How should one manage his finances during initial years in industry? I do understand that not to buy unless the market is understood but once ready to start with buying how to go about it? Keep some monthly budget etc. Please advice.
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Money Management Question
- Thread starter AKA14
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Hi
i'd say think like it's a business
tally expenses, that will be filed
tally income from sales/monetization that will be filed
then figure whether/when you want to be in the "red or black", year after year.
in order to maintain, you must budget for renewals of each domain that you register or purchase.
if you don't "buy or build" an income stream to support that, then how will you sustain?
should that happen, then you'll have to liquidate your portfolio, below market value or drop domain names that aren't productive.
so you don't want to get over your head, before you realize where you're at.
buying is an easy way to loose money fast, when you don't have a plan, niche' or model to follow.
in these days there are so many who want you to "follow" them, down "their" road of claimed prosperity.
there are a lot of paths to follow and there are trails that have yet to be blazed.
which way will you go?
Good Luck!
Thanks biggedon really very insightful comments. I would have not certainly thought so far. Progressing in such a way that books are well kept and the business is at least able to sustain itself is pretty important !!!
As far as strategies are concerned I think I still have lot of reading assignments pending
Lots to think about appreciate your help
As far as strategies are concerned I think I still have lot of reading assignments pending
Lots to think about appreciate your help
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i agree, but doing that means one has/had a plan, found a niche', and proceeded along the lines of how an "investor" would think.
however, being that domainers approach the game differently, some come with "quick flip" mentality.
looking for instant turnovers in a market that's flooded with similar unsellable domains.
many make impulse purchases, especially when coupon codes are available.
next thing, they got 50 > 100 names in various extensions, asking where can they sell them or trying to push to auction.
money management is key, but brain has to manage the focus so you don't loose sight.
there are "safe investments", though the majority of those require budgets above what many entry level domainers can afford or are willing to pay.
still, there are investment grade domains for sale all the time, those with even the smallest traffic and revenue, illustrate their potential in the face of the viewer....yet many turn a blind eye to that aspect of the domain or again, are only willing to offer a few months of return.
while in contrast, they'll spend more in comparison, guessing on "unproven" names with hopes of selling to end-user.
that too, is part of money management, because when you buy a domain that produces revenue....you start earning a return on your "investment" from that day!
when you buy one that has none, you earn nothing until it's sold, developed or perhaps some time in the future the terms catch on and visitors come, but until the income flows where will you get renewal fees?
if you don't recognize value, then how will you know...
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I agree, biggedon. For me, I have a very small portfolio... probably 50 odd domains. However, I prefer proven domains over speculative domains with "potential"... bigger investment, bigger/safer future returns.
Looking at what the Castellos did with palmsprings.com, you only need 1 of those domains to make a big fortune. There is no need to have 100s of domains that don't generate much income.
Of course, budget is an issue, so it's better to use domaining as a side job while having a regular job to fund the investment of domains.
Looking at what the Castellos did with palmsprings.com, you only need 1 of those domains to make a big fortune. There is no need to have 100s of domains that don't generate much income.
Of course, budget is an issue, so it's better to use domaining as a side job while having a regular job to fund the investment of domains.
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Domaining is not an easy business to get in to. For one, domains are not very liquid - so even with a decent portfolio of names, you might need to wait a while before you get a fair offer for one of your names. I would build up your portfolio slowly, focusing on good quality names that get some type in traffic. In the best situation, you can use parking revenue to fund the purchase of more names, while waiting for sales to come in.
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Even buying a solid (geo) domain is not a guarantee of a good investment if you don't have a plan:
Zimbabwe.com seller takes huge loss
As hinted above, domain names lack liquidity so many domainers have cash flow problems.
You need to figure out how you are going to generate revenue. Sale are a way but they are unpredictable.
However maintenance costs (renewals) are predictable. Ideally don't buy any more until you make a sale, use the money to fund the rest of the portfolio, take a profit and reinvest a portion.
Lather rinse repeat.
Don't leave your day job
Zimbabwe.com seller takes huge loss
As hinted above, domain names lack liquidity so many domainers have cash flow problems.
You need to figure out how you are going to generate revenue. Sale are a way but they are unpredictable.
However maintenance costs (renewals) are predictable. Ideally don't buy any more until you make a sale, use the money to fund the rest of the portfolio, take a profit and reinvest a portion.
Lather rinse repeat.
Don't leave your day job
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Even buying a solid (geo) domain is not a guarantee of a good investment if you don't have a plan:
Zimbabwe.com seller takes huge loss
As hinted above, domain names lack liquidity so many domainers have cash flow problems.
You need to figure out how you are going to generate revenue. Sale are a way but they are unpredictable.
However maintenance costs (renewals) are predictable. Ideally don't buy any more until you make a sale, use the money to fund the rest of the portfolio, take a profit and reinvest a portion.
Lather rinse repeat.
Don't leave your day job
Zimbawe.com was a bad investment. There is not much economy going on there and things are chaotic. Of course, not all geo domains are born equal. For example, I wouldn't pay more than 4000 USD for Afghanistan.com . Also, imho, Geo domains are not supposed to be bought to be flipped. Geos are all about development and linking up with local offline advertisers.
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Here is one template for a prudent person to follow:
1. Ask yourself how much money you can survive LOSING -- 100% LOSING.
2. Divide that number by 3 (based on 3 years of renewals).
3. The result is a budget--how much you can spend on domains during the next year.
4. Don't spend any of this money until you've researched the industry for months.
5. Once your year's budget is spent, you are ONLY allowed to buy more domains with income FROM the domains you've already bought.
6. At the end of 12 months, reevaluate your portfolio and ask yourself which domains you would buy now if you hadn't bought them already. Renew those and drop the rest. Don't be afraid to drop everything if necessary.
7. If you make no money from the domains you bought during those 12 months, say to yourself "Domaining was a fun experiment. But I'm going to learn a new employable skill instead and make money that way."
1. Ask yourself how much money you can survive LOSING -- 100% LOSING.
2. Divide that number by 3 (based on 3 years of renewals).
3. The result is a budget--how much you can spend on domains during the next year.
4. Don't spend any of this money until you've researched the industry for months.
5. Once your year's budget is spent, you are ONLY allowed to buy more domains with income FROM the domains you've already bought.
6. At the end of 12 months, reevaluate your portfolio and ask yourself which domains you would buy now if you hadn't bought them already. Renew those and drop the rest. Don't be afraid to drop everything if necessary.
7. If you make no money from the domains you bought during those 12 months, say to yourself "Domaining was a fun experiment. But I'm going to learn a new employable skill instead and make money that way."
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