In my opinion, the niche site business model is a very compelling one and in this post, I’m going to share with you the 7 reasons why I think the niche website business model is so powerful. Before I get to that, so that you have some context for what you are about to read, I’m going to first share with you a little about the “traditional” business I used to be in.
Back in 2001, I scraped up my entire live savings (sold my house, my stocks and most of my toys) to start a company called Dyrand Systems. At first, we were just a small IT support company that billed hourly for our work. Within 6 months, I figured out how to deliver our service over the Internet and charge our business customers a flat monthly fee for the service. On top of that, we’d bill them for any hardware, software, and projects that were needed to upgrade their network.
At the two year mark, the company had generated a profit of negative $175,000. Yes, you read that right. After two years in business, we’d lost $175,000 of my hard earned dollars.
Ouch.
Guess what else? By year four I had not only run out of cash, but I’d managed to accumulate over $300,000 in debt…and that was debt that I was personally liable for if the company failed.
Talk about stress!
By year five, things had gotten better and we were no longer racking up debt. Sadly, we weren’t generating much cash either…and that was with a seven figure revenue stream coming in!
After running the business for about 7 years, we had two offices, 13 employees locally, plus a bunch in India, a seven figure revenue stream, and numerous awards for fast growth. Guess what we didn’t have much of? PROFIT. Yep, that’s right…despite having all those people and parts there just wasn’t much profit left over at the end of the day. The reason for this was simple; too much overhead, too much competition, and not enough pricing power. As you might guess, the “fun” of running this business was wearing off.
Thankfully, I was able to sell the business for a seven figure amount and set myself up to go off and do something else. That was a very good day, but even that was a huge challenge (and beyond the scope of this post).
So, with all that out of the way, please allow me to share with you why I think the niche website business has a better model than my old company.
Low Startup Costs
Not surprisingly, getting started in the niche site business doesn’t cost too much. Keyword research can be done with free tools and time. A domain costs about $10. Hosting costs about $6 per month, and if you are so inclined, you can build the site, find the images, write all the content, and build all the backlinks yourself with nothing more than your time.
I wouldn’t advise that you set out to do everything yourself, however. In fact, I would advise very strongly against it (covered more in a later post) as it will take you forever to build up enough income to quit your job.
Low Overhead
Having low startup costs is important, but more important is the cost of your ongoing overhead.
Remember my old business? It cost about $100K a month to run. In other words, we had to generate $100,000 in gross profit just to break even.
That sucked.
In my niche site business, my overhead is laughably low. My expenses are roughly as follows:
- Hosting – $10 (I use Hostgator)
- Virtual Assistant(s) – $100 – $300 for link building (at the higher end if I’m building new sites). I use oDesk.
- SECockpit – $67 (most awesome keyword research tool ever invented)
- Aweber – $19 (so I can build a mailing list)
- Article Marketing – $67 (I use UAW)
- Social Bookmarking – $40 (I use SocialAdr)
So, lets see…some quick math here gives me…um…about…well…$300-$600. When compared to the previously mentioned $100,000 a month +, $600 is a drop in the bucket!
Now, realize that some of my readers think that $600 is a very large drop in the bucket, and trust me, I get where you are coming from.
Just remember, you don’t have to hire a VA right away. In fact, if you are brand new, you could make a case that hiring a VA too soon wouldn’t be a very good idea at all. I say this because you really need to understand your business processes yourself before you can teach someone else to do it for you. (more on that in a future post)
You also don’t have to use SECockpit and that would save you $67 a month. Instead, you could use the Adwords Keyword Tool (this link will take you to the free research video on my membership site – its the second video down)
Potential for Profit
My top earning site is www.howtocleananything.com, which at the time of this writing is earning about $500 a month with Adsense. This is a very old site that I didn’t build; instead, I bought it (you can do the same on Flippa) and it gets about 1100 visitors a day.
Imagine having 20 sites like this? The profit gets pretty compelling.
However, for the purpose of this article, lets get waaaaaay more conservative and look at some basic math.
