Hello everyone! This is a guest post from Glen who is the owner of howtosavemoney.guru a website created to help people better understand how to save money, learn how to make more money, and also teach others how to better manage the money they already have.
Let me know if you would like to guest post on MMYW!
If you are anything like me, then you’ve had plenty of dreams of becoming the next big internet entrepreneur. Unfortunately, the chances of becoming the next internet affiliate marketing superstar is actually fairly slim, now i’m not saying it’s can’t be done, I just feel that it’s a lot more difficult than it used to be, as more and more people are trying their hand at making money online.
So late last year I decided to take a slightly different approach, so I created a web store that sold physical products. I realised that I wasn’t quite ready to abandon my goal of making side income online, but I also didn’t really want to turn into one of those shady affiliate marketers that would push anything – so an online shop seemed like the perfect solution.
So today I am going to talk about my experience creating an online store and how it is going so far. Note: I won’t be giving specifics on the product I am selling.
Getting Started – It Costs Money
Probably the biggest thing that I realised when I started out with this web store, was that getting started was hard. Having an idea is one thing, but actually putting things into action is quite another.
Not only is it very time consuming, but it can be very expensive as well, and as someone who is big on saving money, I really wanted to be sure that I wasn’t going to be flushing my money down the toilet. After all, you have to buy stock, organise supply chain management, promote your website and most importantly of all – you need a product that people want to buy.
Overall my wife and I have spent close to $20K on our business so far, and to date we have only returned about 20%-25% of that. But considering that we only started in January, and that our sales have started to become nice and steady (see screen capture below), I am confident that in the long run we will end up turning the business into something that is very profitable.
Now many of you are probably thinking that I’m crazy spending that kind of money on a new internet business, but I did do a lot of initial testing to ensure that there was a market for this product.
In order to test the market, I created a website that sold similar products (the products were through Amazon) and I ranked the site to the 1st spot in Google for one of the keywords I was targeting. What I discovered was that people not only liked the product, but that I was getting between 3 and 4 sales per day.
Now unfortunately the way I tested the website was not sustainable, and eventually the site got hit by a Google penalty. I suspect this was because I purchased black hat links to rank the site – I was a little annoyed, but it served its purpose and it did tell me that I could easily make money in the niche I had selected. This gave me enough confidence to spend a fairly large sum of money setting up my own product line ready for sale.
Patience
The next big thing I learned was patience. During the first month I was pretty upset that we weren’t getting any sales, and even the second month where we had just a couple of sales I was still pretty concerned. You see doing things the right way takes time, and I am in this for the long haul, which means that I am not interested in ranking my website the same way that I did the test one with shady links.
Anyway, after a while things have started to settle down and now we are starting to make around 7/8 sales per month, which works out to be about $700 per month. Obviously this is a lot less than the 3 to 4 sales per day I could be getting if I was at the top of the search results, but it’s enough to keep me satisfied that eventually we will have a good steady side income stream on our hands.
Marketing & Diversify Traffic Sources
Marketing is probably the hardest part of any business, whether it be a traditional bricks and mortar business, or an online one. This is something that took me a while to learn when I first started building websites online, but in short – no one is going to buy your product if they can’t find it. It sounds so simple now, but back then I just didn’t have a clue about internet marketing.
I also used to think that targeting search engines was the answer to getting people to your website, but in reality I think this is a mistake. It’s so easy to get caught up in the massive amount of traffic search engines like Google can provide, that people often forget about some other really great traffic generating websites that exist.
One of the big ones for me is social sharing websites like Pinterest or shopping websites like Wanelo. They are both great at sending quality traffic to my site, and the best part is that it converts far better than Google.
My analytics stats for the last 6 months showing Google & Wanelo
I honestly feel that these types of sites are too often overlooked, and that they can provide a great way for online businesses to generate sales.
I would love to hear about any of your own experiences with starting a business online. What did you learn and what can you share with others before they start out.
