Reality Check Part Deux – Baby Steps

As my website (hopefully) creeps closer to monetization, it’s useful to keep a few things in mind, and the person who put it more lucidly than anyone I’ve ever heard was Fraser Cain, in a 2012 interview with niche website expert Spencer Haws.

Before I drop the good and bad news of the reality check, it’s worth remembering the original purpose of this blog – to reality-test Tim Ferriss’ assertions in Four Hour Work Week that practically anyone can start a lucrative side business, automate and outsource most of it, and use the passive income to fund his/her ideal lifestyle.

Here’s what I’m now sure of-

1)The first website I’m hoping to monetize has a potential 3600 visitors a month with something like a $2.50 cost per click. That’s 9,000 potential dollars times whatever percentage of viewers click on the ad. Industry standard is 1%. That’s $90 a month. It could end up being more, it could end up being less, or it could end up being $90 for different reasons than I expect (if, for instance, I don’t achieve top ranking, but I get traffic from multiple smaller keywords).

2) As bleak as that looks, I believe I’ve seen far enough over the horizon to say with reasonable certainty that the model is a viable one.

Before I get into the “good news” let’s get the other “bad news” items out there:

-According to Fraser Cain, there’s “no such thing as passive income,” since market conditions change so quickly that you have to continue to innovate,

-Niche websites are actually one of the lowest-leverage ways to earn, since you’re depending on Adwords, which has a pretty low ROI compared to products, and you’re depending on search engines, which can alter their algorithms at the drop of a hat and cost you big.

I want to begin to describe why I don’t think those cold, hard facts (that business and art gurus alike agree everyone who’s going to succeed needs to face) are as damning as they seem by posing a Four Hour Work Week “acid test” in true Tim Ferriss spirit.

What’s the bare minimum Ferrissian “lifestyle design” needs to do in order to be considered a viable alternative to the 9-5, “deferred life” plan?

Well, first is – free your time so that you can use it the way you want.

How am I spending my days now? I’m certainly working more than when I was “punching the clock”. Some days I do indeed go into the office, and on those days I usually work from about 10pm – 1am on my business. Other days I work remotely, and will usually use the first 2-3 hours of the day to work on the business before turning to “work” and hammering out my daily “to do” list.

If passive income, or at least “force multiplied” income were possible, I could view every website I built-then-forgot as an income jump. Build ten sites at an average of $90/month and that’s $900/month. That doesn’t sound like a whole lot, but remember I’m *still* collecting a paycheck from my day job (and I sleep very well at night too – everything’s above board, and I demonstrate better-than-ever productivity at work). That’s $10,800 extra per year.

Remember, though, Fraser Cain’s assertion that there are no websites you can truly “set and forget.” Ok, so say I have to keep building new sites. But I can probably build new ones quicker than the old ones fall off the indexes, if they do at all. (By the way, is $90/month average overly optimistic? I suspect not, but I’ll explain why in a follow up article.) That means if the only thing I did to make money from now on was niche websites, I could still slow the pace of producing new ones to half or even a quarter of my current pace and keep ahead of the curve, especially considering all the time the efficiency tactics are saving me at work.

Finally, there’s an opportunity cost angle to consider. If I weren’t pursuing passive income, it’s not like I would just be pulling four-hour Arrested Development benders every night. I’d be trying to get into B-school, or taking a class to try to get a raise, or putting extra hours at the office in hope of securing (or after securing) a promotion.

What I’m trying to do is what Tim Ferriss calls “fear setting”, and what Chip and Dan Heath, authors of the great new book Decisive call “bracketing”. I’m trying to establish a realistic range of outcomes that if I’m better than average I’ll hopefully be able to improve upon.

So, have I freed time in this baseline scenario? If you calculate time both in terms of hourly earnings and raw extra hours-per-week, I’d say the answer is “yes.”

Then there’s the qualitative argument. The way I spend my time these days is: banging through office work as efficiently as possible and working on my online biz the way I described, but also:

-becoming great at the drums – putting in about two hours of focused practice every day,

-filming a web show about music, and, lastly,

-traveling around the world, because since two of my websites are dedicated to travel, travel to destinations I’m going to write about is now business travel. (Look for smartasiatravel.com – with info on multiple Asian destinations as well as hacks for airfare, fighting jet lag, getting a global gsm phone for dirt cheap, the fastest way to learn mandarin, getting an international drivers license, and more – early next year.)

When you factor all that in, the $90/month earning potential of a top-ranked website and the need to continue building new sites doesn’t negate the benefits of the lifestyle I’ve begun to embark on.

And here’s what I haven’t even talked about yet – I’m not planning to confine myself to websites, or to confine website work to myself alone. As cash flow increases, so does investment potential. Things like hiring a programmer to design an iPhone app or a software to sell, and even being able to absorb a couple of failures, come into reach. And so does another pivotal Ferrissian device – virtual assistants. The way to make niche websites work in a big way is to scale them up, and when other people can do things like research and article writing for you, your time is free to do more.

I write this all before having made dollar one, and anything could happen with this first site. Still, I’m confident that A site will succeed eventually, and that’s all that matters.

Thanks for reading!

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