Growing Your Affiliate Assets and Limiting Your Liabilities
I’m finally getting around to reading Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money–That the Poor and Middle Class Do Not!
One interesting point he hammers home in the above book is a very stripped down approach to looking at your assets and liabilities. In his eyes (and this is a bit debtateable but still interesting) your primary residence is a liability, not an asset. It takes money out of your pocket on a daily basis, as far as the mortgage, maintenance, property taxes, etc. Sure, many people profit from their home when they sell it, but that’s not guaranteed and the profit appears when you no longer possess the liability of a home, as you’ve sold it. It takes large amounts of money and time from your pocket, so it’s a liability.
Let’s say you start a business of your own, a bakery, that you work long hours at every day. It’s profitable, you pay your bills, but you’re there ten hours a day. It’s a liability, not an asset. Your time has value and it’s robbing you of an enormous amount of time.
To be considered an asset, something must not only put money in your pocket but it should do so even when you’re absent. Assets can’t require all of your attention, as they typically turn into liabilities at that point.
That doesn’t mean that working at the bakery is bad, just because the business is currently a liability. Or that it will always be a liability. If you hire a great manager and pay them all of the bakery profits minus $100, then go and start a new business, say a car wash, where you work at ten hours a day, suddenly your bakery becomes an asset (it’s generating $100/month in profits for you, with no work at all required of you) and the car wash is a liability. And so on. Assets don’t appear out of thin air, and usually the way to get them is to work hard at your day job, save money, and invest that money in assets. Grow your assets to a certain point and suddenly your job becomes managing and expanding your assets, not working at a day job.
(I’m simplifying his viewpoint a bit there for the sake of brevity, but that’s the basic gist of what he’s getting at.)
All of which made me immediately ponder the affiliate stuff, as far as whether my affiliate sites are assets or liabilities. Remember, something can make money for you and still be a liability, if it consumes too much of your time. So you could have a site that made you $3,000/month in income but it could be a liability if it required constant updating and attention and you worked on it 60 hours a week, while a site that made just $20/month could be an asset, if you never touched it and it simply ran on auto-pilot.
It’s interesting, too, as nearly all affilliate sites start out as a liability (you put in much work but make no money for the first few months, due to the nature of search engine traffic), but “successful” ones are those that tip over at some point and become assets, when the income they produce is greater than the value of the time you put into them, resulting in a surplus.
If I look back at all the affiliate sites I’ve done and isolate the ones that became assets, they pretty much fall into two major categories:
1) Sites that were narrowly focused and had a well-defined beginning and ending point: The key here, methinks, is that there’s an ending point for these sites, when you hit the finish line and say “Done, been nice knowing you, go make me some damn money.” Part of that, though, is being realistic and savvy from the very beginning, and tackling projects that are focused and defined and don’t require Herculean efforts to build and (most importantly) don’t require updating or attention moving forward.
The legal weed site I built back in ancient times is a good example of that. I cringe even including the link to it, as that’s an ugly, ugly site, things are completely broken, lots of links don’t work, and it’s in general something I’d never publicly claim ownership of. But that thing consistently makes me $100-$200 every damn month, without fail, and over it’s lifetime it’s probably make me close to $5,000. Considering I built it in a weekend and have never, ever touched it again, it’s been one of my best assets.
2) Sites that were on topics that I enjoyed writing about: My poker blog is the best example of this, and something I’ve discussed a lot here already. Even though it was very open-ended and consumed a lot of my time, it turned into a major asset. I can’t even begin to count the hours I put into the site and the related projects it spawned, but the income generated greatly exceed that time expenditure. My goal is for this site to follow a similar path, as far as a sprawling, time-intensive project but one that I enjoy, which I can hopefully find ways to monetize over time.
The key thing to take away here is that it’s okay to throw yourself into a huge, sprawling affiliate site that will never end, if it’s something you enjoy and love. There are multiple paths to turning sites into assets so don’t get locked into thinking you have to be mercenary about it, grinding out 25-50 page sites on topics you could care less about, and repeating it mindlessly, over and over.
It’s also interesting to look at a site in progress, such as the Cisco Certification site I recently started. What do I need to do to make that an asset and not a liability? Well, for me the path is pretty clear: hit it and quit it. If I can build a 50 page or so site targeting the most lucrative keywords related to Cisco certification stuff, and I can do it in a relatively short amount of time, it’ll be an asset. It’ll never make tons of money but when I’m done, I’m done. Whether or not it’ll be an asset, then, hinges on if I can build it quickly enough so that it consumes less of my valuable time. If it took me three months to build, working every day, it’d probably be doomed to be a liability. If I can build it in a week or two, it’ll be an asset.
Much of that reasoning, though, is based on the fact that I get no thrills out of writing about Cisco stuff and, honestly, don’t know much about it and have never taken a single class in that field. So for me it’s a chore to grind out content for that site. I knew that going on, so I designed the project to be very close-ended, with a very obvious finish line.
Let’s say instead that I had a bajillion Cisco certifications and loved that stuff, and felt strongly that there should be a site that was a comprehensive, useful recource for anyone looking to get a Cisco certification. If that were the case, I might instead decide to create a site that was a daily blog about my work with Cisco products, with a forum for users to discuss different networking issues, personal development, etc., as well as reviews of programs and schools offering certification classes so that users could find the best programs, and on and on and on. It would literally be a site with no end, as there would always be new features and content you could add.
And, more importantly, it would have just as good a shot at being an affiliate asset for you as my stripped down, mercenary approach to the exact same topic. For me, building a site like that would turn into a liability. It’d be a chore, I wouldn’t be excited, and that would show in the half-assed product I turned out. For you, though, it’d be a labor of love and that would show in your work, as you constantly improved it and generated more traffic and turned it into a major asset.
Growing Your Affiliate Assets and Limiting Your Liabilities and related information can be found in Getting Started