Interesting read, Glen. Kudos to you for giving it a try. I hope it continues to grow for you.
debt debs recently posted…Preferred Shares – Time to Spend Some Money
Thanks, I hope it continues as well 🙂
Glen @ How To Save Money recently posted…This Weeks Best Reads 25 July 2014
Wow, you are brave sinking 20K into your venture! That said, it sounds like there is a solid track record of demand. I know exactly what you mean about wanting the dollars to come in immediately! I just started Money Propeller as a second blog, put some money into it, and want it to generate funds immediately!
Anne @ Money Propeller recently posted…Grocery Prices Across North America + CASH #Giveaway
It really is a lot of money, but I had a fairly high level of confidence that we could not only recoup our costs, but also make some good long term profits with it as well.
Websites do take a while to get off the ground, but if you keep putting the effort in and plugging away, things normally pan out pretty well.
Glen @ How To Save Money recently posted…This Weeks Best Reads 25 July 2014
Well, you know my story Glen. I started a website that I coded myself and it did very little sales. Then I upgraded the shopping cart platform to a licensed one. This enabled me to make changes to whatever I wanted. That was when my store started to take off. I was only making a few sales at first, but after a year, they started coming in. Once I diversified my traffic and where my products were located, I started rolling it in. As I wrote the other day, I was bringing in about $80,000 in sales a month!
Grayson @ Debt Roundup recently posted…Investing 101: Understanding the 4 Main Investment Vehicles
I would love $80,000 a month, but i’m realistic, and I know that kind of money is quite a long way off. Still, I don’t think it is out of the realms of possibility.
Glen @ How To Save Money recently posted…This Weeks Best Reads 25 July 2014
Yes I totally agree with you on the Patience aspect. If you do not have patience, then you might as well forget about making money from your business. Patience, they say moves mountains.
Kojo Enoch recently posted…Arguments For And Against Women In Politics
It’s tough to remember this message when you have invested so much money, but are still waiting to see a return on investment.
Glen @ How To Save Money recently posted…This Weeks Best Reads 25 July 2014
Interesting read! I remember reading a while ago it takes on average 5 yrs for up and coming businesses to make profit. That was an old statistic and probably not based on Internet sales….that totally changes the picture and looks like your be in the black very soon. Best of luck with your business ventures.
MomCents recently posted…How to Get Bank Fees Refunded by Simply Asking
Thanks, although I hope it doesn’t take me 5 years. I was originally planning on 18-24 months.
Glen @ How To Save Money recently posted…This Weeks Best Reads 25 July 2014
It looks like the business is doing really well for you and your wife! I miss seeing your comments over at YAM, but I realize that you are busy with your ventures (as I am too!).
DC @ Young Adult Money recently posted…Are Coupons Worth the Time?
Sorry DC, free time is difficult to come by, but I do still read many of the articles via RSS feed.
I am hoping to get to a point where I have contractors doing most of the things I do online, so I can focus back onto the things I like doing.
Glen @ How To Save Money recently posted…This Weeks Best Reads 25 July 2014
Sometimes it takes money to make money- and patience is definitely key. Congrats on the success and here’s to continued growth!
Stefanie @ thebrokeandbeautifullife recently posted…Couponing Like A New Yorker
From a very young age, I loved the idea of starting a business. It helps that I grew up in a family full of entrepreneurs, so there’s no surprise that I launched my first online business right after I graduated college.
Alicia @ Monster Piggy Bank recently posted…Enjoying the new Carseldine Markets and Buying Local Produce
This is amazing. Your business is picking man. Keep it up. I agree with Stefanie statement it takes money to make money. With combination of hard work, patience and being optimistic, believe you me your business will flourish.
Erastus recently posted…10 Insider Secrets of a Langley Mortgage Broker
I’m a regular everyday consumer who would like to retire, work from home and raise my children.
What kind of business do you have?
Wow, great post. Can’t wait to read the next one. Most blogs you read online are boring and don’t offer much information. This was really helpful.