Building Autopilot Internet Businesses: An Insider’s Dollars and Sense Perspective January 24, 2008
Posted by Andrew Wee in : Internet Marketing , trackbackI think “passive income” and “autopilot internet business” are 2 of the most frequently abused terms in the brick-and-mortar as well as the online business world.
If you’re thinking that you can set up a business and have it running completely by itself, which continues to generate consistent and regular income month-on-month and continues to do that without you having anything to do with it, I would be pretty keen to take a look.
It IS possible to do it once you have systems in place, but given the highly competitive nature of niches in the online marketing world, you will need to put in some effort to maintain your business performance.
If you are interested in building a long-term, sustainable business continue reading on.
So you hear about some Internet guru telling you that if you create 1,000 websites and they make $1 a day, and if you make $1,000 a day, that’s $30,000 a month, right?
WRONG.
While you can theoretically do that with made-for-adsense sites, or automated scraper sites, or even 20,000 page content sites, relying on random search engine traffic, I’m not sure it always works well in practise.
I do know a couple of guys who’re doing this, and they’re pretty skilled (having racked up more than 10 years of experience in doing this).
But then it can be a struggle sometimes, because even if you are indexed, sites might be manually reviewed by staff at Google or Yahoo! or MSN, and de-indexed, or relegated to search engine result page oblivion (maybe page 50 or so…).
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Here is what I do to build my online income.
- Due diligence: Evaluate an offer. Find out what top earners in that niche are doing. Determine if it will work long term (I prefer year-round niches, rather than seasonal ones which might be based on the summer, or the current season of American Idol). See if it’s something that make sense.
- Focus: I’ll focus and test that one offer – whether it’s through natural search traffic or paid traffic. I’ll promote only that offer and see if it generates results for me. (no offer will perform exactly the same way for 2 affiliates).
- Scale: If the offer looks like a viable one, I’ll set a profit target (profit = revenue – expenses. You need to budget in your expenses, not your gross commission to have an accurate picture of your business). From there, I’ll scale it to either $5,000 a month, $10,000, $20,000 or some other number. The projection depends on the specific niche and how viable I believe I can grow it to.
- Automate/Outsource: This is the major step that many marketers do not focus enough on. Here’s where your ability to scale your business comes in. Assuming you are bringing in about $5,000 in net profits from one niche – I will look at outsourcing the continued operation of this niche site, as well as the marketing efforts – whether it’s paid traffic, link building efforts, social marketing, etc. This might cost anywhere from $1,000 a month to $2,500 a month. (again, depending on the niche). So once the website has been outsourced, my net profit drops to $2,500 to $4,000 (assuming it’s a $5,000 a month site).
Am I giving up too much of my profits by outsourcing or automating my business?
Not really, because although I am giving up a portion of my profits, I am “buying” time. The moment I train and hand over the operations to a team, I am free to work on another project and build that up, scale it, and pass it on.
If you haven’t got it yet, the business is “automatic” because it runs without you. This is very different from the misinformation that some create that a website can sit there on the internet, without anyone maintaining or operating it, and it mysteriously churns out huge stacks of cash.
Networking is one of the most vital assets, probably more so than technical knowledge if you’re to succeed in this field.
If you are able to find good partners who can manage your businesses for a portion of the revenue or profit (if they’ve special skills) or if you can pay them a flat fee. (if it’s a lower value task), you can continue to scale your business and as they say, build “multiple streams of income”.
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Hello Andrew, that last part of your post brings up a thought – there might be a business model there for managing outsourced campaigns for other affiliates. Maybe a company like Pepperjam or the other larger affiliate networks will eventually do this – because it seems a new one launches every day and a shakedown is imminent.
Hi,
If you’re refering to PPC management and/or affiliate management, there’re a number of firms that do that, including Heather Paulson of Paulson Management Group, Andy Rodriguez of Andy Rodriguez Consulting, Brook Schaaf of Schaaf Consulting, Pepperjam Management and a number of OPMs (outsourced program managers) and networks, and online web agencies.
You generally will be paying them between $2,000 and upwards, it can go up to $XXX,XXX a month, so it’s viable for big boys, but smaller players can get in on the action too, especially for high value niches like debt refinancing, payday loans, webhosting, etc.
Hey Andrew,
What’s to keep the person or firm you outsource a profitable campaign to from stealing your keywords and do exactly what you’re doing? Any ways to protect this?
It would be useful if you’d provide an example of an “offer” that is mention in the due diligence bullet, and include the steps you take to evaluate it. Also, the steps you take to “find out” what top earners in the niche are doing. The topic of due diligence could be a seperate post. A fully developed explaination of the first bullet would make the information in subsequent bullets extremely useful.
I applaud your efforts to educate online marketers and explain viable online business models such as this. As someone who blogs and creates user-generated content (in a decidely non-automated fashion), your approach to this online business is fascinating–and obviously much more lucrative.
Hi Marty,
Thanks for the feedback.
Let me look into doing a follow up post.
Hey Buddy,
Great Post! I could not agree more, I’ve been writing about this topic quit a bit lately as well. It’s all about creating PASSIVE income.
Too many internet marketers have created 10-12/hr a day jobs for themselves because they don’t understand how to create systems and autosource.
Sincerely,
Amit
Hi Buddy,
We’re certainly NOT about creating the 12 hour workday, are we?
I’d like to think we’re further along with that.
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Yep, you’re right about the system building, with your PhD in Physics, or anyone with an engineering or computer application development degree, they’d realize the massive difference and leverage a system will provide…
You can always build an affiliate program for your websites… then you have other people who promote your website… isn’t that automated income?
Hi,
have you tried managing an affiliate program?
If you set it up and leave it there, it’s going nowhere fast.
You’d still need to manage it, check payments, do an audit of refunds, create affiliate marketing materials, create promotions…
Like I said, a lot of people throw out all these things about “automated income” without knowing what they’re talking about….
Yeah, I manage about 6 affiliate programs.
I’m not perfect in it but the idea is to have a good launch and then a viral growth, so promotion is done by affiliates. There are of course support issues and the work you have to do before launch but you can outsource this work if the income allows it.
I’m not saying that I’m already at this point and I’m not sure if I would do it… but if you have a steady viral growth and therefore a monthly income, then you can pay people to manage your site, just like a big business does.
Great post Andrew – very true. Auto pilot business does not mean you don`t have to do a single thing. What it means, is that you can leave it run for months and make profits, if you leverage it right.
Thank you!