Here are my assumptions:
- monthly income goal of average niche site: $50 – $100
- typical investment in a new niche site: $100 (I outsource everything – more on that later)
- expected time to get my $100 back: 90 days
I think of my niche site portfolio as being pretty much the same as a stock portfolio (only with much less risk!) in that I don’t expect them all to meet my expectations; some will be base hits, a few will be home runs, and several will be strike outs. Overall, however, I at least half of my sites to be nicely profitable.
So, for me, the math looks like this: invest $100 (and very little of my time) and expect to make about $75 a month x 9 months (remember, I don’t expect much in the first 90 days).
In other words, in year one, I am willing to invest $100 to have the chance to earn back $675. I don’t know about you, but I don’t need a fancy financial calculator to know that is a huge rate of return on my invested capital.
Moreover, in year two and beyond, the annual income per site becomes $900. Pretty awesome considering that once the site is built and ranked, there is very little that you need to do (aside from sprinkling on some new content every now and again, which my VAs do without my lifting a finger).
With just one site, my “business” is now earning $900 a year and I don’t have squat in the way of overhead. Good stuff indeed!
Even better is this…why not build 200 sites? How about 300 sites? How about 1000 sites?
At just 200 sites, you are earning $180,000 a year, and that is more than my old business ever earned in a year (if I didn’t take my $120K salary, it would have earned more, but who works for free?).
Assuming you like the 200 site number, if you were to outsource everything, you’d be looking at an investment of $20,000 to make $180,000 a year. I can’t think of another type of investment with such a low risk, that can make you this kind of money. If you can, please submit it in the comments below and I’ll switch!
In the video below, I explain another way to make money with your niche sites. Instead of keeping them all, you could sell some of them and reap huge short term rewards that you could then use to cover the cost of building your next round of niche sites.
Diversification
With my old business, all my eggs were in one basket. I had a ton of money invested (mine and shareholders) in the business, and because of this, I devoted my full attention to it. The biggest risk of this approach is something I call opportunity costs. If I do “A”, then I can’t do “B”.
With the niche site business, its my opinion that you are insulated from this risk through diversification. You can have as many sites as you like in as many markets as you like. Over time, you are going to find out that some markets are more lucrative than others, and you increase your focus on those more lucrative markets. You may also find that some monetization methods (covered in a later post) are more effective than others. Thankfully, with an online business, all of this is very easy to split test (covered in a later post).
My point is this: with the niche site business, you are never going to be reliant on just one site for your income, and because of this, if Google slaps one of your sites, at best you’ll say “oh darn” and move on. This actually happened to me very recently, so I can speak from experience.
Passive Income
Now we come to what I believe is the holy grail of the niche site business: passive income.
There is no form of income that I love more than passive income! It is just so much fun to wake up and check how much money you made in the last 24 hours – especially considering that you may not have been working during that time! For me, this is 99% of the reason why I’m in this business.
Here’s an idea for you to chew on. In many businesses, people are busy completing transactions. Each time they complete a transaction, they get paid. The problem lies in the fact that if they aren’t completing any transactions, they don’t get paid.
With the niche site business, you aren’t completing transactions; instead, you are building assets. Each website is like a little oil well (or a rental house). It takes a little time to build and it costs a little money, but once the investment has been made, the niche site doesn’t its dutiful job and brings home a little bit of profit month after month after month. www.howtocleananthing.com has been doing this for 10 years!
SEO is a Valuable Skills
Lest you think that I’m only blowing sunshine up your rear, let me bring to light another thought for you to munch on.
Supposes that you build a few sites and get them ranked, only to find (for some reason) that you don’t really enjoy this business and want to be involved in a business that has more interaction with people. Having mastered the skill of SEO, don’t you think that there might be a few small business clients out there that might like some help in this regard? Of course there are! There are literally hundreds within just a few miles of your house.
Local search has become a pretty big deal in the last year, so if nothing else, you’re going to equip yourself with some highly sought after skills.
