I think of this site over at SitePoint as a good investment.

It’s a celebrity gossip forum, good base of members, lots of posts, been around for a long time, and has stable consistent traffic.

Makes $2k a month, the BIN is $45k, a little high for the revenue, BUT, it has potential.

Just like a rundown house that you could buy, renovate and then sell for a profit, this site could really do with a massive makeover, it’s a bit of a mess but it’s popular.

You could really make this forum a centrepiece for a larger community, mesh in a blog, celeb photos and videos, and some social aspects and it would go crazy.

Just needs some love and development.

I’m even considering buying it! It’s the kind of thing that if you know how to renovate, you can really make this site go well, you don’t have to be a marketing professional, or even know heaps about celebrity gossip, you just need to know how to renovate.

Look around at what else is popular, find some active posters from the forum and talk to them, ask what they would want to see, and see if they want to be involved in blogging or something, and go from there.

It’s pulling 350k unique a month, the hard work is done here, the traffic is there, all you need now is some development and hard work.

I have no good reasons why you would want to do that, but apparently the people who are trying to offload their site to someone for a 6 month lease think it’s a good idea.

The lease is up for bids over at SitePoint, and the site in question is called Frooler.com

Frooler.com is a social networking site with no niche; it’s just another generic random social site that’s never going to go anywhere. It’s a very average site, with traffic that would be very hard to monetise (Mostly from Asia), and its Alexa rank is 500,000.

The person who’s offering this lease is boasting 6m monthly page views, and as you can tell with the Alexa rank, it’s defiantly all foreign traffic, mostly western countries run the Alexa traffic tracking, also Compete which does traffic analysis like Alexa is measuring next to no traffic.

So aside from the fact that the site is pointless, paying them to ‘lease’ the site for 6 months for their asking price of $2,000 is absurd (from a business / let’s make a return on investment point of view).

To even start to make your money back you’d have to lay down even more cash for marketing, and if you do make it back then after 6 months you’re out with nothing, nothing to sell, nothing to push the traffic to that you’ve spent all your money and time on, you’re left in the gutter with nothing.

However the person who owns the site has done real well, they’ve made a cool $2k from you, and meanwhile they’ve spent their 6 months working up a bank of cash from other projects, they would have just taken ownership back of their site that you’ve built up for them with fresh new traffic and even more revenue from before.

If you’re going to spend 6 months doing something, it’s defiantly better spent building your own site and promoting it. I have no doubt in my mind you could build a site comparable to theirs within a week, and with your $2k lease cash and some time, build an equal amount of traffic and members, if not better.

At the end of it all, at least you own it, you can sell it, develop it some more, or whatever. I think if the lease was more like a building lease, like 3+3, 3 years plus 3 more optional, and you can re-negotiate terms and prices after that, it could be possible, maybe not for this site, but for others, still, would have to be a really good site and good deal.

When it rains it pours, I’ve been light on posting over the last 2 days, and probably for the next couple because it seems like every client I have, and some I don’t have are hitting me for last minute things, with next to unrealistic deadlines.

At first they weren’t unrealistic, but as the days went on, more and more came out of the woodwork with more and more urgent things to do, such as fixing down servers, and getting applications back online from server moves that had nothing to do with us.

What makes it even worse is that we can’t do it all, right now I’m neglecting a client who isn’t my client, or my responsibility, I know if I call them I’ll spend an hour on the phone, and I really don’t have that hour, or any answers for them.

And I really don’t like them either, so it’s not really motivating, the other reason I’m neglecting this client is that they aren’t even my client, I’ve never billed them for anything, they are coming to me through someone else and expecting me to do the work for them because someone else said so.

So what do I do? Well I know what I should do, I should at least call and say no time, sorry, but the other person who told them it’s mine to deal with is pissing me off, and they are their client, so I think I’ll delay the call some more so they take some of the flack.

I love good web apps, and last week I found a really good app for tracking my time.

It’s not about tracking time for customers, but more about tracking my personal time, what I do during the day, how much time I spend working, playing, surfing and blogging.

I think it’s a good idea to track these kinds of things; you can really work out how much time during the day is going to waste, and set yourself goals to make improvements.

Anyway, the app is called RescueTime, you don’t have to manually log anything, it has a windows or mac background process that tracks the apps your using and when you’re using them and it sends the data to their server and you can login and check how much time you spend in the day doing certain things.

