Affiliate Marketing v Offline Business Startup

Sadly there are many people who are put off by the belief that it requires a large capital investment that they just do not have, or because they need the day job that covers the bills and puts the food on the table. It is perfectly understandable to have these concerns and in the past they were true.  Now things have changed. With the advent of the Internet the average ‘Joe’ has a chance and a choice not enjoyed by his forefathers. He can still create a sole proprietorship offline or he can become an online affiliate marketer. Both can be wildly successful but let’s take a look at the pros and cons of each.

Whichever way you choose to go it is important to realize that you have to take it seriously and that a business is like a train stood on the tracks. It needs a mighty push to break the inertia and get it rolling. The more effort you put in the quicker it will start to roll and gather momentum. However, it does have to be said right here that sole proprietorship will, by its nature, be more risky and more labor intensive.

Creating your own business offline is extremely difficult and there is a relatively high barrier to entry that does not exist in the online world. Unless you have a unique idea you will have a lot of competition from pre-established businesses who have all the advantages of prior positioning. If you want to steal their trade you are going to have to build a better mousetrap and have the resources to stick it out until you can get cash positive which for new startups is on average 18 months. Obviously if you succeed the rewards can be immense but the flip side is that you can have a great idea and still go broke for cash flow! Eighteen out of twenty new businesses fail on cash flow and if you are the sole proprietor the chances are you put up your house and lost everything.

One of the reasons that making money on the internet is easier is that with affiliate marketing you do not need a bank loan or a unique product. You are not trading on the strength of your product or your reputation which would take considerable time to build. You are trading on a solid product already established and trusted. You have not had to spend your money researching and developing or even building a sales platform or website let alone leasing a unit, refitting and stocking it.  That has all been done for you at no cost. Your house is not being used for collateral on a loan and you are still able to go to your daytime job and bring in an income until you decide that your online business is more lucrative and warrants your fulltime attention. If it failed you have lost little but a few hours of your time. This is a huge benefit.

Another problem in the offline world is ‘counterparty risk’, which is just a fancy term that means that even if you are successful and profitable if one of your customers goes down without paying you, if it is substantial enough he will take you down with him. In these uncertain times this is not an uncommon occurrence. In the online world you never have that risk. You are paid commissions on sales. You own no stock and your commissions are controlled by reliable, third party established businesses like Clickbank who are here to stay. Even if they did go down the worst you could lose would be a month’s commissions compared to an offline business where you lose your house and your job if you were working it full time.

Another benefit of Affiliate marketing is that your advertising costs are minimal. The product owners have done all that for you. They often supply you with sales materials to help you sell as it’s in both your interests for you to be successful. Your only effort is to get people to visit them through your affiliate link. There are many inexpensive or free ways to do this including Blogging, Video Blogging, Social bookmarking, Article writing, Facebook, Twitter etc. Alternatively you can speed up sales with Pay Per Click (PPC) on Google Adwords. You can spread your word across the planet and only pay when your targeted customer click on your advert and you can set a daily budget at any level you can afford. You are in total control. If you are trying to promote an offline business you have to advertise everywhere you can to get customers to come and try you. It’s the scatter gun approach as opposed to the rifle shot, very hit and miss and potentially hugely expensive.

Finally as a Sole Proprietor you are out in the cold on your own. If you need expert advice you have to pay for it, nobody is going to help you build your business for free. When you become an Affiliate marketer you have a lot of resources available to you. There is product support, a help desk and there are forums where other affiliate marketers freely share their advice and experience.

Whichever route you take you are going to need to be serious and focused. The difference between making money on the internet and making money in the offline world is that you never have to risk your shirt as an affiliate, you are never on your own and you not the business, decide how much time , money, and effort you want to commit to your business.

With so little risk it’s hard to come up with a reason not to give it a go!

“To continue doing the same thing

and expecting different results is insanity.”

–Albert Einstein