While no business is perfect, the business model for building a portfolio of niche websites is about as close as I’ve ever seen.
In today’s post, I thought it would be helpful for me to cover off some of the pros and cons to this particular method of making money online.
By the way, today’s post is almost 2000 words and 99% of readers will just skim read it. Sadly, if you do, you won’t get the point of what I’m trying to say. Are you going to be part of the 1% that “gets it”?
Pros
I definitely feel that the pros far outweigh the cons. Here they are…
Anyone Can Do This
If you have a computer, a connection to the Internet (guess you wouldn’t be reading this without those two!), a burning desire to succeed, and are willing to invest a lot of time up front, along with some money, you have everything you need to succeed as a niche site marketer.
Of these, I must confess that I believe the burning desire to succeed is by far the most important.
With a strong enough desire, you’ll figure out a way to overcome anything you are lacking. Conversely, take someone who’s got everything but desire, and I’ll show you a failure in the making.
Passive Income, 24×7
Ah..the sweet sounds of making money while you are sleeping (or traveling, or riding your dirt bike, or anything else…) are without a doubt some of my favorite sounds in the world. There is really nothing like it.
In fact, as I wrote in my last post, having passive income from your assets (websites) that exceeds your chosen level of living expenses is really the equivalent of having a huge pile of money in the bank and living off the interest.
The very nature of a website that displays advertising or sells products products that are either digitally delivered or that someone else delivers, is to generate a stream of passive income.
The reality is that we live in a global economy (thanks Al Gore!) and because of this, people are searching for solutions to problems 24×7 365 days a year. What that really means is that you literally have an ocean of customers all wanting to buy your stuff (or click your ads). As the website is your ‘salesman’, you really don’t need to be present to complete the transaction.
Not having to be present is the best part of this business!
Location Independence
For the reasons mentioned above, it really doesn’t matter where in the world you are. So long as you have a connection to the net, you can run your business anywhere you like. Think about the possibilities created by this. You could travel full time. You could live in a new country every three months….or every three weeks. You could decided to move to small town USA and take advantage of lower housing costs without taking a pay cut.
Try and find a job that gives you this kind of flexibility.
Diversification
Like I have already touched on in my last post, having a portfolio of niche sites means that you are generating income from a wide variety of sources. If a site goes down, or the product goes out of style, or Google slaps you, you still have the remainder of your portfolio making money for you.
Just like you wouldn’t put all your money into one stock, I don’t believe you should put all your eggs into just one site. Too much risk for me.
You Can Be Invisible
When I started my niche site business on October 27, 2010, I also started this blog. Why? Because I wanted to become an authority and I wanted to teach people. Obviously, this approach doesn’t make me invisible.
Guess what? You don’t have to take my path!
Instead, you could simply build site after site and become the most successful person that no one has ever heard of. For many people, that is a pretty sweet deal!
Unlimited Income Potential
If you can get one site to earn $1 a day (very easy to do), what is stopping you from creating 500 sites?
Not much really.
True, each site requires an investment of time and money to get up and running, but once they are in position in the search results and getting traffic, very little maintenance is needed, and what little is required, is extremely easy to outsource. I know, because that is what I do!
They key to growing your portfolio lies in the keyword research. If you get the right tools, the research is not the hard, without the right tools, its downright awful!
For me, my tool of choice is SECockpit and I have tried most of what is available today. If you’d like to see SECockpit in action, check out my review here.
Plenty of Ways to Monetize
In my first six months of building niche sites, I was very focused on the affiliate route and built around 35 Amazon affiliate sites. Now that I’ve been through my ‘training wheels’ period, made a boatload of mistakes (poor research) and a few thousand bucks, I have switched my focus to Adsense sites. I find that they are much easier to find niches for because you don’t need a related product and you don’t need anyone to buy anything for you to get paid.
With Adsense, you can just create information sites and have them display Google ads. All your site’s visitors need to do is to click on an ad and you get paid. Because of this, Adsense is just about my favorite thing in the whole world.
Don’t want to do Adsense or Amazon? No worries, there’s always CPA (usually lead generation), membership sites, sites that sell your own digital product, or sites that deliver an automated service (link building, blog comments, social bookmarks, etc…). Suffice to say, the list goes on and on and on. If you have some other ideas, please leave them in the comments below.
Cons
With the pros out of the way, I would of course be remiss if I didn’t elaborate on a few of the cons to this business. Here are the top ones I can think of…
Dependent on SEO (Google)
In my portfolio, I’m heavily dependent of G for traffic. Bing and Yahoo contribute as well (and are super easy to rank for), but G still has the lions share of the search market. Piss G off and you could have a problem.
One of the ways around this is to build a mailing list and to integrate social networking into your traffic strategy. If all your sites are totally unrelated, this will be cost (time) prohibitive, however, if you end up building more than one site in a niche, you can have all the sites contribute to a single list as I have done in the photography niche.