Lifestyle
Ok, at almost 2000, its time for me to wrap this up (besides, I need to get to the beach).
As I hope I’ve pointed out, the niche website business has a pretty awesome business model. Low startup costs, low overhead, plenty of potential for profit with passive income and lots of diversification.
Combined, these factors make for a very compelling business…but I’ve left the most important thing to last.
The lifestyle of a niche website owner is beyond compare – at least in my opinion.
Lets fast forward to the point where you are making $50,000 a year. Not a huge sume, but a respectably one, just the same.
Do you need an office? Nope. Do you need to work Monday to Friday? Nope. What hours must you keep? Any you want. Could you travel full-time and just take your laptop along? Yes, absolutely you can.
So, what I’m saying is this: when you have passive income of $50,000, that is like having about $2,000,000 in the bank earning interest for you, and you can do any damn thing you want!
For me, there is nothing better than this. In fact my entire definition of wealth changed when I made this realization.
I used to think being wealthy meant I had a pile of cash big enough to live on, now, I don’t need the pile of cash; instead I just need passive income from my assets that exceeds my chosen level of living expenses. Have that, and you are rich!
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52 Responses to 7 Reasons Why the Niche Website Business Model is So Powerful
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Who’s Trent?
Having sold his last business for over a million bucks in 2008 by the age of 38, Trent has since immersed himself in the study of internet marketing by going out and doing. Continue reading...
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This all sounds so good – invest $20,000, get $180,000!
My questions is did you put up any sites that didn’t make any money at all? or did every one of them get to that $75 mark? ( there about)
Hey Graham,
Many of them didn’t earn any money…but that was because they were the first ones that I launched and I made poor choices. Now, most make money because I’ve gotten better at keyword selection. Anyone can build links…the talent is know which battles to fight and which ones to avoid.
Of course there will be sites that don’t earn any money and fail miserably. I had a lot of such sites initially when I started with this model of business. My number 1 mistake at that time – trying to do all things by myself in order to save money. Now I outsource a lot of things, specially the difficult ones or the tedious ones like building links etc.
Even now I have sites which are getting around 200 visitors per day and make less than $50 per month while there are others with less than 50 visitors per day and making equal or more than $50 per month.
I cannot say with surety while launching a new site whether it will be a hit or a miss. But if you do this in bulk, a lot of them will probably be hits and will more than make up for the misses!
Hey James,
That is exactly why I look at my portfolio of niche sites likes its a portfolio of stocks. Some winners, and some losers, but overall, you do fine.
Trent, I agree with your analysis about passive income and Google adsense makes it so easy, but what is plan B. First, I here from many that when you hit the $100.00 a day mark you get closer scrutiny of your sites from Google. I know, if you have good content and all that there is nothing to worry about, true. Next, what if Google changes the game or suspends your account, what is plan B.
I here the second and third players under adsense don’t pay nearly as good as adsense. Would you go with CPA or affiliate products?
I’m right there with you in the passive recurring camp, and just a FYI I like the new look of your site.
Regards..
Hey Ric,
Did you listen to my first podcast? its with Spencer Haws who’s earning about $15,000 a month with Adsense. I haven’t heard of anything about closer scrutiny at $100 a day. Google owns adsense, so why would they punish a publisher? Makes no sense to me. As for a plan B…I have a number of sources of income beyond Adsense, plus I have many sites in my portfolio. Some have been Google slapped in the past for overly aggressive backlinking…but they have all come back out of the sandbox, so if you have many sites, I don’t see a huge risk here either.
Thanks for sharing your question!
I’m not sure why people worry about getting their Google Adsense account banned. Google would only do this if you are violating their terms of service, so just don’t do that and you will be fine! There is a TON more I could say on this point, but just play by Google’s rules, and you will be fine. There is indeed risk in this business, but I don’t see this as one of the major ones…
thanks for throwing in your two cents Spencer!