You can also tell it what apps are productive and what aren’t, so for me, business based apps that I use I mark as productive, and games I play I mark as not productive, and you get stats on how productive your week is compared to previous weeks and you also get breakdowns on where your spending your time, playing games, working or blogging etc.

It’s great for people like me who have a tendency to not want to work at times and get sidetracked easily on new things, it makes me accountable to me, I can check WTF I was doing and think to myself, okay, stop it, get into doing work.

I think that’s a big thing when you work for yourself, you’re not really accountable to anyone but yourself and a tool like this really helps drive that point, you can look at it and say, as an employee of my own business, my time spent during the day was good or bad, and reward or discipline yourself depending on what you’ve done.

You can also set yourself goals, like I want to spend 6hrs+ a day on work tasks, or spend 1hr a day or less on playing games or blogging, and you can track those goals. It’s always good to set yourself goals, you need to reward yourself and feel good about what you do.

On top of that I have employees, so I’m now tracking their time using the app too, I don’t have to watch them so close, I can monitor them online to what they are spending their day doing!

Back on the Amazon story a little…

It’s extremely important in business to keep your customers happy, a happy customer is a repeat buyer, it’s cheaper to have an existing customer buy again than it is to acquire a new customer.

It typically costs 30%+ more to make a sale from a new customer, than it does an existing.

How so?

Simple, to acquire a new customer alone it requires marketing, and most of the time sales support. Both cost time and money.

Something people don’t often factor into their marketing spend is the time that it takes to produce the marketing campaign as well. Even though say your cost per click is $1, and you get 100 clicks a day – total daily spend of $100, you might have spent a week designing the campaign and the landing page for it etc (collateral).

Your time for the week is worth say $1,000. So your monthly spend on the campaign could have been 30x$100 a day ($3,000) + the 1 week setup and the additional 1 day a week for monitoring the campaign ($1,500) which is a total for the month of $4,500.

So your monthly cost per click which in theory was $1, is in reality $1.50, a 50% higher rate than expected.

So you’re spending in theory, $4,500 a month on brining in new customers, a small portion of which will actually make sales, but to make a sale of an existing customer, who’s not an active buyer already would only take a phone call, or an email, either a personal email or a newsletter, these things only take minutes to a couple of days to achieve, and if you have a database of say 3,000 names, you could drum up a higher conversion rate than your CPC campaign is achieving, mostly because these customers have dealt with you before, they know and trust you and should be happy to buy from you again.

In theory you would have only spent $500 to make more sales than your $4,500 from your CPC campaign with a higher profit margin since your profit from the sales aren’t having to cover marketing expenditure.

In saying that, it doesn’t mean you should stop marketing to attract new customers, it means your new customer acquisition marketing should be just that, targeted at new customers, not everyone.

You should have different marketing strategies, one for new and one for existing. Your new customer acquisition marketing should be competitive with your competitors and offer something more, and your existing customer marketing should offer them reassurance on customer service and a comeback and buy again deal, maybe a discount for being a loyal customer.

Amazon has done the right thing here, they put a public apology on their front page of their site, not any old small apology either, it’s huge and it’s designed to really push the point across.

Why? Well its good business, actually, it’s really good business, happy customers are customers that are repeat buyers, on top of that happy customers also give good word of mouth referrals, as opposed to unhappy customers that do the opposite.

On top of that by putting the message out there publicly they are also taking a load of support.

Amazon are having a real issue manufacturing enough of their kindle book readers to keep up with demand, rather than dealing with a large number of support questions every day from customers wondering where their kindle is, they have put out the message to their existing customers who have purchased one, to everyone else who might buy one and to the general public that they are aware of the issue and are committed to doing the most that they can to fix it.

It’s a win for the support team – inquiries will go down.

It’s a win for people waiting for their kindle, they have some news on what’s going on and they know Amazon is working on the issue.

It’s a win for Amazon – it shows potential kindle buyers that even though there’s no stock right now, that Amazon are committed to increasing their output and are committed to supporting their customers.

And It’s an additional win for Amazon, even though that large image took away every product on the front page that would generate tens of thousands in sales typically it shows that Amazon cares about their customers more than making sales, it shows that there IS support, where most other companies really lack support and it shows that Amazon isn’t afraid to tell their customers the truth, not make up BS stories to buy more time.

