[Guide] Simple Online Business Model #1

[AdamCochran]

As a marketing and business development consultant I frequently get asked about good business models for online business. Since I myself got my start as a webmaster I know exactly where you are and I am going to share a few of the models that I used to use to help you along!

Method 1: Hosting Support Upsale

This is perhaps one of my favorite methods of all time and it's highly scale-able, I know some people who have formed there entire business around this model and are making upwards of $300,000/year.

Resources Needed:

1. Either a VPS or Reseller account from GoDaddy or HostGator. (If you are going to be catering to the Indian or Asian markets then I would suggest using BigRock)

2. Basic Website

3. Some simple templates from ThemeForest

Knowledge Needed

1. Basic Hosting Management
2. Basic HTML knowledge
3. Use of Google Analytics


Method

Step 1: Open up your local yellowpages, and head to the services section here you are going to find a number of professionals who offer various services directly to consumers. They need to have their services found, but chances are they aren't backed by a big company with a web budget. These could be doctors, lawyers, painters, plumbers, you name it!

You will want to assemble a list of around 100 of them, check out their websites for ones with poor websites that could be replaced by one of your templates.

Step 2: Set up your own personal website, modify one or two of the templates you bought and use them in a portfolio. Careful not to use these ones with actual customers.

Step 3: Write up and print out a proposal to these clients:

Insert Name Here,

My name is [Your Name Here], I am a web design specialists from [Your City Here] and noticed your website could use a bit of a touch up, I provide professional quality websites and an excellent promotional price (Only $750) and will even host your site for a flat rate of $30 a month which includes detailed analytics reporting absolutely free of charge.

You can see a portfolio of my works at [Your Site Here].

Call or email me at XXX-XXX-XXXX to discuss this further

Signed
[Your Name]

When you mail these out address them to the owner of the business. People rarely get direct mail any more and they are more likely to open it than email. Also an excellent trick I like to use that I learned over the years is to put a pair of red game dice in the envelope. This requires it be sent as bulk packaging by the US postal service so it will be specialty stamped, some states may even required it signed for. When the person gets it they will be more likely to open the bulky package, and with no explanation about the dice it really sticks in their mind. I've even had a few people call me just to ask about the dice and then managed to close them on a sales call.

The point here is you can easily host 20+ sites on cheap VPS hosting that costs only $30 a month (your first client will cover the cost), you get quick money for simple edits to templates and now here comes the big twist:

Step 4: Set the client up on Google analytics when you add them to your hosting. When ever a client wants to make a change to their website you offer to do it for them at a low billed rate as it's easier since you are already hosting the files and have html experience. You can bill them at a rate of $45-$75 an hour and charge a minimum of 15 minutes per change.

Then set Google Analytics up for monthly reporting. Each month when you get the report note low performing pages (those with low CTR, high bounce rate or low time on page) write in a few notes of what could be done to enhance that page (improve metatags, edit content, re-do layout of page, add SEO).

Send that report with your additional suggestions to the client, include an invoice statement outlining the proposed changes and what you would charge to do them. Keep the invoice under $1000, if the changes would add up to more than that hold some of them off to the next month.

For an actual business an expense under $1000 is pennies that they would most likely agree to in order to see an improvement in their customer experience.

When I first did this I would bring in roughly 4 - 6 new clients each month ($750 x 5 = $3750), and make changes for 3 - 4 clients at an average of $250 per person (3.5 x $250 = $875) plus all the hosting fees (I usually had around 20 - 30 clients at anyone time (25 * $30 = $750)

$3750 + $875 + $750 = $5375

That's right, I was making $5000 a month for roughly 30 hours of work a month.

How to Step it Up

Of course aiming at contractors and individual practitioners is just the start. Eventually you want to move to large clients and businesses.

If you are confident in your web design skills and can handle clients with more needs or a better unique design then you can charge more for your websites. Once I hired a web guy to make unique designs (nothing fancy, around the quality of the templates but catered to the layout needs of the clients) we would charge $5000 flat fee for one website and go after larger companies.

These companies would be charged at $125 a month for the hosting and reporting, and billed $75 - $150 an hour for any onsite changes.

You can see how quickly this method can add up. Start with contractors who have no technical knowledge and build capital and a reliable infrastructure, then you can go after businesses who have the capital and knowledge but not the time to deal with all these things. With in a year you could grow a very strong business.

Ultimately you can flip the business (sell it for 3x yearly profits) and invested the capital into other projects.

[Cricket]

This works well provided you back it up with quality work and results.

[AdamCochran]

Exactly, you always need to bring quality to what you do. You can make a fortune at anything by giving it your all.

This method is nice though because for most in the webmaster community these are very simple tasks they will be used to doing everyday and it can be done very quickly and make a good profit with only a fraction of their time

[deryaSavas]

This sounds great, would it not be better if the clients interest was placed first? I know I know, many would bite my head off by saying that. But it seems to me that client in this example is placed in second and self first.
Would it not be better to talk with them, consult with them and find out what it is that they want to accomplish online and help them towards achieving this?
Either way, this post and information you have created is greatly detailed which obviously states that you are keen to share your knowledge, that I admire, since knowledge is there to be shared and we only get rewarded for our time and energy

[jvwp]

I like this method VERY MUCH Adam... gives me some good ideas to ad to my current hosting clients. Thank you so much!