Isolation at Work
This could easily be a pro as much as it is a con; depending on your personality type, so we’ll set that aside for now.
The thing about the niche site business is that you don’t ‘need’ to get out an network, however, if you work in isolation, you are really missing out on the masterminding that can happen when you spend time with people in your business. There are a couple of ways around this, but you need to put effort into it.
For me, I have a weekly lunch with another marketer and during lunch we each talk about what is going on in our business. If you don’t know another marketer in your area, try Meetup.com. For some, going the face-to-face networking route might sound unappealing, and for those, I would suggest that you have a look at joining an online mastermind group. I offer one such group to Premium Members of Niche Site Mastery.
Repetitive Tasks
Building a niche site portfolio is really just the same set of tasks over and over again. Research, content development, site development, link building…and of course…getting paid!
As much as I like getting paid, doing anything over and over and over, can quickly become boring. Luckily, there are ways around this.
The two that come to mind are; outsource everything (I do this), so you really aren’t doing much, or buy existing sites off Flippa. I have purchased one site (www.howtocleananything.com) but didn’t buy it off Flippa. With that said, later today I plan to set up an RSS feed to find sites that fit my buying criteria so that the potential opportunities come to me on a daily basis. (I plan to blog about this more in another post)
Steep Learning Curve
In terms of ways to make money, the Internet is the wild, wild west. As I briefly touched on above, there are literally endless ways to turn traffic into profits. While this gives the seasoned marketer a vast array of opportunities, for the newbie, this can lead to information overload! Call it the ‘shiny object’ theory, and it goes like this: New marketer starts reading the Warrior Forum and tries a few things. Doesn’t make any money. Finds a course that promises instant riches. Buys it. Doesn’t make any money. Finds another ‘better’ course. Buys it. Doesn’t make any money. Repeat, repeat, repeat.
For this reason, I believe that all the ‘free’ information is actually a bad thing, in that it really isn’t free at all. Instead, it comes with the largest price tag of all – your time!
When I started, I floundered (we all do) and was easily distracted by shiny objects. Thankfully, I avoided most of them and stuck to my knitting.
Thanks to this focus, I was able to earn a few grand in my first six months whereas most newbies never make even one sale! Having had this success and knowing that others would thirst for a structure course to explain not just what to do, but more importantly, how to do it was one of the reasons that I created my membership site. (Shameless plug: if you join my mailing list, in email #5, you will get a price that is ridiculously low and not offered anywhere else)
Competition
I debated whether or not to include this as a con because I’m of the mindset that there is always room for another player in the market, plus, in the case of Adsense sites, there are just so many darn markets!
To make my point, consider my last business; an IT support company. Did Vancouver, BC need another one? Hell no. In fact most were already struggling just to make a profit. Did I pay much attention to the competition? Hell no. Instead, I just started selling. Heck, we didn’t even have a business plan.
The result was pretty exciting; sales doubled every year for four years in a row, we won a bunch of awards, I was recognized as one of the Top 40 under 40 businesspeople in Vancouver in 2007, and in 2008, I sold the company for a seven figure sum.
Would any of this have happened if I’d been paralyzed by fear of competition. Not likely.
Now, I have to admit that relying on search engines to bring your customers is very different than my old business. After all, there are only 10 slots on page one and once they are full, you have to displace on of them if you are going to get any traffic. But here’s the really important point: if you don’t start building sites, you will never discover all the additional keywords that you could have a much easier time ranking for!
So, as you might guess, my opinion is that competition isn’t really as much of a con as you might think.
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17 Responses to Pros and Cons of the Niche Site Business
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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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So…the pro’s outweigh the con’s, what do ya say?
By far!
Trent, I agree with all the pros for the niche model. One “pro” I would add is the ability to easily test. I like to do a monthly review of my portfolio of sites and based and data make a call whether to implement a new monetization or traffic strategy for the site. Then next month it is easy to tell how succesfull the strategy was.
…nice picture of bubbles
Yes, testing is super important. I didn’t really think to include it though because you can test any kind of site, so it wasn’t really an attribute that was specific to the niche model. Regardless, its a heckuva suggestion!
Re Bubbles: his name is Mike, and somewhere, I have a picture of me wearing his glasses. I couldn’t see a damn thing!
I love your site, and it is probably one of the most honest sites I’ve seen in internet marketing. I’m going to focus here on the “cons.”
I think you are making it too easy for “anyone” to do this, You write you were a successful businessman before this, so a business like this would be cake for you. As a programmer I could say anyone can easily become an expert in writing WordPress plugins or creating large database backed PHP websites, but I know that isn’t realistic. Some people are going to struggle with business. Most of the people who do really well in this business come from sales background(cars, technical, etc). I can list 5 big names off the top of my head. Sure there are exceptions to the rule, but there are people with a predilection toward business.
