Investing In A Website: A Better Return On Investment Than A Bank Account?

 

Changing perspective can always make you see things differently, if I said that people should invest in a blog and spend a few years working on it most people would say that it wasn’t worth it. I however disagree, I believe starting a blog can be one of the wisest investments anyone can do.

1

When you consider the cost of starting a traditional offline business on the high street of your town, you are usually in big debt before you have started your first day of trading. In many cases it can take years to make your money back and turn a profit. Many restaurants go bust within the first six months of starting and other businesses can go bust within the first two years. The odds are not good for offline business surviving especially during this global recession.

Starting an online business can be far better than an offline business for many reasons; this great article will tell you more.

Why Online Property Has A Better ROI than Traditional Bricks and Mortar Property

When you start an online business, and for this example I am going to talk about a simple blog, the start-up cost can be as little as $70 for the year. For that you will register your domain name and then get hosting. Hosting is your online rent; the cheapest package with Hostgator is $47.52. Unless you decide to outsource your content creation all of the work would be done by yourself.

So the cost for the year is around $70, you can start to build an email list if you like and often people suggest that you start at the beginning but there is a cost associated with building an email list and the truth be told, for the first 3 – 6 months you will probably get very few sign ups from organic traffic while you are growing your site. You could employ some paid methods to generate traffic to your site and start to build your email list faster if you wish.

Starting a blog and working on it can require some work and commitment on your part however I will give you a big, BIG secret here, the success of a blog is not always down to the commitment and work you put in but the quality of your plan. Every business needs a solid business plan and building a blog is no different.

Ok so you are probably wondering about the bank account part to this post, well I am writing this in the U.K. where we are currently in the 3rd year of recession or is it the 4th? Maybe more, it seems like the news has been going on about it forever!  The banks which are the traditional way of saving your money pays an interest on the money you have stored with them, people put money into banks hoping to make some extra via the interest they pay. For large sums of money it can be useful.

Originally this interest was paid as a thank you for lending the bank the money that they could then lend to other people, the bank would charge a higher interest rate as part of the repayment and  they would pay you back from that money as a way to say thank you. Everyone was a winner, the person wanting to start a business was given some start-up capital which he repaid back over time, the bank made a profit from the interest paid on the loan and you made a small profit for having your money in that bank.

Thanks to the banks getting greedy and making a big mess of everything they have had to claw back as much money as possible to prevent them going under and this has meant that many interest rates on savings accounts have been slashed.

While I write this I did a quick search and found on Google U.K. that if I had £3000 in an account and deposited £1000 each month for 12 months without an overdraft limited I could earn between £5 and £10 a month in interest.

2

What is interesting is that one account would cost me £10 a month in fees and only generate £5.92 in interest. I know that if I do not touch the money then compound interest comes into play.

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” – Albert Einstein

But what I want to get across is this, I would need to have £3000 in the account and deposit £1000 a month to earn roughly £72. Now I ask, is it worth it?

I know you need to store your money someone where but it is wrong now to think of most banks and their accounts as a good way to generate money via interest.  The example above would have £15000 in the account after the first year and earn less than £100 in interest and you might notice that some of the rates drop down to 1% after the first year.

Back to the online business, a blog that can cost $70 to run for 1 year can in fact generate far more money back in return. While growing your blog, writing posts and sharing them on your growing social media networks (every blogger should build a network of fans and followers on Twitter, Facebook and Google Plus) you could record a series of short videos or write an eBook complimenting the niche of your blog and then sell it to your site visitors.

Imagine that you created a series of 10 short videos and charged your site visitors only $10 to access them. You only need 7 of your site readers to pay for access and you now have $70, that is your money made back, increase that to 14 customers then you have doubled your initial investment. How hard can it be to sell 14 places to your online video course over 12 months?

Video and eBooks can be created very easily at home with the tools at hand. Videos can be made using free software like Screencast-O-Matic.com and eBooks can be produced using a range of free software like Libra Office and Paint.net for the images.

I know of one guy who was making around $300 a month from selling a blogging video course from a box standard WordPress site, he was charging more than $10 for access and it was his first project. His website cost was as little as $70 and he was using the very basic WordPress standard TwentyTen theme.

There is also the possibility of generating advertising revenue by using networks like Google AdWords or maybe even private advertising. Imagine selling an advert spot to a local business at $10 per month,  at the end of the year you will have $120 which is $50 profit after your $70 cost is accounted for. Now imagine selling advertising space to several businesses!

When you get a lot of site visitors and customers you may require to pay more each month for hosting as your bandwidth and disk space will need to be increased.

Patt Flynn the legendary blogger makes over $40,000 a month from his blogs, his monthly costs are not $70 anymore, I am sure he would like it if they were however as his business grew so did the costs.

This April 2013 his outgoings were $8,650.93 and his gross incomings were $58,412.33 leaving him with a profit of $49,761.40. Now you will not get that, Pat is well established and has several sites and products that generate income including iPhone apps and a bestselling book on Amazon but what is interesting here is the ratio of what he puts in and what he gets out.He started out as a simple blogger!

Also after a couple of years you decide you have had enough and if you have worked on your blog and grown it to something generating a profit or at least has a potential to grow into a profitable blog you could sell it, some blogs have sold for several thousand dollars with some reaching the hundreds of thousands, after two years and a cost of around $140 you were able to sell your site for a nice respectable $500 you have still more than doubled your money.

There are running costs to websites and they do increase over time however as I am sure you are beginning to see, the investment is not only well worth it, it outstrips any return you get from relying on your bank account to swell your savings.

3 thoughts on “Investing In A Website: A Better Return On Investment Than A Bank Account?

  1. A very interesting way of looking at things Sam. There is very little appeal these days for having a bank account for savings. Obviously if you are doing well you need to put your money somewhere. I am not sure that leaving it in PayPal is a wise idea but when you look at the bank accounts of Cyprus being robbed by the Government it makes you wonder where you can keep it. 🙂

  2. What an excellent post Sam 🙂 Very informative and very easy to understand! The whole low cost advertising is a great method of paying for your website running costs in the interim – something a LOT of blog start ups could / should pay attention too.

    There are plenty of ways to get ahead and make money, but its a case of thinking outside of the box to get there …..

  3. Its true – with the current climate you are much better off investing your money this way. A blog takes time to get established and start making money, but as we know it can be done. Nice post Sam. Interesting concepts….

Leave a Reply

Your email address will not be published. Required fields are marked *