Its quite a broad area but one way you can make money without money online is through selling products online, more specifically in this case, through drop shipping.

I have written a previous post about the pros and cons of drop shipping but in this post I will talk more on how to get started.

A drop shipping business is basically where you sell a product, either online or offline, and after the sale is made you order with the manufacturer (or drop-shipper) and they ship the item directly to your customer. This could be your own private label product or a manufacturers however the principle is the same. You don’t see the product and you don’t hold inventory, all you do is make the sale, process the payment and then place the order with the manufacturer or drop shipper. That’s it. When done correctly its a fantastic way to make money and doesn’t involve a lot of the nuances existent in a ‘normal’ business.

One of the key features of drop shipping is that you need next to nothing to start out, especially in today’s online environment. Sites like eBay and other online marketplaces allow you to sell to thousands on potential buyers and the cost to set up is $0. Here is an example of how to do it using eBay as an example:

1. Sign up with Ebay – FREE
2. Get a Paypal account if you havn’t already got one for processing payments – (also FREE)
3. Check out eBay pulse – this will tell you what the current top searches on eBay are. This information will help you understand what is in high demand on eBay.
4. Once you are aware of what is selling, write a list down of these items and find out what people are willing to pay for them. A good way to do this is to check out other sellers in the category selling similar products and have a look at their feedback. Most of the time you can see what they sold previously and how much the item sold for. Use these sales as a guide to what the items will sell for. Write down a rough price range for each item to refer to in the next step.
5. For each item find the appropriate manufacturers and possible drop shipping companies where you can purchase the product and have it drop shipped. You can find manufacturers and drop shippers at the following places: Alibaba, Craigslist and DHgate.
6. Determine those products that you can make a profit from based on the amount they usually sell for (see step 4).
7. For the profitable products, put an advertisement up on eBay setting the minimum bid at what you need to break even or make a small profit.
8. Sell your products, take the money and then organise the shipment of the item
9. eBay will invoice you once a month (around mid-month) and will include submission fees (fee for placing an auction) and also their commission on the sales you make. Ensure you factor in these fees into your bidding reserve as they will eat into your revenue.

If you take the approach above you actually will never need to spend a cent of your money before you make money. Signing up to eBay is completely free and you will only pay the fees in bulk which most of the time is after you have sold your products so you have the money already. Once you have found the right product it is super easy to develop and automated sales process that can immediately send orders to your drop shipper as soon as your Paypal account has been credited.

You can also set up an online store selling drop shipped items. There are both positives and negatives in starting your own online store. The positives are mainly the fact you don’t need to pay insertion fees to a company like eBay and the commission fees are much much lower. Added to this with less competition (compared to eBay) you can charge a premium for your products. However the other side to this is that you need to find a way to drive traffic to your online store and your main options are paid advertising. These can be offline and online. You can use offline methods like print, flyers etc to drive traffic to your online store and also online traffic methods such as pay-per-click (PPC) advertising, banners ads or similar. Most of these cost money but probably not enough to turn you away from this path.

If you want to take the online store route then there are plenty of options where you can easily develop a great looking and functional e-commerce ready store. My favorite is Shopify and there is a Free Trial so you can test it out. It’s not expensive at about $24 per month for a normal sized business selling 100 units. This can be much cheaper than eBay if you get it working well. Essentially that means you can set up a free store (using the trial) and all you need to do is drive traffic to it, no inventory, no staff and no bulk orders. It shouldn’t take longer than 30 days to start making money from it so you already have money to pay their monthly fee starting from the second month. So in this example you have again effetively started with virtually no capital.

I have tried both of these and both of them worked well. I was able to charge more with my online store with Shopify however eBay sales came easier but much less profit.

Do dropshipping right and you to will realise just how little money you need to establish a great revenue stream.

This is the most important step you can take when starting out a business. You can do everything else brilliantly, come up with a multi million dollar idea and if you fail to do this step then it will amount to nothing. Once again to read about the first 3 steps (important!) you can do so by clicking here. This will take you to the category and you can browse through the other posts.

