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Make Money Online: Beginner's Guide

Mike Peters, 07-13-2007
My father officially retired from his job at Con Edison this week. He spent 26 years there.

Intrigued by earning money online to complement his retirement funds, my father started asking me lots of questions about how exactly people are making money online.

I decided to summarize our one hour long phone call, into what I call a "Beginner's Guide to making money online"

Please use the comments section to add anything else my dad (and anyone else reading this guide) could use.


Q. I keep reading about people making serious money online. Is there any truth to it or is it all hype?
  • Not hype.

    As of 2007, the number of different ways you can make money on the Internet, has reached an all time high. Normal people are selling on eBay , promoting affiliate offers , writing for a living , creating niche content sites and typically doing it all from their home office.

    In fact, I'm surprised so many people stick with their "physical world" boring day jobs and never even experiment with making money online. Their quality of life could improve significantly if they just stick to it.
Q. How much money are we talking about?
  • On the high end, there are people like Markus Frind , an engineer who created a free dating website, has no employees but his girlfriends who helps out and is collecting $200,000 a month from Google. Or Jeremy Schoemaker , a self taught pay per click expert, who is reportedly making $6M annually working from his home office, running 4 companies.

    You have folks like Kris Jones , who started a gourmet food company, doing affiliate marketing on the side and ended up repositioning and creating the fastest growing full-service Internet Marketing agency in the United States with now nearly 100 employees, all financed from affiliate marketing profits.

    There's a nice lady by the name of Wendy Piersall , who started a blog titled eMomsAtHome and turned it into a little empire.

    We're talking big money.
Q. I don't have any technical skills. Is that a problem?
  • No.

    Not unless you make it a problem in your head.

    There are literally tens of thousands of success stories, covering people from all backgrounds, origins, professions and countries. You no longer need to come from a certain background, origin, posses a certain level of education or have any other inherent skills. The only thing all these case studies have in common is an unwavering passion to succeed at all cost. You're going to fail repeatedly, so you better get used to it. Persistence is key.
Q. How soon can folks normally quit their "day job"?
  • At least not for a year. Read success stories of people who made it big online and you'll learn all (or most) of them had a solid dayjob, while they were working on their online businesses. You need to put food on the table, that's your first priority.

    There are enough hours in the day and plenty of resources online, so that if you're committed and willing to invest 2 hours every day and a few more over weekends to building your own sites , 12 months are more than enough to build a significant income from your online ventures. It takes time building revenues online. But it's worth it.
Q. How exactly is money being made online?
  • To understand how money is being made online, you need to understand two important online marketing terms:

    Traffic = The number of people who visit a website.

    Conversion Rate = The percentage of website visitors who decide to buy or signup on that website.

    For example, a website with daily traffic of 10,000 visitors and a conversion rate of 2%, selling a $20 product, will generate $4,000 per day to the website owner. (10,000/100*2*20)

    To make money online you need to focus on promoting the website, getting as many people as possible to visit the site (increase traffic) and continually work on the website sales copy and the product/service being offered to get as many website visitors as possible to buy (increase conversion rate).
Where to Start

Q. Ok, I understand Traffic and I think I understand Conversion. What next?
  • The first important decision you have to make is what path to choose for starting to generate money online. Having so many different ways to make money online may seem confusing to new people.

    Borrowing an analogy from Robert Kawasaki, I categorized the 4 distinct paths you can choose when getting started online. Pick the one that you feel is best suited for you and you'll be one step closer to earning your living online.

    Level 1: Online Employee - Replace your "physical world" boss with an online boss. Visit WAHM (Work At Home Mom), WorkPlaceLikeHome. You'll find hundreds of opportunities to do real work for real companies from your home and get paid real bucks. LiveOps and West are two solid companies in the customer support category. You can find other companies if you don't feel comfortable speaking to customers over the phone and getting paid by the minute.

    Level 2: Online Self Employed - Start a small business online and be your own boss. The absolute best place to start is eBay . Find a niche you love, search eBay to ensure there are at least 3 sellers in that niche to indicate demand is high enough and start offering those products on eBay as a seller. Starting on eBay is common to many of today's successful online moguls. Other great online small businesses to start with are - your own copywriting shop (if you know how to write well), a blog where you write about a hot niche and promote affiliate offers, or your own consulting business (if you have strong expertise in your area).

    Level 3: Online Investor - If you have $5,000 to risk (don't risk more initially) this path might be for you. Head over to SitePoint forums and take a month to learn about how online businesses are bought and sold for a profit similar to Real Estate fixer-uppers. Another good investment channel is becoming a Domainer (people who buy website domains cheap and sell them months later for a huge profit).

    Level 4: Online Business Owner - The holy grail of making money online is becoming a business owner. The difference between "Online Self Employed" and "Online Business Owner" is that as an online business owner, your business can function without you. Online business owners typically have dozens or hundreds of active websites, all generating passive income requiring little to no involvement. While obviously ideal, this is also the most difficult level to conquer. I strongly suggest you go through the previous levels first, to gain an understanding of the online world. Once you're ready, profitable online businesses are all about creating a service (or destination) people would easily extract value from. Create a site people would love to recommend to their friends and you're on the right track. Profitable online businesses include: Niche Content sites, Dating sites, Proxy servers , Lead generation , Affiliate Marketing and many more.
Q. How do I pick the right path for me? Being an online business owners sounds like the best one?
  • Yeah being an online business owner with hundreds of sites under your belt is the quickest way to making a 7 figure income. But notice I specifically marked that one as 'Level 4'.

