Are You Digging for Long Term Value or Short Term Fools Gold?
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I’m seeing this point made over and over, both in the wise words from the experts (like below from Perry Marshall), from my own experience running Internet businesses and in case study examples of business models that provide the contrary result, which proves the point.
What am I talking about? I’m talking about building an Internet business based on a sustainable, long term model.
99% of the business opportunities that I come across are focused on short term thinking and unsustainable methods of making money. It could be that they rely on using content of little value, or chasing search engine traffic using very inconsistent methods, or relying on tapping markets that are only lucrative short term.
Some of these models may make money, but as the made-for-adsense years prove, something that has little resistance to replicate and provides no real value to people, will not be making money long term.
My income curve has increased significantly in the 8 or so years that I have made money online, yet each time I move up a bracket I again realize that the entire process is about building on past work. In all cases shortly after receiving a nice boost in cash flow, I’m taking big chunks of it and reinvesting in growth and preparing for the future.
The trick is to reinvest current cashflow into sustainable business models, so you compound on your previous work and create greater overall value, even if you reduce your current profit margin – this really is a swimming strategy. This is analogous with taking equity from your current assets to purchase more assets.
Wise Words From Perry Marshall
Here’s what Perry Marshall had to say about this topic in a recent email he sent out to his Renaissance Club members (still the best marketing newsletter I know of!).
A couple of years ago, the rage on the web was clever little programs that generate thousands of garbage pages that get picked up by the search engines. You’d stick AdSense ads on them and make some money – because when people come to a junky page they either hit the back button or click on something that looks good.
It’s getting harder and harder to even find such pages as the search engines get wise to this.
As ephemeral as the web may appear, it really is more like real estate.
Long term value is built over time, and things of value are usually still there years later. There are almost a million sites that link to Amazon, and regardless of what Amazon does or doesn’t do today, those links will still be there tomorrow. Yes, there is the surface turbulence and flavor of the month on the web, but in the long run, real content and valuable links are an investment.
I cannot overstate the foolishness of fake content.
Every now and then we get emails from people that go something like this: “hey dude, i really need to make 5000 dollars in the next 3 days, can your ebook help me do that if it works ill buy your book thanks matt”
Sorry, lower-case matt, can’t help you. If you want to spend your life wandering the ghettos of the Internet, be my guest. But don’t blame me if you get stabbed by a heroin addict.
The Internet is just like real estate. So why would anyone want to build a building this month, knowing the wrecking ball is coming through the East wall next month? When you build on a solid foundation, you don’t have to start all over again next week after the search engines get wise to your game.
Oh yeah, and there’s another thing too: When you build your business on a solid foundation, when you cultivate your customer base, when you nurture your customers like watering a garden, guess what? If you need $5,000 in the next 3 days you can get it. Gotta plant the seeds first though.
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[...] Are You Digging for Long Term Value or Short Term Fools Gold? – Yaro advises you all to look at your long term business model instead of short term gains. [...]
Perry makes some great points, I like the real estate wrecking ball comparison
Thanks for the powerful post Yaro! Building online businesses for the short term led to the buble bursting last time. The worthless sites that don’t give readers value are largely going to the waste side.
Hi,
Yaro another great post.
I agree , it’s all about building long term sustainable businesses.
There’s a point where i would like to hear your viewpoints. Currently the hottest trend in affiliate business is ppc marketing with landing pages. Find keywords , slap a landing page make money. While there many affiliates who are making 7 figure incomes with this , do you think it is a sustainable model ?
Rosalind Gardner’s site http://sage-hearts.com drives traffic mainly through ppc but it’s a great value addition to visitors.That’s not what i am talking about.
The kind of sites which i am talking about are pages which have a headline , bulleted list and call to action.
My train of thoughts on this path started when i heard perry marshall’s viewpoints wherein he says ” affiliate marketing is no real business”.(Can’t recollect where i read that ).
Jatin – Affiliate marketing with landing pages and PPC can be a sustainable business, as long as you build mechanisms into your process to ensure you create long term relationships.
The simplest way to do this build an email list with the traffic you drive through PPC, don’t just send them straight to an affiliate link.
Also, when you tap into something lucrative, that’s when you can look to build a funnel by expanding what you offer to that group of customers.
The risk is if you rely 100% on continuous fresh traffic from PPC and you have no defense against competition. At some point your traffic or sales for that product will drop, so unless you are prepared to forever seek new products, then you need to find other ways to build longevity into the business model.
It’s the age-old business concept – are there barriers to entry? Do you have a sustainable competitive advantage? If not, then don’t expect that income source to be around forever.
As an entrepreneur one of the biggest challenges facing us is the paralysis by analysis syndrome which becomes amplified when you have to choose a long term strategy.
Take this example , when i first visited your blog (mid 2006), i saw how hard you had worked over the years. In One of your posts you had mentioned you were earning $5000 from this blog.
Now when i saw people who had jumped into ppc and were making five figure profits within a few months , i got scared in choosing a long term strategy.To a beginner it seemed unfair.
What are my viewpoints today about entrepreneurs journey:
barriers to entry –> pretty high.
sustainable competitive advantage :Like the German Bismark http://www.youtube.com/v/UKScoC7WigE
Silently over months it has built equity. It’s helping people and it is real business.Why do i keep on coming back ? Because i find value. Because these posts everyday give me a direction , new ideas and sometimes much needed inspiration .
We as entrepreneurs will many times have to undergo the temptation to make short term profits to think long term.
Aloha and thanks for this very informative blog. Just started a home based business myself; the product is VoIP internet phone service. I’m pretty excited about the opportunity but it’s still new to me. Thanks for being here.
I also agree that “paralysis by analysis” can be a discouraging result of never really making a move because of uncertainty surrounding the *best* long-term strategy to take.
It seems the ideal solution is to fall somewhere in-between:
Make important moves NOW to get your business off the ground, while also keeping your eye on the future.
Perhaps the essential message here is “You can’t get rich quick!” but “If you don’t try something, nothing will ever happen.”
Great post, Yaro!
-Jason
This is a good post about having a foundation to your Internet business. I am new to this arena and would like to read more about it. I have a good idea of the fundamentals, but it is the growth part that I am having a hard time with. Planting seeds is the way to go, but does anyone have any solid ways of doing this?
Hi Yaro,
Thanks for the content.
I just started on blogging and fully agreed on providing content to our readers. If we want our readers to invest their time to read our site, the content must be of value, in particular blogs. Content is king, we have to be passionate to write and write from our heart, experience, knowledge and NOT garbage.
Great that I visited this site!
Janice
“…plant the seeds first…”
One of my favourite sentences
Great post and great newsletter by Perry.
- Roman
Hey Yaro
So true. I think the challenge often is that to create real value takes time and energy. And perhaps most people are not willing to give up their time and energy to create something lasting and worthwhile.
But that’s a good thing – it means there is less competition at the top!
Cheers for your great content!
Gideon