I doubt that it would have hurt sales anyway; people would still search the site and do their usual shopping.

I came across another post on digital point the other day about why people don’t start their own business.

I was going to blog about why I don’t agree with the post and what my thoughts are on why more people don’t get into business, but I think I’ll save that for another day because I just came across another post on DP, which happened to be by the same person coincidently, and in this one he’s really showing his business knowledge…

Which is none, he’s blogging and posting about business with next to no knowledge at all from what I can make out, and as I was reading his post his stupidity infiltrated my mind and sent me into a rage of flaming… yeah, I might end up banned on DP, but I had to give this guy a reality check.

Here’s the post he made:

In my previous post WHY IN ONLINE BUSINESS? I tried to explain about online business. Now I will explain the difference between traditional business and online business.Traditional business means the business which we know about from our childhood. These are a bookshop, sweetmart, daily needs shop, provision stores, hotel, restaurants, vegetable shop, department stores, etc. etc.Traditional businesses have some limitations. You can’t do it as part-time, requires huge investment which a common man can not afford, unless and until you have some experience of business you can’t start, unfortunately if you fail in one business then it is very difficult to start another one, requires big space and set-up, you have to work as per customer’s demand. etc. etc. etc.

While in online business you don’t required any investment, you can start it at free of cost, this you can do as part time job and if you got huge success, left the present job, it’s possible. Online business requires very less experience but if you have some technical knowledge that is well and good. You can do it from your home or cyber café because this type of business
don’t required any set-up, only a computer with internet connection is sufficient, online business has no time limit if you wish you can do it as 24 x 7 x 365.

TRADITIONAL BUSINESS
01) Business has local limits.
02) No help from field experts.
03) Physical exercise required.
04) Difficult to change field.
05) Failure is visible to every one.

ONLINE BUSINESS
01) Global business.
02) Experts are ready to help.
03) No physical exercise.
04) Can do in any field of business.
05) No one will know about your failure.

In my opinion online business is very good form of business, for a person who has desire
of his own business. Start it with no investment,improve skills,work hard,keep faith on yourself.

And yeah, my reply is below, I don’t know if you’ll agree with me, but have a read… beware of my language, I was pretty angry about his post:

Your blog is poor and your bold posts are pissing me off… go back to plumbing. This is a forum not a blog.

On top of that your post is complete bullshit, and you have no idea what you’re talking about.

YOU CAN start a traditional business with next to no capital. YOU CAN start a traditional business part time, YOU DONT need huge sums of cash, YOU DONT need experience, YOU CAN fail and start more (i’ve failed in at least 10 traditional businesses) and i find failing is the greatest way to learn anything in business YOU DONT need a big space, I’ve seen vegetable shops that are no more than a wooden stand

An example is me, i started a sushi train with NO experience in cooking, or any offline business. i also started it with next to no capital and i’ve never managed the business, never been part or fulltime involved.

An online BUSINESS not a random blog or something crap that a 12 yr old can do, i’m talking real business like you are, i would argue DOES take knowledge and investment, unlike any offline business where you can make sales by having a location, the internet nullifies location and creates an equal playing field, so to survive you need to know what you’re doing, you need to spend your money well and you need to do it from more than a internet cafe.

I’m talking about traditional online business… not a blog.

TRADITIONAL BUSINESS
01) Business has local limits. (No, location is the greatest asset of an online business, the only limit is the owners stupidity of starting in a bad location)

02) No help from field experts. (What? so all the small business centers around the world won’t help an offline business at no charge? I’m astonished, even the government funded ones that are built to help local small business? shame on them)

03) Physical exercise required. (I’m a tad lost with this one? i assume moving away from a keyboard is exercise?)

04) Difficult to change field. (why would you want to? you should be focusing on making your business work)

05) Failure is visible to everyone. (your on the internet with your photo, i will know when you fail.)

ONLINE BUSINESS

01) Global business. (i own a sushi shop in Thailand, i’m from Australia, my offline business is global).

02) Experts are ready to help. (Experts like you?)

03) No physical exercise. (i go to the gym, i don’t want to be fat.)

04) Can do in any field of business. (yeah you can, but unless you know what you’re doing you will fail)

05) No one will know about your failure. (You just failed, i know you).

Sorry to flame you but i really think you need the reality check right now.