35 Amazon/Adsense sites would cost around $1000 with outsourcing or many, many hours of writing articles, research etc. If you create one or two sites they will probably realistically make a few bucks each,
so one has to have very high confidence and perseverance that this will work.
Hey Len,
I appreciate your taking the time to share you comments.
It is true that I have already had success in business; and I agree that it has helped me, however not so much in the way that you might think. Primarily, it helped me with my mindset (yes, I can succeed again) and having money gave me the free time to learn (and make all the mistakes that I did). The reality is that
A) building Adsense sites is not difficult – however, one must first discover that there is an opportunity to build them. When I started, I didn’t know a thing about Adsense so instead, I built Amazon sites and had only a very small amount of success.
B) while I am in the camp that more sites is better, a newbie doesn’t need to build 30 sites to make money. Instead, with thorough research (which I and others teach), just ONE site can be successful enough to pay for the next one, and then the next one pays for the one(s) after that.
C) with the right direction, anyone can learn to outsource, so having the “extra time” that was an “advantage” for me, really isn’t that much of an advantage, SO LONG AS YOU KNOW WHAT TO DO when you are doing to outsource.
It is for these reasons that I created my membership site, Niche Site Mastery. I didn’t want others to have to waste as much time and as much money as I did. If you visit the site, you will see there is a great deal of free training material and then a special offer to join. If you join my mailing, the 5th email you receive from me will have an even lower price for access to the Research Module, which, for newbies, is the MOST important module to study.
Regardless of one’s background, the most important factor that will determine success or failure is mindset.
Trent.
Diversification is critical. But not so easy.
Organic SEO based systems take time to work. Bummer.
For the newby at first to navigate the shark infested waters of IM systems and find a realistic one then to focus and learn that system without falling victim to shiny object syndrome then establish a certain volume of profitable sites and to get paid a realistic wage all while avoiding or minimizing the Google algo refinements, which seem to be coming fast and furiously while keeping a positive mind set and then diversify into another organic seo based system and repeat is not the easiest thing to do.
Holy run on sentence.
Do the pro’s outweigh the con’s? You bet. That’s what keeps me going.
The whole idea of a sustaining passive income is like winning the lottery for me. It just takes more work to get there. Work that is well worth the effort.
Cheers
Jay
This is why I tell anyone who’s planning to purchase a Niche Site Master membership that they should expect to work their ass off. The good news is that once you figure it out, you don’t need to be a rocket scientist to repeat the process over and over
I always get a kick out of people subscribing to the idea that a “Steep Learning Curve” is a bad thing. This actually should be included in the Pro listing, IMO.
Why is a Steep learning Curve Good?
Easy, because the steep curve is short and you can get it out of the way quickly.
As you point out these focused niche sites are simple in structure and very repetitive, Once you learn the tasks and/or train an outsource person to do them, you can light a cigar with a $100 dollar bill and put your feet up.
A shallow learning curve, on the other hand, means it takes a long, long time to learn what is needed and to get to the point you can make money.
Suppose you want an airline job, and suppose being a flight attendant or a pilot pays about the same (actually, in the early years there isn’t as much difference as you might think these days).
Well, a fight attendant typically goes from hiring to flying the line (earning) in a few months and the airline does the training.
A pilot, on the other hand, has to undergo typically several years of expensive and difficult training and experience building on his/her own before the airline will even look at hiring him or her. And then several years at least before s/he can move into the captain’s seat.
This is a very, very Shallow Learning Curve. Not nearly as attractive to me as a Steep Learning Curve.
I wonder why a Steep Learning Curve has become such a negative factor?
Yeah, I know, I’m a contrarian, and a bit of a curmudgeon as well, but it’s still worth thinking about …
Hi Dave,
Very interesting perspective, and one that I agree with. Perhaps I should have used “overwhelming” instead, as, judging from many of the discussions that I have in my coaching sessions, that is probably a more apt description.
Thanks for sharing such an excellent comment!
Trent
Hey Trent,
I believe that everyone sets its own learning curve and establishes their own barriers.
I remember that in school I’d say “oh man this math test is going to be some serious crap to get past” so it I managed to pass that, I’d feel a lot better than if I thought something like “Ok this should be quite easy to get at least a B+, even A-” makes sense?
However I don’t think anyone should be putting barriers when it comes to succeed in something as delicate as making money whether if it is with marketing or if it is online or offline.
I think that when people see something that says “quick, fast, easy, etc” get excited but at the same time, after being burnt or bitten by the greedy gurus then they start thinking that ANYTHING should be long, slow, steep, hard, etc.
I am not very experienced (yet) but if I had known what I know now and took action right from the beginning I don’t know where would I be right now.
