Tim Linden

I'm the CTO of TimTech, I love coding with PHP and MySQL.
I'm addicted to tracking clicks and email marketing.

Investing in your business

There’s a phrase from some person who I’m sure you could Google and find out who started it, that says, “It takes money to make money”. And in general it’s very true.

Especially when things are tight, people tend to cut expenses. I do it to, nothing wrong with that. But you have to remember you still need to invest in your business. Failing to do so could stop any progress you’ve already made.

Take the “TE Model” where you get referrals and earn commissions. If you pay $10 per month for an upgrade, and make $20 per month commissions there, cutting your upgrade would change that profit from $10 to $20 right? Wrong! Most exchanges give you a higher commission rate when you are upgraded.

So now that $20 per month is only $6-7 per month (assuming it’s one of our exchanges where we give 30% for upgraded and 10% for free). So in the long run you end up losing more income than it’s worth.

I’d encourage you to also look and see if upgrading might actually increase your income. If you are making $6-7 a month as a free member, that $10 upgrade would triple that income and up your profit. On top of that you’d have all the other benefits of being upgraded.

I know it’s boring, but sometimes doing some number crunching and investing in your business can really help in the long run.

8 comments for “Investing in your business

  1. March 14, 2012 at 10:49 am

    Thanks Tim for the great tips you are so right :)

  2. March 14, 2012 at 11:25 am

    Hi Tim

    Before giving up an upgrade, you need to check some other things at the TE.

    What is the minimum payout for free members
    Does the TE actually pay out to free members (they don’t all do it)
    What surf ratio will I be dropping down to, because that is a time Vs money consideration. Not to mention the bonus credits you might receive with your upgrade.
    Maybe, think about investing in some longer term upgrades which usually work out less per month. Not all Te’s do them, but if you get a chance at a 3 or 6 month deal at a good exchange, or even longer (i’m a fan of Lifetime memberships and have at least 10 now) they are great investments!

    Paul

    • Tim
      March 14, 2012 at 11:51 am

      Exactly, a little planning can make a big difference. You just need to take the time to figure it out, even if you’re like me and you find it boring. But what’s not boring is seeing money come in ;-)

  3. March 14, 2012 at 1:36 pm

    I learned something early on in my business life that has proven true again and again: Investing in your business means putting money into it BEFORE it has produced a net profit. Investing prior to profitability will generally reduce the time it takes to actually reach profitability. So for example, your earnings of $6-7 per month as a free TE member may not cover the monthly outlay of $10 per month… but it moves you closer to earning $10-20 per month.

    Investment generally accelerates earnings, which means your time to reach net profitability can be much shorter.

    If you’d like to see this in chart form, I did a post on the topic last year; you can read it here:
    http://www.tamebear.com/pages/?p=1347
    (Click on the charts to see them bigger.)

  4. Diana Russ
    March 14, 2012 at 6:58 pm

    Tim I hear you and I would love to upgrade but until I start making some money I simply can not. It is not a case of not wanting to spend money you can not spend what you do not have

  5. SurferGirl
    March 15, 2012 at 9:55 am

    Currently I’m a free member at most of my TEs. Most of them don’t pay until you get to some ridiculous amount of $25 or so…. when I don’t have many active referrals, I am never going to get paid! So why would I upgrade? Please help me see the benefits of it (besides being able to add more links, etc.)

    • Tim
      March 15, 2012 at 10:03 am

      All our sites do mass pay if you have $10 or more. I agree, some get ridiculous. The benefits of commissions shouldn’t be the only reason to upgrade. Higher surf ratios, and other benefits should be. For instance ThumbVu you get more votes and a star on your photo to set you apart.

  6. March 15, 2012 at 3:26 pm

    If you not are earning commissions it means for most part it is probably just an advertising deal, and as John Wanamaker famously said: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” So commissions would make it a no-brainer, but just factoring surf ratios and such then it gets more complicated to figure out whether you are actually making anything from it. It would likely be based on a variety of factors, including time spent surfing, and products sold, and of course type of product. For example, I found that it is largely a waste to try and advertise more tangible goods or arts and media in traffic exchanges, however if you are selling some sort of analytics or adverting service then you could have much better luck, since everyone is looking for a service that promises to either make the process easier or generate more revenue and if you are able to make such claims (and of course if you can actually deliver then you are golden) they are much more apt to look at it as an investment. Almost no one online see the investment potential in art or more traditional goods and is willing to take the risk, so don’t your time with anything like that in a traffic exchange.

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