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Turnover or Profit, What is being stated?

samb
Posts: 33
Joined: 05 Aug 10
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Turnover or Profit, What is being stated?

Hi All,

This topic was triggered by another great thread by Clayton in response to how well he is doing. However because of the general nature of this question I thought it would be interesting to ask it at a broader level.

Many times, when reading blogs etc, one get statements about 4 or 5 figures of money being received. What is not clear is whether this is turnover or profit. In a significant number of cases I suspect it is turnover. On further research I have picked up a feeling that one needs to put in a significant amount of work to get a site listing properly and ultimately acquiring enough traffic to be useful and then ultimately to create a site that is converting. I also read Ashton's excellent blog about getting to $400 in 4 months. So lets assume 6 months is a realistic time period, what would the profit figure look like taking into account the labour hours and other costs? I am asking this is a conceptual way to generate debate.

Revenue
- Commissions

Costs
- Own labour ( $10/hour which is probably too cheap, but perhaps reflects quality of life factor of this work, as opposed to doing something more stressful which one may want to charge more for.
- Outsourced labour
- Services ie hosting, domains etc.

Profit
- Difference between two.

Asset Value
- Value of site if you want to sell it on.

I find this approach at looking at a venture more instructive since it identifies the real cost in time in getting something working which I believe is often glossed over in this sector. Also it could identify cheaper ways of doing things such as automation or outsourcing.

I would welcome any feedback on this?

Cheers,

Sam
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PremiumMember
thebigventure
Posts: 334
Joined: 26 Apr 09
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Hey Sam,
Most places will only reveal revenue. Even with most local businesses like coffee shops or franchises, it's all based on revenue.
In regards to IM, again it's the same deal only revenue. But obviously with things like PPC and paid backlinks, etc, the revenue could be high, but so can the expenses. This is why you should only stick to those Internet marketers who also reveal expenses. I'm sure if you've followed Clayton, you've also seen that he reveals his expenses (and they really isn't any surprises there). Not sure if you know him, but Pat Flynn (http://www.smartpassiveincome.com/) is another good marketer who I only just got onto, but saw that his reports include expenses as well, and profit.
Basically what I'm saying is just look around for those who reveal.

That being said, does it even matter man? Get out there and start doing your own stuff, and get some experience. This shouldn't even be a thought if you're a newbie, go do something first.

And regarding the $400 in 4 months, even with 6 months it may not be able to be done. I outsourced a lot, and took something like the AB course to an extreme by making the sites bigger and multiplying it all by 5. If you can do it, then it's possible, but a lot of the time results are small in the first 6 months.

But at the end of the day bud, how many sites you got up? Have you seen any sales?
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http://www.TheBigVenture.com - Started 6 years ago...finally making $15,000+ per month now!
 
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toby101
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Joined: 20 Apr 11
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SamB thanks for this interesting post.

I'm not sure anyone can say confidently what profit a website will be generating 6 months after it is launched. And in a pure marketing sense I don't think it is that important. Sure you can break it down and say if I made x amount of sales per week then the turnover would be y after 6 months, but anyone who has experience in launching a business knows that it rarely turns out the way you predict.

I think the really important question in your post is how much does it cost to get your website into a hypothetically profitable position for the niche your targeting
ie
ranking in the serps for enough buying kw
content of the quality needed to generate sales
consistent streams of traffic
ppc tuned
etc...

Once you have a feel for this cost then you can map out a detailed strategy to the last penny. This seems to me to be a biggest benefit of Internet marketing because not many other business models can be so exacting!


On this note of budgeting it would be interesting to know the exact investment that went into a website such as Mark's WOW site in the 1st 6 months. I'd hazard a guess that it would be a significantly larger than Ashton's 4 month goal.
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samb
Posts: 33
Joined: 05 Aug 10
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Hi Ashton,

You are correct I am new at this and yes I do have other income streams... I am an IT consultant by day, but intrigued by this sector. So for me there is an opportunity cost since doing this will prevent me from running with something else. Also understanding the complete "Business Model" is more useful in creating an optimised approach. I just felt this was an interesting debate..... and yes I will be doing it!!!! I have some pretty ambitious ideas, but how best to implent at present.

Thanks for the Pat Flynn references. I also follow Lisa Irkby who is incredibly frank about what is involved.

Good luck with exceeding your 4month targets,

And thanks for your comments,

Sam
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thebigventure
Posts: 334
Joined: 26 Apr 09
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Good to hear mate and the opportunity cost makes sense :) Usually we invest time or money, whichever we can spare. I do wish you all the best with your ventures too!
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http://www.TheBigVenture.com - Started 6 years ago...finally making $15,000+ per month now!
 
samb
Posts: 33
Joined: 05 Aug 10
Trust:
Toby,

Thanks for your great post. Yes it would be interesting to find out what the WOW site cost in the first 6 months... Infact a business breakdown would be very enlightening!! Perhaps I will suggest it.

Ashton,

Thanks... Onwards and upwards !!! To make this work in the first instance I feel that one has to make the time to learn and then optimise the business model ie outsourcing, automation etc where necessary.

Cheers folks,

Sam
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This topic was started on Jul 25, 2011 and has been closed due to inactivity. If you want to discuss this topic further, please create a new forum topic.

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