In today’s environment taking action has never been easier. There are a multitude of plug-ins, scripts, programs and programmers that make this step super cheap and super easy to do. All you need is the idea of what you want to do (which you already know from Steps 1 and 2 ) and Google. Get in there and go onto forums asking questions about your chosen business and ways you can make it happen. Don’t be afraid to talk about what your thinking of doing but obviously don’t give away the finer details. For example in my situation, I am looking at creating a mobile video site where you can search a massive database of videos and download them directly to your mobile. So I would go to a forum and ask them if anyone knows how to download movies to their mobile. Using this information you can gather further info then ask following questions until you have a better understanding of whats involved.

Once you have a great load of information, simply post your request to a programmer on either rentacoder or elance and see what they come back with. One thing to remember is that if your not a programmer, don’t think everything is difficult because it sounds difficult to you. If in your description you make out like its a big project which requires the uber brain to code, then programmers will treat it like that and you will pay a premium. On the other hand, if you have all the information you need, know what you want and write it with clear straight forward instructions then you will notice programmers will be much more honest. They immediately can tell what you will be like to work with and will tailor their pricing considering this. These guys are professionals (most are anyway!) and what you think is a big deal could probably be bread and butter easy for them and most often is. So just stay aware of that.

Ok, so what I have done is put up a bid request to see what I could get. It goes something like this:

I am looking at having a simple WAP (mobile) site created. Its for a hub where people can download videos onto their mobile/cell phone.

The design is quite simple, see attached file – (i’ve shown this below).

The site needs to be designed for mobile phone and support .php ads from google and admob.

I would like to be able to:

1. Ad Videos
2. Update the “featured videos”
3. Amend the position of ads
4. Ad and remove categories.

A content CMS would be required for this.

Coding has to be search engine friendly and clean.

The image I attached was this:

Mobile Video Site outline

What I need to do now is wait to see what comes back and if the programmers have any questions, which they usually do. What to get out of this is that I was very succinct yet quite open in what I wrote down. I used graphical representation so that they could even better understand what I was after. I strongly recommend this and it only takes a few minutes to do. Even something hand drawn would work great.

By understanding exactly what I require, programmers immediately associate me with less effort compared to someone who doesn’t really know what they want. This leads to more accurate and usually lower priced bids. Secondly because its not overly detailed it gives the programmer a bit of flexibility and the option to discuss better ways the site can be done. This is great especially if they are aware of plug-ins or scripts that can be integrated quickly and easily. This can result in the saving of costs associated with the project as well as improving project turn around times. So keep it succinct yet make sure you give the programmer a bit of flexibility, unless your determined and sure about what you want.

I’ll let you know how this goes when some feedback comes through!

Many of you may be aware I’m quite into reading other Blogs and quite often I refer to those that I read. You may also have heard me mention Yaro Starak’s blog Entrepreneurs Journey.com.

Well Yaro just released his Membership Site Masterplan and I have got my hands on it. Put simply, its fantastic. Its very thorough and tells you pretty much everything you want to know about starting a membership site. He has been there and done that, which I believe is the key to being able to provide great value, so naturally this ebook is fantastic value.

What I can’t believe is that it’s a whopping 72 pages of Membership Site gold from the brain of one of the best, yet its absolutely FREE.

Here is a link to Membership Site Mastermind.com where you can get a free copy of this masterplan. I strongly recommend you do, if not for information about starting and growing a membership site, but for understanding more about online marketing and how to use the resources around you to promote your offering.

Nothing makes me cringe more than hearing someone say “you need money to make money“. Simply put, this is a load of crap. For many of the people who say this, it’s purely as an excuse which they try to pass off as a reason. However that’s all it is, an excuse. It’s an excuse so they don’t put themselves out there in a world where failure is a definite possibility. Its an excuse to not have to put in any effort. Most notably is an excuse to themselves as to why they are where they are and why they are not happy. People feel validated by this excuse and keep reminding themselves that having no money is the reason they are unable to achieve their goals. It’s the easy way out.

In my experience the amount of money that I have spent on starting and growing a business has had very little effect on its profitability or success. I have spent $50k developing a mobile advertising network which although has proved successful, has not netted me anywhere near what I was expecting. Yet on the other hand, I created several mobile sites, each one under $100 and they have taken off, in fact they have produced more of a profit than my 50k project! I wouldn’t call the 50k project a flop, as it works great, but I would call the smaller projects huge successes and examples of how I didn’t really need money to make money.

