The internet realestate model.

The internet in my opinion, works much like real estate does.

A lot of forethought goes into ‘location location location’  as the location assures traffic and then traffic converts to business.

Then in real estate it takes a long time, and a lot of effort to build your structure….

Once the establishment is setup minimal manpower is required to keep it running… you rent it out, and pretty much forget about it till next rent is due as it runs on auto-pilot.

Minimal upkeep is required unless things go wrong and you are free to work on your next development.

After you have enough of these establishments up and running you can go golfing, fishing, or cruising, and the money will still come in at the end of the month.

I don’t want to make the real estate business or the online business sound like a breeze , it isn’t. Most people get tired and quit during the establishment phase because it requires too much time and effort. Some people’s personal lives and relationships suffer too from being too focused for too long on something that will not pay off in the short foreseeable future.

Now if you look at the online business… it’s a similar model.

You don’t choose a location on a busy street, but rather you choose a domain name on the information superhighway… get yourself an unknown brand name and work towards building your brand equity and it may take you years to get anywhere…. get yourself a search engine optimized (SEO’d) keyphrase derivative domain name and you may see your website rank and get traffic within a week.

This is exactly like trying to have a restaurant that people will go off-route to visit; vs building a less magnificent but still great restaurant in a busy district with high traffic flow. One is a 10 year strategy (and you may never make it… especially as a first time entrepreneur without deep industry experience) and one is a probably going to get you enough cashflow to get you started.

I’m not about thinking small. I don’t want to crush your dreams of Michelin starred restaurants that are worth the detour; however, it’s smart to be practical and if you’ve never owned a restaurant then a basic deli will be a handful, just like a first time INTERNET marketer gets his hand full with his first website and is definitely in no position to be ‘the next facebook’.

After you’ve picked your domain name and your SEO and other internet marketing strategies to grab your traffic, the next step is building your website (your store front). That’s right first you decide how you’re going to market your website, THEN you build your website to execute on that strategy.

This part takes a lot of effort but is dis-similar to real estate in that everything can be taken down and rebuilt.

The key to making a good e-commerce website (or other online entity such as a forum, blog or a social network) is to go through as many iterations of testing and correcting as possible. You think a certain theme works best because YOU like it… but you try out a different theme or skin for 2 weeks and monitor your analytics… if your analytics shows more activity from your visitors or more of the right kind of activity (sales, subscriptions, opt-ins) then you leave that alone and optimize something else.

After several rounds of brainstorming, tweaking, tracking, and correcting you end up with a website that is much more efficient than the one you started with  and hopefully you’ve learned something along the way about how your market likes to be dealt with… do they like a simple fast no frills craigslists style website ? or would they prefer something they can wow their friends with (using ajax on page and flash effects and navigation and state of the art API integration into other platforms) every time they log on.

If you look at some of the most successful sites outthere (youtube for example) you find that their layout gives them the ability to cram A LOT of information (Video, description, link to the video owner’s profile, related from the owner, related videos in general, comments, ratings, and cross platform integration) all one one page but without filling up all of the white space and without confusing the visitor about what is what.

Another strong thing about youtube is the strong brand integration… the top left button with the youtube logo is one of the largest clickable items on the screen with a prominent placement top left and quick access right next to the search bar.

These aren’t mistakes folks… these are results of rounds of testing, iterating, tracking results and refining the page.

So now that you’re on a traffic grabbing location, and that people can get to you, and now that your website is built and optimized both to grab their traffic and to serve them efficiently, in a way that THEY (not you) like the most, then you have an established business and you can start to collect your ‘rent’ money.

As the rent money comes in … you’ll find 2 things going on:

1- You have to spend minimal time backing up, supporting, and maintaining the existing site.

2- You have time to move on to build your next ‘complex’

3- You can take time off or spend the day out with your kids and come back and have a few emails to catch up on and minimal ‘daily’ work (probably less than 1 hour a day) to do to keep your customers happy in their new e-home.

The whole point of this post :

I’ve been thinking a lot about automation recently and maybe even outsourcing….

What happens, if you have multiple websites (say 10 websites), working for you generating great revenues. Each website requires ‘minimal’ interference of about an hour a day.

As your website portfolio grows, and without automation or outsourcing… the websites will hold you captive to 10 hours of daily ‘support’ work between backups, fixes, email problems, registration codes, payment confirmations…etc

This all stuff that you HAVE to do to keep your customers happy and to keep the cashflows coming in. And even though you can put these things on hold for a few hours as you go do something else you like to do with friends or family, they are definitely things that you can not put on hold for ever as they pile up and drown you.

Now luckily (or unluckily) as it may be, I am not in the point in my business to be swamped by my website. But I do setup passwords for my clients manually because I don’t have my own custom written software integrated into my payment gateway to check payment confirmation and allow confirmed customers to setup their own acccounts automatically.

This at the moment gives me a fear of ‘walking away’ from my websites for more than 24 hours in case I get a sale that day. Which means my current e-umbilical chord (or USB cable as it may be) is only long enough for me to spend a day out doing something else besides working on my websites, but not long enough (yet) for me to leave the laptop at home and spend a week on the beaches of the Mediterranean with only an i-phone at my side.

So the next big step for me is automation (because at this point I would rather automated than outsource… it’s both cheaper, more scalable, and challenging to be interesting).

As I mentioned last time, I’m re-writing my software on GWT’s platform… part of the re-write is more features, another aspect is cross platform compatibility, and the last part which is most important to me is automation and payment gateway integration!

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2 Responses to The internet realestate model.

  1. Jim says:

    Very informative post, you have captured a lot of what I have read in various forums, and talking to my friends that are doing the same thing. I like the real estate analogy.

  2. admin says:

    Yeah sometimes this generation has to explain things like internet marketing to an older generation (like me explaining what I’m doing after I quit my job to my father and uncles).

    That generation is WELL aware of how real estate works… you spend 2 to 3 years building a house, apartment complex or compound, and then that pays off for years in the future…

    They may not understand analytics and search engine optimization … but they do understand the value of ownership, rental of that owned space, the importance of having a desirable location …

    Albeit, they are very risk averse in the sense that you can’t ‘delete’ an apartment building, but you can very easily delete a website :) ….

    Thanks for reading.

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