I found a post today on Digital point, it was someone asking about how to write a risk management report, and he basically started the both with “I’m estimating I’ll sell 100, but what if I sell 20?”

I’m blogging my reply because I felt I made a good point!

This is the post:

Hi, i am writing a proposal but i am stuck in “risk management” section.

Anyone of you know how to write a proper RM?
Let say, if i estimate i can sell 100 of the products in a month, but eventually, only 20? What’s the RM report i can write?

And furthermore, if i say, i can Advertise the product in order to boost up the sales but what if i dont hv the Advertising budget?

I wonder how smart those folks can write out this kinda articles?

And here is my reply

Writing about risk management isn’t too hard.

It’s all about how are you going to manage the risks that you are going to take?

So first go through and list out all your risks (might be similar to your KPIs).

And then write out how you’re going to mitigate and manage those risks to help achieve success.

The key with any plan is to not bullshit yourself or someone else.

I can estimate that I’m going to sell 100 products a month right now, but it’s complete bullshit, you can’t estimate that, it’s impossible to estimate that without first having any established and current history of selling the products already, and without showing that in the past you have been able to successfully increase sales by doing X or spending $Y.

And if by spending $Y is the answer that you’ve shown in the past, there’s still no guarantee that it will work again, you can display ways to mitigate that risk by diversifying your $Y spend into different market segments, tracking the $ spend per conversion and slowly growing sales while not blowing out your spending.

On top of that you should never estimate anything, estimations, any at all are complete bullshit and I never believe any estimations or agree with them at all.

Rule of thumb in my book is to never estimate.

Set KPI’s, targets, goals and plan ways to achieve them, use your risk management plan to apply mitigating factors to your marketing efforts, diversify the marketing, or target the marketing, cross market your product or partner up with other providers.

Work out ways to achieve goals, not estimate what you could make or sell.

I could estimate that I’ll make $1m this year, but without a plan with goals, a map to get there and ways to manage my risk I’ll never make it. It’s just a bullshit estimate.

Everyone should diversify their investments. You don’t need a million dollars to invest to diversify; investing can start with as little as $40! Heh

Seriously, though, you can invest in a new opportunity for nothing, just your own time. All you need is an idea and some motivation.

If you do have some spare cash, even a little, it does help. If you do you should start talking to people, discuss some ideas on a joint venture for something, look at what you can bring to the table and come up with something where both parties can benefit. Brainstorm something together, you could even try to take your idea to a micro venture fund.

Before you know it your investing in something new and you’re ‘portfolio’ of investments has expanded and you’re more diverse than before.

I like to diversify offline just as much as I do online; my latest venture is in sushi, of all things. Unlike the internet where everything is local, and to compete with another site you need to be different, or offer something very special, offline businesses don’t have to do that, offline businesses can offer location over difference.

If you’re in an area like me, a small city, and there’s no sushi train or place to buy sushi, then there’s an opportunity there to start something, it doesn’t have to be the best sushi in the world, or the cheapest, or the greatest looking, it does help to have a good product and of course we’ll try to do that, but the location is what’s going to make it work.

Especially with a restaurant, we’ll be opening in an area with other restaurants where there is high foot traffic. Just like the internet where traffic is king, with offline businesses such as restaurants, foot traffic is king, foot traffic for restaurants is like organic search engine traffic, it’s a life blood, if you’re in an area where people naturally search for food on a daily basis, you’re going to get some hits, hopefully some bookmarks, referrals and with any luck some return visits! Try and keep that bounce rate low…

I’m no restaurant king with years of experience, but I’m no idiot either, I’ve seen restaurants with fantastic tasting food that are in really bad locations, they bleed to death slowly over years and rarely survive or make decent profits, if that same restaurant was in a street with other restaurants the traffic and word of mouth would have made it successful in no time.

Anyway, back on topic, my diversification is simple; I’m taking revenue from my other businesses and using that revenue to support a new venture in a whole different market segment.

If for some reason my development studio failed to convert projects and our staff costs started bleeding us to death, my personal backup is in a whole different industry, if we started to die because of a global market slowdown in the internet segment, which has happened before, then I’m ok, I have a restaurant, people always need to eat!

I think it’s a vital part to anyone’s financial success to diversify their personal investments, it doesn’t have to be much, and it doesn’t have to be big, start small, start small multiple times, and nurture the venture, bring in some partners so your time required to work on the venture or invest into it remains low.