The level of success of my businesses have been completely disproportional to the amount of capital invested, however totally proportional to the amount of value they provide. In later posts I will go through the various options but for now I wanted to share a few examples. Firstly, so that you can stop thinking that you need money to make money and secondly to start thinking about how value, hard work and determination creates money.

1. Plenty of Fish: Markus Frind started this dating site with nothing. It started as a hobby when he was trying to learn ASP.net programming and decided to practice on a dating site. He worked on it a few hours a night and did it because it was a challenge to his ASP.net skills. But what he created was immense value. Value in that all other dating sites around the world charged members to talk to other members. Markus didn’t charge a cent for this service and this was value according to site members. The sites popularity spread massively to where it is today, a 1.5billion page behemoth making anywhere between $5-10 million a year in Adsense revenue. All he did was create a simple service that others would charge for, charge nothing for it and make money through advertising. Simple.
2. Shoemoney: Started the now famous Shoemoney blog. Started off struggling to hold a job. Found out how to turn images into wallpapers for a mobile phone.  Told others how to do it and got a great response. Set up next-pimp.com and used Google Adsense for revenue. Then moved into the ringtones industry and made more money with Adsense (leading to his famous $132,994.97 Adsense cheque) until he got into the subscription/membership revenue model. He had 70,000 members paying 19.95 every 6 months and generating over 3 millions dollars for that year as a recurring income. Once again the fact he had no money to start with didn’t mean he couldn’t make money.
3. J.K. Rowling - Do I need to explain? Born in Bristol, England into a middle class family. Hit hard by the death of her mother, who suffered from multiple sclerosis, and left for Portugal where she married and had a daughter. Returned to Edinburgh a single mom; lived on welfare while finishing her first Harry Potter tale. (Forbes). She went from living on welfare becoming one of the richest woman in Britain in the space of a few years. The 2008 Rowling’s estimated fortune was £560 million ($798 US million).
4. Steve Jobs – Adopted and could not afford to stay in college so co-founded Apple in his parents garage. Has has been monumental in how we use personal computers today and has changed entertainment forever with the introduction of the category and history killing iPod. Once again, starting with nothing but an idea, created a remarkable product and value… now the rest is history.
5. 2/3rds of the worlds billionaires – not a person or a company but more an institution. 2/3rds of the worlds billionaires started out with next to nothing. It was determination and drive that got them to where they are now. These are people who faced adversity many times over and yet still overcame the difficulties to become extremely successful in their field.

This is why whenever I hear that dreaded saying I cringe. People who were in much worse sitatuations than you and I have been able to overcome barriers much worse than simply start up capital problems. We are talking about prosecution, famine, war and other situations which many of us have been fortunate enough not to have been exposed to. It’s not that the doubters don’t have the money, but rather they don’t have the determination, drive and passion when it comes to following their dreams.

For the majority of examples, entrepreneurs start a business to generate revenue and hopefully in turn, make a profit.

Before I go any further I want to clarify something. I have always found it perplexing the way people approach how they should be making a profit from their value offering. I’m not talking about the method in generating a profit, I’m referring to how they think about the term, ‘profit‘. People almost feel guilty if they have an aim of making a profit. Why would you feel guilty about this? There is no reason to feel ashamed of doing something to make a profit. If you provide a product which is of great value and set your price in a range where people can and will purchase it then its a win-win situation. First, you generate revenue and your buyer has purchased something that has a certain perceived value for something they were willing and able to purchase it. I don’t see why anyone should be ashamed of this? If you provide a sub-standard product and charge an exorbitant amount to people who don’t know better just to make a profit, then yes you should be ashamed.

Before you go on this post is continuing from my previous steps for starting up a business. Step 1 and Step 2. If you havn’t read these I strongly recommendyou do as you’ll be completely lost for the remainder of this post!

That aside, once I have thought of an idea with potential and then put down some points regarding the concept, my next step is to think of how I can make money out of offering this service. Well the first and most obvious answer would be to copy the Youtube example and place ads on the website which will earn me money whenever a site user clicks on them. That sounds pretty straight forward but people who are regulars to this blog know my thoughts on using advertising as the revenue model. In short, I’m not a big fan. After all, how many times have you clicked on a display or text ad on Youtube?