Trent, nice to-the-point post. Normally I skim through a lot of the posts I “read”. While I did find myself being drawn to the next headline, I jumped back to where I was because of the content. I really liked your statement about making $50K passively and comparing it to having $2M in the bank. I’m sure I’m not alone in sometimes thinking (dreaming) that, “if only I could have some kind of windfall. I’d just live off the interest”. With niche websites, it seems the opportunity is there to create this type of passive income. The best part is that it does take some hard work (which eliminates about 80% of the potential competition). Keep up the good work. J
Hey Jason,
Thanks for sharing your comment, mate. Glad you found my blog and are enjoying it. If you haven’t already done so, I would love it if you’d tweet about the post
Thanks,
Trent
It sounds great but do you think it really is that scalable and you/we can find 200+ niches that will turn a profit?
I’m not saying you can’t and I know Spencer did it but can everyone?
I’ve got about 50 sites in fairly low monthly search niches and most of those aren’t number 1 and some are 2 years old now. Obviously I’m doing something wrong haha
Moan over…
Yes, Joe, I do believe its possible. There are literally millions of keywords to find! They key is understand how to find them and having the right tools. If you go to my membership site, Niche Site Mastery, you can get access to the entire keyword research module for just $7. Regarding the tools, check out my review of SECockpit. I can’t imagine life without it as it would take me FOREVER to find niches. With this tool, I could find you 50 niches in a day.
Can we buy a research pack with 10 article mini site? Main term and 9 sub terms that we can have 400 word articles written about. Results from seocockpit… The topic “website design” would work. How much would you charge? Art
Hi Art,
That isn’t a question I’ve been asked before – nor is it a service that I’d thought of offering. If you are going to do all that through my team, it would cost you more than if you did it on your own, you realize? If I was to have my VA team do it for you, finding a keyword, writing 10 articles and then building the site would be somewhere in the vicinity of $250-$300….mostly because we’re not really setup for this type of service offering. If you wanted to do it on your own, I know a vendor that will find keywords for $7 a piece, you could then get your articles written on text broker for around $10 each, and you could then find a VA on oDesk to build the site and put all the content on it. I currently pay $30 for that to my VA…however, I also have all the training systems already in place, so without that, you might need to pay a smidgen more…Please feel free to PM me if you want to discuss this further.
Hey Lemuel,
I think this is your first comment here on OIL, ya? Welcome!
I definitely build my links slowly…especially at first. I use a team of VAs for the most part, but I also like to experiment with outsourcers. I actually offer a link building service myself. There’s a link on my nav bar.
If you do link too aggressively (like I have in the past), your site will get dropped for a while, but not forever. Mine are now all back on page one after being absent for about a month. If you want more details on this, I go to great lengths to teach link building in my membership site; Niche Site Mastery.
Great post Trent.
You just brought me closer to my dicision of trying to doing similar full time. I’m in the middle of a gigantic battle right now.
One side want me to take the new Job offer I just got, and the other want to be self employed and try doing something like this.
Think I’m almost certain I’m going to do it. I already have a small income and is sure I can build something up in the year and a half I have for it.
Thanks for a great blog, and Podcast
Here’s a few thoughts for you…
If you take the job, you sacrifice your time, HOWEVER, you will have more cash to invest into hiring a team to build your sites. To be honest, it takes almost none of my time to launch new sites and I could easily do 10 a week, SO LONG as I’m willing to spend about $100 per site. The downside of the job is that you may not be disciplined enough to devote energy and capital into the development of your portfolio of sites. You may also ramp up your “lifestyle” expense in line with the income from the job and in doing so, become a prisoner to the job.
I’m a big believer in being an entrepreneur so, for me, there was no choice. I realize however, that others may need a different approach to get started.
Thanks for the thoughts Trent.
Just informed the company today, that my future was not with them, but with myself.
So now I’m going to jumb out on the deep end start 1. January (currently have a contract with a company which I want to finish the right way)
I had it the same way that if I kept having a job, I could not focus on my own business, and luckily in a situation where I can afford not making any money for at leats 1 year, and still invest some money in a company.
