Building a good affiliate business

Good affiliate business

There is a difference between owning a website and owning a business. A website is just a collection of text and pictures. Many people have their own website, and most don't get rich from it. A business on the other hand is a collection of people, ideas and technology, all working together to make money. Most people who are very successful have their own business.

It follows that a good affiliate business is not the same as a good affiliate website. First of all, an affiliate business may comprise many different websites. I personally run a multitude of affiliate websites, each making money in its own niche. Second, a good affiliate business has to meet sound business principles. More about that below. Third, an good affiliate business will grow over time, and you will have to think about how to scale it up.

Principles for a good affiliate business

Just like any other business, an affiliate business will have to employ good business principles to be succesful. Let's start with some business fundamentals. The first and foremost goal of most businesses is to make money. It is not to be cool; not to attract as many customers as possible; not to be as big as they can be (although many go wrong there); but to make a healthy profit. So if you're going to build a good affiliate business, you'll have to figure out how to make money with it.

Calculating the money you make (your profit) is very simple:

Profit = Revenues - Costs

So if you want your affiliate business to make more money, you either have to increase revenues or reduce costs. It's as simple as that.

How to increase revenues

The best way to make a bigger profit is to increase revenues from your affiliate business. If you have more money coming in, your costs will matter less. Also, this is the natural way for a business to grow. The following are ways that you can improve the revenue from your affiliate business:

  • Find good affiliate programs. If you find a program with a higher commission or a better conversion rate than the one you are currently using, that will immediately affect your revenue. Especially in competitive affiliate niches like gambling, online trading, or adult entertainment, there will often be a more profitable affiliate program out there.
  • Get more visitors to your site. You can either achieve this through SEO, advertising or using your social network. Learn at least some basic principles of good affiliate SEO. Whenever you have something interesting to share on your site, also post it on Facebook, Twitter, LinkedIn, and potentially on Google Adwords. Any extra visitor is a potential extra customer.
  • Optimize your website to sell. Rather than just placing a link or a banner on your site, try to promote a product or service (without overdoing it... you want to provide both valuable information and sell something). Also read this excellent free e-book on the topic: 'Make Your Content Pre-Sell'.
  • Build more websites. While you want to make an effort to develop your first affiliate website well and get it to rank high in Google, you shouldn't let this hold you back from setting up more affiliate websites. A good affiliate business shouldn't be too dependent on one website (or one vendor, or one product, for that matter). Each new website you start can attract completely new visitors.

By using these techniques you can steadily grow your affiliate business. You will notice that you get better at it as you do it more, and that revenues come flowing in. While increasing your revenues is the most important part of building a good affiliate business, the other way to make more money is by reducing costs.

How to reduce costs

Most likely you don't have much costs yet. If you don't have any personnel or offices, your main costs are: your time, your webhosting, your affiliate software and your marketing expenses. While there is not a whole lot of cost-cutting to do here, some things you can do are:

  • Save time by using efficient software for keyword research, by using easy web-building tools, or by outsourcing parts of your job (e.g. content writing or link building).
  • Don't cut costs on webhosting. Your webhosting is the life blood of your business and you do not want it to break down under any circumstance. For a long time now I've hosted my websites at Rochen Hosting. They are rather expensive, but they are the best in terms of reliability and support.
  • Your software can be a big expense, but there are some ways to save on software. For many office programs such as word processors, spreadsheets, photo editing and webdesign, there are free open-source alternatives available. Preferably you'd want to use a really good keyword research tool such as Keyword Elite or SBI's Brainstorm It!, because this will determine how profitable your affiliate niche is. But if you really need to save money, you can use the free keyword tool in Google AdWords.
  • Advertising can be money well spent, as you attract visitors who will increase your revenue. So you shouldn't necessarily want to cut down on this. However, it is essential to monitor the performance of your ads. If you see an ad with bad conversion or a high bounce rate, scrap it. If you use Google AdSense for advertising, you can connect it to your Google Analytics account to monitor performance. Advertise only there where it makes you more money than it costs.

You'll have noticed that there is often a trade-off between costs. For example, you can save on a good keyword research tool, but it'll mean that you spend more of your valuable time on doing research by yourself. You could save time by outsourcing the graphic design of your websites, but then you're going to be paying someone else for the work. And if you save on advertising expenses, it might cost you visitors who could bring in more revenue.