On the other hand, will people actually pay to use a video sharing service on their mobile when there are so many free options out there? No I don’t think they would to be honest. If I started charging for a service to stream videos onto mobile then wouldn’t my users start reverting back to using another mobile video streaming site? Most probably. I’ll think a little harder.

Ok so what do I do now. I know that Youtube is the giant and so far offers the best mobile video offering available. I also know Youtube only allows streaming to your mobile and the other download sites are not really anything special. So I’m thinking if I can offer the streaming service for free and support it by advertising I will keep and retain the casual visitors. On top of that if I can also offer a premium service for those wishing to download those videos onto their mobile then I would be able to charge for this as the current alternatives are pretty poor. This allows me to work with two revenue streams, the first being advertising for those casual streaming visitors and as well as a membership based premium service for those wanting to download the content to their mobile.

Ok so this is what I’m thinking:

1. Revenue model 1 – Free video streaming (will not include video downloads) will be supported by advertising. Advertising network options include: Adsense Mobile, Admob and Decktrade.
2. Revenue model 2 – Offer a premium paid service where users can stream videos as well as download any mobile video they like directly to their mobile. Premium members will pay a small monthly fee in order to use the download service.

I’m pretty happy with this as it offers both a streaming option which anyone can use and yet also tailors for users that want even more and wish to download any video directly to their mobile. To do this they will need to become site members and pay a relatively small ongoing membership fee. For me that means the highly trafficked free streaming section still generates a revenue but I can also offer great value and charge for membership which is a great form of recurring income.

I mentioned in my previous post how I am able to get Google Adwords traffic for 1c per person. It’s truly a bargain in that for only $10 I can get 1000 users to my site who may benefit from my services, hopefully click an advertisement or even better, purchase a product. But is it really a bargain?

First of all, there is very little chance you can make up the advertising dollars spent by the advertising revenue on your site. To effectively get good advertising revenue, either through Google Adsense, Adbright or whatever, plenty of organic traffic is the way to go. Why? Well first of all you need to think of your site as a real business. Where advertising is your revenue model, using paid Adwords traffic to drive traffic is effectively your cost of goods sold (remember accounting 101: COGS?).  It’s your main expense. With organic traffic you don’t have that expense. (I know, not too technical here).

Most importantly however, (this is the part to really think about) Adwords traffic is traffic that came from a contextual environment. A contextual environment is your ad showing up on a relevant and contextual keyword search, another site or a blog that is in a similar niche. So the amount you pay for an ad is roughly the same amount you will receive for a click on your site, as you also run contextual ads. This means that in order for you to make a profit, or even break even, almost everybody who comes to your site must click an ad. You will need a 90-100% CTR on your site which isn’t going to happen. The only way around this is to drive traffic from probable alternatives (ie get traffic to a credit card site from a job search site) but then it will be difficult to get good conversions as your not playing the percentages. Or you can run several ad campaigns from different ad networks but then again it would kinda look like this.

But what if you sell a product? I’m still not sold on this. I honestly don’t think that Google Adwords does that great of a job to drive qualified and potential customers to your online business. I may be wrong and you may have a completely different take on this so if you do, please share. Some bloggers have their own secret tips. There are too many factors you need to overcome in order to break through to the sale. These include your anonymity, trust, competition and desire from the consumer. I can’t imagine that receiving 10,000 people from Google Adwords would compare to receiving 10,000 referred and organic traffic, either by word of mouth or through recommendations.

Genuine organic traffic is traffic that is not complicated with the earlier mentioned barriers of anonymity, trust, competition and desire. I think if your interested in running a successful online business the hardest part will be developing a following and building the genuine organic traffic.  Nothing valuable comes easily overnight, it requires you to provide value, day in day out and accept the fact that the rewards are long term. Sure you can use Google Adwords and I’m sure that you will benefit from it, but the real value comes later down the track when your effort and persistence becomes worth the effort. Work hard, don’t give up and keep at it as everything else is just a fragile quick fix.

Using Google Adwords is a fantastic way to drive traffic through effective contextual ads. Unfortunately for many industries it has become extremely expensive. We all dread that pink pastel colored warning box at the top of the screen and that classic “Bid is below first page bid estimate of A$15.65″. Who is crazy enough to pay $15.65 to get on the front page? You must have either been selling something that has a crazy conversion rate or was lulled into using Google Optimization strategies to be paying $15  a click!