    If you're just getting started online, it usually doesn't make sense to get started at level 4 from day one. While you might succeed, you can increase your chances by starting from the basics.

    I didn't say you have to spend years working through each level. You can open an eBay business, learn the ins and outs of making money and sell your eBay business a few months later as you move on to the next level.

    Probably the best way to pick the right path for you, is to mimic what you are currently doing in the "physical world". If you are an employee of a big company, start by converting yourself to an online employee so that you can work from home. If you have a small business in the "physical world", start by converting your small business to an online one so that you can attract a much wider audience.

    Take it step by step, be prepared to fail and most importantly - keep your day job until your total 3-month online earnings equal 150% of what your old job used to pay.
Q. I used to do Real Estate and can relate to buying-selling businesses. How do I get more guidance?
  • Once you pick the right path for you, your next question is probably going to be - "Ok great, now what do I do first thing tomorrow morning?"

    Thankfully, the Internet has many forums and a handful of blogs, matching each path of online money making. Make sure you pick the right forums (I linked to many of the good ones above) and don't get too carried away spending all your time reading and no time producing.

    Be very focused on meeting your predefined goals before you jump on the forums.

    For example, if you pick the path of being an Online Investor, buying and selling websites, you'll have to start at SitePoint Forums - read everything under the marketplace sub-forum and try to identify how the successful users act. Feel free to ask questions, introduce yourself and be very honest about where you are in the process. You'll be surprised but many people would love to help.

    Similar to a Real Estate fixer-upper, in the online world, you'll have to learn how to first evaluate website traffic (population), earning's potential (look at comps), search engine placement (neighborhood) and then understand where to get cheap developers (workers) and project managers (builders) to manage it all.

Q. Sounds like a lot of information to digest. Any shortcuts?
  • We all love shortcuts, don't we?

    The best way to ensure you are on track to replace your "physical world" income with an online income in less than 12 months, is "goal setting".

    Cliche or not, without having specific goals, your chances of succeeding are slim to none.

    Here's a good set of goals that will help you get started, covering all basic grounds:

    1. Make $20 online by exchanging your time for money

    2. Sell something on eBay, even if you make no money or lose up to $50 in the process.

    3. Make $50 profit online by selling a product, service or promoting an affiliate-offer

    4. Make $5 online by building a simple content site and embedding Google AdSense in it

    5. Buy a website that is making $100 or more per month, for $200 or less.
Q. What else?
  • Pick a mentor and ride his (or her) wave.

    Every meteor revolves around a star. Similarly, you need to pick a successful person making money online in the path you chose earlier, contact that person and get them to take you under your wing.

    You can find these people in forums such as DigitalPoint , WickedFire , SitePoint and WebMasterWorld.

    Be very honest about who you are and what you are looking to do. Explain you are willing to work very hard for very little or no compensation, you are very impressed with the posts posted by [your chosen mentor] and are looking to learn more about making money online.

    Don't expect to win over stars who are making 7 figures on-line. Start with folks who are just one level ahead of you in the game, re-assure them your intentions are pure and keep trying until you find the right fit.

    Just about every successful person in both the online and offline worlds had a mentor they looked up to when they got started.
Q. Where do I find my first customers and how do I build a critical-mass of traffic?
  • Once you have an eBay store, a content site (with AdSense and Affiliate offers) or just a basic website promoting your own services, go to friends, family and old co-workers. Ask them to visit your site and ask for honest opinion.

    Very Important: Don't tell them this site is yours. If you do, you're not going to get honest opinion. Instead, say you're looking to buy this site and you want to get their opinion if this is a site they would visit again.

    Having a site with high stickiness factor, where you offer enough of a value proposition to website visitors to come back, is very important to building a sustainable online income.

    John Reese has an excellent PDF Report about this titled The rebirth of Internet Marketing .

Prasanga, 07-13-2007
this is some topnotch ideas, I am working on the basic steps of making money online, in a month I hope to launch an e-book. Great post, thanks again.

samuro, 07-18-2007
Nice tips, I just learned about discipline

Mystic Liquid, 02-01-2008
That was a great guide. Thanks.

David Samuell, 06-19-2008
Great informative guide, Mike. Do you have time to be my Mentor?

Geddada Vijaykumar, 02-15-2012
I am from India, we would like to take-up outsource from India.

Naveed, 06-26-2015
I would like to know how we get the earned money what's the process..

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eitan, 02-23-2017
Great article
  I tried all kinds of ways to make money online
What works best for me Its Koocam.
I teach my hobbies, and sells my knowledge in any field
It's great

J Desai, 02-27-2017
Great Article, I we are based in India as a software development company and wanna get project work in IT like ERP CRM or B2B work or website n mobile app development so looking for outsource work from US UK Canada Australia or Europe, so please guide us if there is any consultant or outsource Agent with whom we can get a good work. we have 25 peoples staff in the development of software.

Fam Fanoz, 10-31-2017
Make money online

فروشگاه اینترنتی, 02-06-2018
I think your site is scientifically interesting and I would love to share it with my colleagues.
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