I think you’ve made a good choice and wish you all the best!
Your “Yes, please take me to the videos” button is not working in Chrome on Mac.
I realized that, too. Should be fixed now. It was a javascript error that caused it.
Hey Trent,
Great post! For the last 3 months, I’ve been doing backlinking and writing articles myself using services that post short articles to high PR sites. But I just realized that for the same money I’m spending on those services, I could hire a VA to do backlinking and more… plus free up my time for more important work! I recently got out of the mindset of trying to be cheap (as in doing everything myself) and spending a little money to have the boring work done for me.
I’ve been in internet marketing for only 6 months but I’m just about breaking even with only 2 monetized sites. That was my first goal in this biz. It’s not that much money, only $100/month but I thought it’d be a year or more before that happened. Now that I have the motivation to grow that number, I am definitely ready to outsource some of the work. Your thoughts on ROI is right on! I’m just realizing that!
Hey Harlan,
In my mind, this business revolves around one simple concept: Return on invested capital. Outsourcing makes that a possibility.
Hey Trent
I find it quite easy to rank on page 1,as you said anyone can build links. The trouble I have is finding a keyword where you can get adsense clicks.
Kevin
Hey Kevin,
Keyword research is 95% of this business and SECockpit is THE tool to have, IMHO. With it, I can easily find keywords.
Hi trent
Intresting reading. Makes me depressed when i read of people making money easily with a little work and big returns
Ive worked in SEO for years for corporate clients but my adsense business is stuck. It seems to me that i HAVE to have 2000+ exact match searches a month on the keyword and also a CPC over $4 dollars to make any kind of real progress.
With 30 sites but getting collectively 50 clicks a day im makine $15 a month…
your thoughts on my error?
regards
Hi Tom,
With so little information, its impossible for me to give you an opinion. If you want to PM me the URL of one of your sites (the best one), I’ll have a look at it.
Hi Trent,
I really enjoyed this post and as someone who is about to embark on the niche site building model, some things have really hit home, namely that not all sites will meet expectations and the need to outsource asap.
I am glad I have recently discovered your blog and have learnt so much already.
Thanks for sharing your knowledge and experience with us, it is more appreciated than you know…
Hi Adja,
Welcome to the OIL community; thanks for participating. I look forward to hearing more of your comments in the future.
Trent
Great article Trent.
I am currently trying to sell a business I started in 2007 because between the high overhead and slim profit margin the model seemingly just can’t work. Even though annual sales have continued to grow.
I am looking to tap into the online blogging for profit and your posts and knowledge have been very informative.
Kate
Hey Kate,
Thanks very much for the kind words. Please PM me if there is anything you think I can do to assist you in preparing for the sale.
Cheers,
Trent
Hi Trent
Where besides oDesk would you recommend outsourcing the building website piece plus putting the content on? Do you know of anyone with an actual website dedicated to doing this part for people?
Thanks for your help! BTW, LOVED THE ARTICLE!
I saw a Warrior Special Offer (WSO) the other day on the forum for a guy who builds sites for $60 a piece – including content; however I have no idea if his content is any good. My VA does it for me for less than that, and her content is excellent. If you like, I would provide it as a service to you for $60 a site and can assure you that you will be very happy with the results – as I am.
I’d like to take you up on your offer. How can I get in touch? I’m already on your mailing list…
just use the contact page.
Hi Trent,
Just curious. On your website you mentioned above, howtocleananything, does Google require a privacy page and an about me page when doing Adsense. What is the trick to getting away without it?
By the way I absolutely enjoy that you have Itunes to listen to – what a fantastic idea.
Thanks – Mekus
Google wants to see a privacy page on any new sites. The cleaning site is so old that Google likely didn’t have that policy back then. As for the about me, I don’t bother with it on my new sites…but my Adsense account has been approved for ages as well.