(Quickly just on that, what Google’s Adwords optimizations strategy actually does is take all your money quickly and gets you 10-12 visitors for your $50bucks worth. Don’t bother with it.)

Now before I go on any further, I’m assuming you know a little bit about Google Adwords, not a lot just the basics. If you don’t there is so much info out there on it you’ll figure it out within 3 minutes. Don’t buy anything, all the info you need is free so don’t get sucked in. The best resource would be Google’s own info regarding Adwords or simply just try it yourself and dive in.
So if your in an extremely competitive market what can you do? You don’t want to be paying $10 a click do you? But you don’t want to be on the second to last page either. I personally had this problem with a games business I run. When I tried to promote free games on Google Adsense i’d have to pay at least $1.50 to be on the front page. Now don’t think that means you’ll be in a good position on the front page, we are talking $1.50 to be on the bottom of the ladder of the front page. To be at the top your probably looking at double that, probably more.

Then I discovered a way to manipulate my listing so I could get traffic for much less than that. I went down to 20c a click then to 10c. Then down to 5c. Then ultimately down to 1c! I was getting targeted traffic to my site for 1c per click! How did I do this? I skipped the search side of Adwords and focused on the content network side.

You only ever hear of 2 things when it comes to Google advertising, Adsense and Adwords. Many people fail to understand that they actually go hand in hand. Too many online marketers separate the two and use Adwords in their search marketing and put Adsense on their site to generate revenue. Adsense is nothing more than other people’s Adwords campaigns that have come up in the content network. Let’s take the facts. Adsense revenues on average are steadily declining. 4 – 5 yrs ago Adsense clicks were much more valuable and it was not uncommon to see sites getting 30+ dollars eCPM (effective cost per thousand – ie how much money you’ll probably make per thousand impressions). Today, with the exception of some competitive niches, such a figure is unheard of. What does this mean? It means the costs to get in other people’s Adsense ads, ie the content network, is now much cheaper. People are making less money through Adsense which boils down to the ads on their content pages costing less. This is in comparison with search engine marketing which is now more expensive for good keywords.

Still a bit sceptical? Well I have taken a snapshot of my Adwords account for an online gaming site I was promoting. Check it out:

Adwords Snapshot

The first white row from the top shows stats from the search network. The column under show the stats from the content network placements. The difference is extraordinary. Click through rates arn’t good either way but that’s not the point, with the amount of inventory you can receive using the content network, you’ll get the traffic. Looking at the stats again, I paid on average 28c per click on the search network and 1c per click on the content network. I got over 24,500 people for $278 using the content network. To get this from the search network I calculated that I would need to pay almost $7000!! I don’t know about you but that’s a serious bargain!

How do I get on the content network? Easy. All you need to do go to “Edit Campaign Settings” in your campaign summary page and make sure that the content network is clicked in the Networks and biddings section. Here you can also choose to disable search marketing which will make Google focus on delivering your ads in the content network. Now you should be placed in the content network.

Even better, there are not even more advanced options where you can tell Google what sites you want to be displayed on. This is excellent as you can simply find the site’s that your target market most likely visits and ask for your ads to be shown on them. This is great for slightly off-topic ads such running a promotion for an online business opportunity and putting it on job search site. This is really easy to do as well (as with most things with Google!). Click on the campaign summary and then click on the ‘ad-group’ you have created. You will see four tabs on the right hand side of the screen. These say Summary, Keywords, Placements and Ad Variations. Now click on the ‘Placements’ tab and there should be a button that says “Find and Add Placements”. Click this then I would recommend you choose the “Describe Topics” tool and do a search for your desired target topic. Then select the sites you want to have in advertise in! You will need to go back and edit your campaign settings (previous paragraph) so you can change the content network targeting to “Relevant pages only on the placements I target”. And that’s it.

Sounds a little long winded when you write out the steps, but it’s dead easy. Hopefully now you will be able to work your way around those expensive keywords and yet still place your ads in a contextual environment. The key is to test it out. Don’t go straight down to 1c. Try 20c, then 10c and so on until you reach a point where you are paying the least you can before your traffic starts dropping off. I was lucky to go down to 1c but your niche may be different. Of course by using the content network you may not have the direct targeting of certain keywords but then again, who has that budget?