is worth noting that if you display two ads on each page that you are charging the advertiser $10 CPM for, your web page is earning 2 x $10 per CPM.
A top content site with a well-targeted audience can earn up to $50 per 1,000 pageviews ($50 CPM) from each advert. Smaller sites with small audiences will earn between $3 – $8 CPM.
For our pond building website, I’m estimating I will earn $5 CPM
Affiliate marketing is where you promote another company’s products or services. If one of your website visitors clicks on a link that takes them to the merchant’s website, where they make a purchase, you earn a commission from the sale.
There are affiliate programs for most products and services. The commission rates vary hugely. For example, the commission for promoting and selling a holiday could be 0.5% of the value, whereas the commission for selling an eBook could be 50% of the sale price.
The best way to get started as an affiliate marketer is to visit one of the big affiliate networks. These companies aggregate hundreds or thousands of merchants. They manage the whole affiliate process, monitoring links and facilitating commission payments.
- Commission Junction (www.cj.com)
- Trade Doubler (www.tradedoubler.com)
- Affiliate Window (www.affiliatewindow.com)
- But.at (www.buy.at)
My pond building site will have links to several affiliate marketing programs promoting:
- Books (Amazon partner program)
- Pond products
- Aquatic plants
For the purpose of this example, I will assume that the conversion rate of visitors who click on an affiliate link on my site and then makes a purchase is 0.5%. I will assume that I will make an average commission of $10 per transaction.
I will have a simple shop integrated into the website through which I will sell my ebook of plans and guides for rapidly building ponds.
I estimate that I will sell the ebook to 0.5% of the visitors who come to my site (i.e. the conversion rate = 0.5%). The average sales value for each ebook is $14.97. The conversion rate on a good eCommerce site is between 1% and 10%, so 0.5% should be conservative.
Selling subscriptions for access to the premium content on the site will be the most important revenue stream and will enable me to build a sustainable business. I plan on making my website the world’s number one community for professional pond builders. The member area will be a combination of me providing information to members, and the members helping each other through the forums.
I estimate that I will convert 0.25% of my website visitors to paying members. That is one out of every 400 people. The average subscription fee will be $14.97 a month or $97 a year. To simplify my forecasting I will assume everyone pays annually. The conversion rate on a good membership website is between 1% and 5%, so again 0.25% should be realistic.
Finally, I plan on hosting four events a year which will take attendees through the whole process of planning and installing a pond.
I’m aiming to get 25 people attending each course, which means on average I will need to sign-up 8 people a month at a price of $149 for the day. I will also promote the event locally through garden centers, nurseries and aquatic centers where I’m well known to the owners.
So in summary, this is what my monthly financial spreadsheet looks like:
Now all I have to do is to test different visitor levels to see how much-targeted traffic I need to hit my monthly target income of $7,000.
With a little bit of experimentation, I find my target traffic number is 15,500 visitors which will make me $7,086.
This means I need to get just over 500 people a day to my site who are interested in ponds. Is this realistic? It seems very achievable particularly as I’m targeting a global audience of enthusiasts and professionals. However, you should do some research in your sector to help you judge whether your forecasts are achievable.
The other important thing to note is the importance of having multiple revenue streams. Most people start an online business with just a single revenue stream. You can see from this case study that it would be extremely difficult to hit your target income levels with just one source of income, particularly, if like most blogs, it is advertising.
The next step in this planning process is to put together a business plan for the first twelve months. Don’t worry this is a very straight forward thing to do. Here is an example for the pond building site
You will not be able to instantly attract an audience of 15,000 visitors so you need to estimate how long this will take and understand the cost implications of building the business.
Your biggest start-up cost will be building your website. It is worth investing some money at the outset to build a website that is easy to manage and is ready to generate multiple revenue streams. If you compromise at the start it will cost you a lot of time and money later to put it right. There are services available that can provide everything you need at a reasonable cost such as SubHub (www.subhub.com).
Your biggest ongoing cost will probably be marketing. There are lots of ways to get free traffic, but to accelerate your growth you will need to invest some money in marketing.
Once you have built a business plan you are happy with it. You are ready to build and launch your website. To watch a free ten-part video series on how to do this, take a look at this video course.
Traditionally, when economic conditions deteriorate, online businesses tend to be shielded from many of the effects. And that trend shows no signs of stopping. Revenues from advertising, ecommerce and paid content are all predicted to grow.
Entrepreneurs have an opportunity to set up an online business.
The most successful internet businesses focus on a niche subject and are dedicated to becoming recognized as authorities in their niche. They understand the importance of driving traffic, building relationships and then generating multiple revenue streams.
Hopefully this article has inspired you to look into starting your own online business. There has never been a better or more exciting time to join the thousands of entrepreneurs who are making their living online.