This is a truly motivational post! My plan is to get to at least 200 adsense sites in around 15 months. I really hope I can do it. I know that’s a really aggressive target to hit but I figure it I outsource my content for all my sites I can make a couple sites a week and be on my ways. It will be a large margin of investment to start but I think I can afford it. If I spend less money going out and more on my adsense empire I can spend my money in the future and enjoy it!
Thanks again Trent for the inspiration. I just completed another site today. Now on to my next Adsense site!
Thanks Michael!
Trent, there is nothing better than having couples of niche sites earning consistent income online – it’s better off ‘having’ a job and you won’t know what will happen to you the next hour considering the economic situation now.
You can decide to increase your earnings in niche sites by creating more but with a traditional job, you can only think of the day you’d be sacked!
Sheyi
The Authority Site Guy
Hey Trent, I totally agree with you that this is a great business model.
Start up cost is low. If you want to do everything manually, (without software/service help), it could be as low as $5 web hosting a month.
I just enroll in NSM. I make $200 Adsense a month, and love to follow your process to reach $1000 a month and be one of your successful student case-study.
Over thanksgiving, I was working hard and try to scale up my business.. all the sudden, I realize, I need to outsource and automate as much as I could. Thankful that I got Chris WSO Niche Website Masters.
That’s why I got to know your blog and grab the Hostgator Cyber Monday deal to join NSM force.
You gain me as a follower. I follow SPI and nichepursuits as well.
What I am learning is a business process and I on-going fine tune mine and test out different niche and SEO strategies.
Be in touch, see you on NSM forum!
Hey Kent,
Welcome to the OIL community and to Niche Site Mastery as well. I’m glad to see that you have “seen the light” when it comes to outsourcing and as such, you are going to LOVE NSM’s new “done for you” VA service when it launches next week!
Trent
This is a great post that vastly explains everything pertaining to niche sites. I plan to also start an empire of niche sites, and as I am new but learning how to build links and whatnot, it takes sooooo much time! Where would be a good place to outsource link building online? And I also really like your videos and posts, they are filled with great info that is hard to find on the web because everyone nowadadys just wants to slap up sites are filled with bad content.
Hey Mark,
Welcome to the OIL community! There are MANY placed to get links (Fiverr has a ton) and there are many tools that you can subscribe to that will help you; however, at the end of the day, you still have to make all the moving pieces start moving. This can be a pain. As a result of this, I am just in the process of launching a complete “done for you” VA service. You can watch a short video that explains it here.
Hi Trent, I seem to be popping up all over. I have been trying to make money with Adsense for a while now as I mentioned in my support request. I never really learned how to build properly, or had problems maintain sites. I think NSM may be the answer I have been looking for. I am a bit ahead of the curve as far as knowing how to build a site, but really have problems when it comes to choosing a profitable keyword. I can also see how promoting is something best outsourced. My eyes glaze over after posting on blogs, doing forum signatures and all the other off site SEO that I usually just give up. Hopefully we can change that.
Hi Gene,
So long as you take advantage of outsourcing, I’m sure you will be successful. If you don’t…better get some help for those glazed eyes
Trent I have a question? I have had my absence account banned do to no fault of my own (other then not knowing enough about what I was doing), what do I need to do to use your program?
Hi Lindsay,
You will need an Adsense account. Perhaps you can open one in the name of a relative?
Love the post. I also agree with you when it comes to passive income. I sound my 7 figure business for time. Time for myself and family. I had to be at my business to make the money. I now make money from anywhere.
I get stuck at keyword research, You mention above about a service that does the keyword research. can you provide that info.
I waiting for you to open Master ninja, cuz i think this will help me grow.
Thank Trent
Love this post. It’s very encouraging.
I know you make reference to sites making $900 per year, but what would you say was a typical average annual (or monthly) earnings for a site, taking into account all the winners and losers?
Hi Warren,
There is no average. It just depends on too many factors.
Hi Trent,
Thanks for sent this post to your subscriber. I missed it. Of course, I really agree with you that niche sites is powerful business. Always thanks for you to remind all your readers. Great to join here..