But that’s okay because I decided to take the long path myself.
I really enjoyed reading your article and enjoyed writing this as well, I’m currently listening to the podcast with Matthew Newton and I’m just hooked on your site.
Great work man, have a great day!
Sergio
Hi Trent,
I like the article/post. As we all know all businesses have drawbacks and risks. However, one of the things that really attracted me to the niche site or content business is that the risk is SO LOW.
I also manage money for a living (401k, profit sharing plsns, etc) When you look at the amount of existing savings one must have in today’s (low interest rate) environment to generate $500 to $1,000 per month in interest or portfolio income, it’s in the hundreds of thousands. This is considering you are somewhat risk averse and can capture 4-6%. I don’t like the uncertainty of the financial markets.
So, I approach my niche sites as “retirement assets” on 2 fronts.
1. As a passive income source to be developed well in excess of monthly expenses. This will take 2-3 years and I am “ok” with that. My risk is really limited to 2-3 hours per day and very low operating expenses. Most importantly, I don’t need to jeopardize my existing savings. If I follow the model, I will only add to them.
2. My sites are appreciating liquid assets that I can sell thus, adding to my existing savings or to generate cash should I need to fund something else. Oh, I really appreciate the “liquidity” of these sites too. This is so important in my estimation versus conventional businesses whereby you have to get a business broker involved and go through numerous legal wranglings.
In addition to your list above another PRO I’ve grown to appreciate is the ability to become more knowledgeable in the areas/niches I choose to build. I am 42 and pay closer attention to my health. I also plan to “semi-retire” in 3 years. So, this will definitely drive me to build a niche that deals with health/fitness and other areas of early retirement. (not a bad deal) Aside from doing the prerequisite due diligence, I’ll assure myself I (and the reader) gets something valuable out of the content creation.
If we take the time to formulate a long-term business plan and diligently work at it every day, we can reach all of our financial goals with a niche site business. I’ve just started to make consistent cash flow. Now it’s just a matter of scaling, learning and being consistent.
Best,
Mike
You took the words right out of my mouth, Mike, only so said them a lot better
I’m a retiree with a supposedly “fixed income”. I don’t intend, though, to lay about and wonder how much of a hit my pensions and benefits are going to take next.
I figure it’s better to do something about things and empower my own retirement.
So much of the ‘conventional wisdom’ about funding retirement is almost always centered around IRA’s, and 401K type plans. In many cases, these are great deals for people in their younger years, but not only are yields depressingly low these days, when you reach a certain age (like being only a few years from mandatory withdrawal requirements), there is not much ‘luster’ in ‘defined contribution’ style plans.
But, as you point out, even if you outsource most of the effort, the projected rate of return on building smart niche websites, compared with putting the same (small) amount of cash into and IRA/401K is amazingly better.
And risk? Compared with the people who have lost their life savings in various schemes like Madoff schemes and airline mergers causing retirement plans to completely disappear, as just two sickening disasters, the risk of building niche sites intelligently and ‘by the book’ seems very low to me.
Thanks for a great informed confirmation of many of my own thoughts.
Hey Mike,
I’m glad to see that you so quickly grasped the opportunities this business provides! Thanks for sharing your thoughts for others to read.
Hi Dave,
I can remember being at a client meeting near the end of 2008 whereby part of my visit entailed meeting with employees and conducting an education session. I can vividly recall the disappointment, or should I say fear/terror for those nearing retirement. No one likes uncertainty when it comes to their personal finances.
One woman in particular said to me “I’ve done everything the way I was supposed to. I’ve saved every pay period for 30 years. Then, in one or two months, my 401k plan is down 40%.”
Of course the market has bounced back over the last few years. However, it has been a 0 sum gain at best for many over the past decade. And let’s be honest, how confident do we feel that the next MF Global isn’t just around the corner?
It just really makes you appreciate a business like this with limited downside risk.
Thanks for sharing your experience! Mike
Hey Trent,
Great article. 3 things really stand out for me personally…
1. Location independent- The reason I got into niche blogging. My wife is originally from Italy, so we actually got to go there for 3 months last year. The whole time we made steady income!
2. You can be invisible- This was a big thing for me for some reason when I started. I liked being able to be completely invisible…of course now I’m trying to dig myself out of my anonymity bunker:)
3. Isolation at work- This can be a big downer. Forums and online communities like yours definitely help! And having a physical place to go to work with other people is a great idea as well that I’m thinking of trying out. Google “shared work space ‘your city’” or “coworking in ‘your city’” and you’ll see what I mean.
Again, thanks for a great article.
Jeff
Hey Jeff,
Glad you enjoyed it. After a year of working solo in my house, I finally got the business to the point where it could afford and office and a full-time assistant. As a result, my level of enjoyment has gone up immensely!