In the past I’ve started ventures with upwards of 6 different partners all bringing something different to the table, we had a common interest, to diversify and supplement our income, and by dividing up the work load and investment we were able to give the business what it needed to work.

Partner up, brainstorm, plan and get it going on!

Have an idea for a web application? Want to invest in a real online venture? Something custom built to actually take on players in the market?

To build something substantial realistically costs thousands every month in development fees.

Let’s break down a professional development team, such as ours.

To develop a business application to the high standards that we have to for our clients, we have the following staff in house:

A Systems Architect, Project Manager, Programmers, Designers and an accounts person to manage the billing.

Of course they all aren’t fulltime on 1 project.

I’ll break down the % of time spent on an average 4 month project by each team member.

1 Systems Architect: 20%
1 Project Manager: 20%
1 Programmer: 100%
1 Designer: 50%
1 Account person: 10%

Our apps are all web based apps, hosted either internally or externally (intranet / internet), so there’s a high level of input from a designer who handles the interface design and xhtml etc.

This should be typical for any midsized development house. Let’s take US rates for staff and break down what a project would cost, and also look at the % per project.

Systems Architect: $100k – 20% = $20k a year, about $7k in wages for 1, 4 month project
Project Manager: $80K – 20% = $16k a year, about $5k in wages for 1, 4 month project
Programmer: $60k – 100% = $100k a year, about $20k in wages for 1, 4 month project
Designer: $50k – 50% = $25k a year, about $8k in wages for 1, 4 month project
Accounts: $45k – 10% = $4.5k a year, about $1.5k in wages for 1, 4 month project

So in total, in wages alone, for 1, 4 month project the cost for a company to develop an application is at least $40,000!

Plus, if this company is a contracted company, than they need to add profit and cover other costs, looking about $100k plus.

If you were to shop the project around and found a lone ranger, a 1 man show that can do it all, to cover his own wages for 4 months is still around $20k, and you would realistically expect less development done in that time since their time will be spent on other things, management, architecture, design, client updates, billing etc. I’d expect 3 days of a 6 day week of actual programming.

So how can I possibly justify my topic of a whole development team for $40 a week? Where is this crazy and bullshit deal?

Well there isn’t one. Not yet. Not that I know of anyway.

I can however divulge that I’m considering it…

I’m a systems architect and project manager for our current projects. We also have another project manager on staff, a designer, some ruby on rails programmers and some other general staff for accounts, and support.

There’s a bunch of projects that I want to build and I’m willing to open my team of developers to outsiders in exchange for their expertise, industry contacts and their own network of resources.

On top of that a requirement would be to share the development costs.

I can afford to reduce development costs to as low at $40 per week, on the proviso that there are 10 people investing in the application development.

So my thinking is that I’d invest in at least 3 shares minimum, and put the other 7 shares up for anyone to buy into at that $40 per week.

Why?

Well, I can afford to develop my own projects, and we do. But that’s what we do, we develop applications, we don’t necessarily have all the greatest industry contacts, networks of websites with thousands of users every day or things like that.

We can build businesses but we don’t have the time to market them, I’ve done marketing before professionally and I understand the resource requirement and time that’s really needed to make a web business work, and that’s not time well spent for a team like ours.

So I’m willing to open my team up to outsiders to own a portion of a business and in exchange for our super low development costs / super cheap investment, I’d only be accepting people who can offer what we don’t have, that marketing and promotion side of things.

Honestly the money for development isn’t an issue, but it covers my team costs and re-assures me that the people involved are dedicated to the cause; they have a financially invested interest in what’s going on, I would want to be partnering with people who have the resources and traffic to promote whatever it is we build successfully.

At the end of the day it’s about making the development successful, I wouldn’t be profiting from the development, so it’s in my best interest to partner with worthwhile people so me, just like you can profit from the business itself.

As for what we would be building, well I’m undecided. I have a lot of ideas, but who says it has to be one of my ideas? If someone comes along and has a good idea and is keen for what I’m proposing, then we might run with that and see if we can round up some other people to invest in it.

Anyway, just been a thought of mine, thought I’d blog about it.

Client work pays the bills and more, but I’m not into doing client work forever, we’re building our own apps and I’m defiantly interested in expanding that scope.

I’d be interested to hear some feedback on what people think about it all.