The big picture

Ever notice how many domainers or wannabe domainers just jump in and start buying and selling? There is the thrill of the first purchase, the thrill of the first sell, the thrill of the first auction and its goes on. This is often where the pack separates into different groups.

The disillusioned

This group includes those who want to make money quickly, those who jumped in before they knew what they were doing and those who haven’t the patience to learn. Many people get disillusioned and quit before they have really tried.

Small change

Some find a way to make a small profit through considerable effort which is often time consuming and ties them to their computer. The profit puts some extra money in their pocket but it will not change their lifestyle. This group will often be thinking in the back of their mind that they just need that one golden hand-registered domain that will transform their domaining and their life. They do not realize that if they sat down and calculated how much they earned per hour, they would likely be earning below minimum wage.

The lucky

Yes, there are those who hit upon something that can transform their lives. Outside of domaining, it might be the lottery. In domaining, its the name that will have the money rolling in or be the big sale. For those lucky enough to find one, there is no guarantee it will continue to rake in profits and it is often not a scalable business model (more about that later).

The thoughtful

The chances of having a successful business dramatically increase if you take the time to think and plan. In a brick and mortar business, many owners will have business plans and understand their market. Because of the easy entry into domaining, too many people start buying before they have taken the time to understand what they are trying to achieve.

The big picture

If you read many books on entrepreneurship or business success, a common theme is that the founder or CEO start with creating a the big picture or vision. They envision where they want to be and how they want the business to be operating.

Asking what this business is going to do for you is the first step. Making money is only a tool to accomplish something. Are you trying to become self employed? Are you looking to be able to travel more? Are you looking to retire? It is really only after you truly understand what you are trying to accomplish that you can intelligently think about how to get there.

Time-frame

Now that you know what your personal vision is, you can set a time-frame. For example, retirement in 15 years, semi-retirement in 10 years, transition to full time domaining business in 2 years. It doesn’t matter how practical they are right now.

Specific goals

Now that you have added some more detail to your vision, it challenges you to see specifically how you are going to achieve that vision. If you need $50,000 profit a month to be able to switch to full time domaining in 2 years, then how will you get there?

For example, you now own 1000 domains with 2% click rate earning $1 a click on average and you have traffic of 1,000 a month. Your earnings right now will be $20 a domain a month or $20,000 a month total. Ignoring fees etc, you now know you need to increase your earnings by 2.5 in 2 years.

So your goal could be to obtain 1500 more domains with the same click and earnings per click rate to reach your goal or you could try developing some of the more promising domains to increase your average earnings per visitor to reach the same goal.

Reality check

So if right now you are only earning 20 cents per click, then that goal just became much more challenging. You would need 12,500 domains to achieve the same goal. You can do two things in this situation. You can lower your expectations and set a new vision or you can change your business model and run through this whole process again to see if you have a realistic chance of reaching your vision.

The more facts you have, the greater the chance that your plan will succeed

Running through this process should not be a one time deal. You have to constantly test your assumptions and see if your click rate or earnings are matching your assumed rates. Are you seeing any patterns to your earnings? For example are they cyclical or do they mostly come from domains set around a particular topic? Use that insight to refine your plan.

Scalable

I mentioned this earlier. Is your model scalable? If you own 100 domains and sell 10 per month to make your profit, will you be able to have 10,000 domains selling 1000 domains per month which might be necessary to achieve the profit margins you need to accomplish your vision. Simply put, some domaining models are not easily scalable.

An exit strategy

Strictly speaking an exit strategy is where you sell off your business, collect the profits and move on. This is certainly one exit strategy for domaining. I think of an exit strategy in broader terms though. For example, say in 5 years, you achieve profits of $100,000 a year which was your goal and your vision was to semi retire and travel. What you may find is that you are now essential to the business and while you have achieved your goal, you have failed to achieve your vision because you are completely tied to the business.

Planning ahead and finding the right business model and the right people to run your business is often essential to peoples visions but is often neglected. We like to feel needed and important but to achieve your vision you may well need to plan to make yourself dispensable.

It is far too early

Many people tell me that it is much to early to plan properly, that they barely know anything about domaining and know little about expected click rates or earnings. It is never too early to plan. Your first vision and goal may be completely unrealistic but you start the business and constantly test and run through the planning process to make the necessary adjustments.

Big testable visions

Having a vision only requires that you dream. A testable vision requires that you translate that dream into a set of actions that you test and revise repeatedly.

This longterm planning should help you stay motivated and stop you getting stuck in the small change scenario. Buying on impulse with the adrenaline coursing through your veins changes to the thrill of seeing another piece of the jigsaw falling into place and bringing you that much closer to your vision.

Bookmark to: