Diversify to Survive
by Elena Fawkner

Over the past few weeks and months the news headlines have 
been focused on Wall Street and the downward spiral of all of 
the major stock indexes. As usual when one of these shake-outs 
occurs, the popular media tries to reduce the issues to easy to 
understand, bite-size morsels. A favorite strategy is to profile 
a "typical" small investor who had all his eggs in one basket 
when the market crashed and now his entire life savings are 
nothing more than red ink on his personal balance sheet.

Had our typical small investor diversified his portfolio, 
investing some of his capital in blue chip stocks, some in tech 
stocks, some in property, some in bonds, chances are he would 
still be in the black. The same can be said for anyone running 
an online business. The online environment is so dynamic and 
volatile, and so many so-called "hot" opportunities come and go 
(and don't do much in between), that devoting your entire 
enterprise to just one product or service offering is nothing 
short of dangerous, if not outright foolish.

The answer, then, is to place a few eggs in several baskets, so 
if the bottom falls out of one, you can still make an omelet with 
what's left. In other words, diversify your product and service 
offerings to generate multiple streams of income. 


Here's five ideas to get you started:

1. Affiliate programs. 
2. Own products and services. 
3. Website advertising. 
4. Ezine advertising. 
5. Content access via subscription.

We'll look at each of these individually in a moment, but first, 
one important caveat. The concept of multiple streams of income 
does NOT mean you should rush out and add new products and 
services to your repertoire willy-nilly.

Whatever you choose to offer must be closely related to the 
subject matter of your site. If your site is about pet care, 
don't try and sell saucepans. To do so is not only a waste of 
valuable time and other resources but you compromise the 
integrity of your site's purpose, not to mention your credibility 
as an expert in your field. 

But even more importantly than that, all traffic is not created 
equal. Sure, if you create a separate page on your pet care 
website just for your new saucepan line you may attract one or 
two site visitors you may not have attracted otherwise. But those 
visitors were interested in saucepans, not pet care. Once they 
reach your site they'll assume you've lost the plot and click 
away faster than you can say "where'd he go?". 

Far, far better to have fewer site visitors who are all highly 
interested and motivated by the subject matter of your site 
(highly targeted traffic) than relatively more visitors who are 
only somewhat interested and motivated (untargeted traffic). 

The return on your investment will always be MUCH higher from 
targeted traffic in the form of repeat visits, referrals, 
recommendations and, of course, all-important sales.

OK, let's turn now to the five sources of income.


The first and most obvious source of income is affiliate 
programs. I'm sure most of you are already well-familiar with 
the concept but, if not, you can get a quick primer by reading 
the article at http://www.ahbbo.com/affiliate.html .

To be effective as an income-generator, the affiliate programs 
you choose should be closely related to the subject matter of 
your site in the sense that a visitor interested in your website 
content will also be interested in the subject matter of the 
affiliate program you are promoting.

To start your search for appropriate affiliate programs, visit 
http://www.associatesearch.com and/or http://www.refer-it.com .


While affiliate programs are a good place to start, you are 
working on commission. For significant, long-term, sustainable 
income you need to develop your own line of products and 
services. This does not necessarily mean you must personally 
create the product or service; it just means you get to keep the 
profits on any sale. You could, for example, sell products you 
purchase from a wholesaler. Under this type of arrangement, you 
buy the product for a certain price and sell it for a higher 
price. The difference is your profit. The profit under this type 
of arrangement will, 99% of the time, be significantly higher 
than the commission income you generate with affiliate programs. 
If you don't want to bother with the hassle of storing inventory 
and shipping orders, make arrangements for the wholesaler to 
drop-ship orders to your customers instead. 

Of course, you can always create your own products as well. A 
good option for an online business is a digital product such as 
an e-book since production and distribution costs are extremely 
low. Your customer simply downloads the product from your server 
to her hard disk. But you don't have to restrict yourself to 
digital products. You might choose to write a book and have it 
professionally bound and printed. Or you may choose to make your 
book available in both digital and traditional format with 
different price points to reflect the different production and 
shipping costs.


Once you have generated consistently high, targeted traffic to 
your website, you can begin to think about charging for third 
party advertising on some of your website real estate. The price 
you can charge for banner advertising depends on your traffic and 
whether your advertiser pays you to simply host her banner or 
whether she pays you per click-through. If your revenue depends 
on click-through it is especially important (both for you and 
your advertiser in terms of repeat business) that your 
advertiser's product or service is relevant to the overall 
subject matter of your website.

Your pricing would generally be set at a CPM rate, for example 
$20 per thousand page views. So, if your site receives 5,000 page 
views a week, that's $100 a week in advertising revenue. The more 
targeted your traffic, the more you can charge as your CPM.


You have, I'm sure, heard it said many times that a great way 
to generate traffic to your website is to publish an ezine 
(electronic magazine or newsletter). That's certainly true. 
Ezines are a terrific traffic generator. But they can also be 
a source of revenue in their own right. 

Once you hit 1,000 subscribers (as a general rule) you can start 
charging for advertising in your ezine. Again, CPM is a good 
pricing model to start with.

Again, the more targeted your subscriber database, the higher 
your CPM. Some very highly targeted, specialized ezines can 
charge as much as $40 CPM or more. Others that are very general 
and untargeted may only be able to generate $2 CPM. Again, the 
more time and effort you expend in targeting your market audience, 
the higher your potential revenue.


The number one commodity people are looking for online is 
information. Consider making your website content available 
on a members-only basis, charging a membership fee for access. 
Your content, however, has to be of genuine value to your 
website visitors. Don't try this if all you're offering is a 
collection of other people's articles. 

The type of content that lends itself well to this type of 
arrangement includes things like apartments for rent listings 
(eg http://www.westsiderentals.com ), home-based job openings, 
that sort of thing. 

Members-only sites that consist of a collection of freely 
available products and tools can also work well if, by joining, 
the member saves him or herself many hours of independent 
searching and collating the relevant materials. 

Apart from information, entertainment-type content also lends 
itself well to a pay-for-access type of arrangement. The obvious 
(if unfortunate) example is the highly lucrative internet 
pornography industry. Say what you will about it, it is a 
business model that most online entrepreneurs would love to be 
able to replicate in their own industry, if only they could 
generate the same level of interest. It's that targeted traffic 
principle yet again!

As I said, these are just a few ideas to get you started. Once 
you start implementing these, others will suggest themselves to 
you. It really doesn't matter what you do so long as it works for 
you. By all means, if something works well, don't stop what 
you're doing. But don't rest on your laurels either. Make sure 
you always have other wells to drill if today's runs dry.

Elena Fawkner is editor of A Home-Based Business Online ... 
practical business ideas, opportunities and solutions for the 
work-from-home entrepreneur. http://www.ahbbo.com