Do you have any ideas or thoughts on how to better run a business? This is the place for these blogs.

Busy With Domain Opportunities!

Busy With Domain Opportunities!

One of the biggest problems for many of us in the domain industry is there is way too many opportunities and sadly, not enough time. One of the great things about domain names is they’re so incredibly flexible with all of the different businesses that you can drive off them.

This past week I’ve found myself in a state of “thrashing”. For those of you that have never heard of this term it derives itself from the computer industry where a hard drive gets so fragmented that the hard disk head has to jump all over the place to piece together a file. In the old days, you could actually hear the head on the hard disk chirping like a little mouse as it was swung across the disk platter.

Escrow.com

For a business, thrashing is when you have a huge number of projects on the go and never get enough time to complete any of them. You end up pushing each one forward just a little bit before jumping onto the next. Like a hard disk head, you find yourself just wanting someone to defragment your life so that you can focus on a project and bring it to conclusion.

In the lead-up to Christmas I found myself frustrated, completely unsatisfied and driven crazy by the number of opportunities surrounding me. I just can't help coming up with new ideas that need to be carefully suppressed and it's all because domains are just so darn intriguing.

For instance, I just built a little “skunk works” project that is now processing over a million pieces of traffic per day and the data coming through is incredible. I can see that off the back of this data is another dozen or so opportunities.

I’ve just been working through a new sales process for 3 and 4 character domains and my previous post (read here) covers a number of new concepts to better sell domains. It’s a real sale of really good domains and so far it’s been an outstanding success. So I’m scratching my head and thinking…..hey, I think I’m onto something here….!

Then there’s ParkLogic Next….this is a BIG one. We’ve completely redeveloped the entire ParkLogic platform so that it’s immensely flexible in how we can work with partners, route traffic and then mobilise the data for clients. It’s been a huge effort but we are already seeing an increase in payouts for domain investors with traffic domains.

There’s then the little project of routing traffic to tier two providers that Google was paying only tiny amounts for. This project provided an uplift of around 30% for the sample set of domains. Not bad when you consider the results of this "skunk works".

Then there’s the other small thing that I’m working on that involves working more closely with direct advertisers in distinct market verticals. How do you solve the problem where a revenue event may occur three months after the traffic was sent to an advertiser’s websit?. The problem is solvable and the dividends look like they will be huge…..but they could also be really low if the correct algorithm isn’t nutted out.

So this is a few of the things on my plate…..and trust me when I say there are a lot more! Some of them will provide incremental improvements for clients (all good) while others are quite revolutionary concepts that are still being proved out.

If you would like to see something pretty amazing then come to our table at NamesCon on the Sunday afternoon. You’ll get a glimpse at ParkLogic Next and we hope that you like what you see.

So back to my thrashing problem…..I’ve allocated a few hours this afternoon to break the back of one of my big programming problems. And doing something like this is really the key to solving this type of issue. When you find yourself jumping from one project to another take a look at your list and ruthlessly prioritise it. It’s the only way that you’ll get the biggest bang for your time. So in a few hours’ time I’ll have an issue off my plate and I’ll secure the benefits for the business.

This does bring up another point….if you would like to propose a business concept to me then make sure that you have the one page summary that is backed up with a solid plan. I’ve had people try and talk me through an idea and this can be a lot of fun over drinks but if you’re really serious then give me something in writing that I can get stuck into.

I would also like to finish with the axiom, “If you want something done then give it to a busy person.” People that aren’t busy tend to push things off until tomorrow…..busy people, prioritise and get things done or they tell you they just don’t have the time.

I hope this helped you with managing your own challenging list. Domains are wonderful things that just keep on creating unusual and exciting opportunities!

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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How to Grow Your Domain Business

How to Grow Your Domain Business

I get asked, “Michael, how can I grow my business?” a lot. More often than not my reply often starts by saying, “You’re not going to like what I have to say….”

I’ve been in business for nearly 35 years and some things just don’t change. The first is that there is no such thing as a free lunch. In other words, if you want to eat then it’s going to take a lot of effort.

Escrow.com

So many of us get entranced by the mega-success stories that we never realise that behind the scenes there’s more often than not a person working 12+ hours per day. You go to a conference, hear from an inspirational business leader about their great success and wonder why you can’t be like them. What you haven’t considered is the fact that they have compacted 20 years of their life into a thirty minute presentation…..so everything seems so incredibly brilliant!

For example, my daughter announced to me the other day that she wanted to become a Youtube star (don’t we all). She’d found out about a Youtube star that is now earning millions of dollars in endorsements per year and thought that sounded like a great job.

Here’s the disconnect for her…..she doesn’t have anyone following her but the star has millions. To build my daughter’s business will take a LOT of hard work producing quality content and then climbing the social media ladder by swapping “likes” with other Youtubers. This will very like end up being a multi-year journey…..so a little disheartening for my daughter.

You really can’t get out of it, businesses take a lot of time, energy and effort to get going. In the domain industry, it’s not uncommon to have two year sales cycles to get a potential client to run a test for their traffic domains. This is even though it literally takes seconds to update a DNS....go figure?

Despite all the effort necessary to run a successful business is almost deceptively simple. All you have to do is add value for someone and then repeat, over and over again. The minute you stop adding value or repeating then your business will struggle.

Too many people spend too much time working on businesses that fundamentally don’t add any value. This is exactly the same in the domain sales industry. I’ve seen so many portfolios that the owner has faithfully renewed each year but never sells a single domain. The reason why is the domains aren’t adding value to any potential buyers.

Likewise, I’ve seen some domainers sell one or two domains per year and barely hang in there financially as they pray for a massive windfall to come and land on their head. It’s very likely it would be better to go and buy a lottery ticket and hope your numbers come up.

The reason why companies like Godaddy are successful is because they find buyers where they can add value and then they repeat the cycle time and time again.

Let’s compare this to the problems that Moniker encountered eighteen months or so ago. A lot of things went wrong with the company that caused both the add value and repeat aspects of the business to fall apart.

In comes new CEO Jothan Frakes and what does he focus on? Getting Moniker to once again add value and consistently repeating the value proposition for customers. Right now, Moniker is in the process of reinventing itself and I’ll be the first to say that I will not be surprised to see them become the domainer powerhouse registrar in the future. It will be a long journey but I’m confident the team will pull it off.

Another example of adding value and repeating would have to be Escrow.com. Their business is run entirely on trust and they have to repeatedly add value or their customers would leave in droves.

I was speaking with the new general manager, Jackson Elsegood, yesterday and he said since the recent acquisition of Escrow.com by Freelancer one of the first things they were working on was 24/7 support. He wanted to ensure Escrow’s global footprint would be serviced by global support. It was all a part of adding value to customers and being always available.

Likewise, as one of the founders of ParkLogic I provide every customer with my personal skype address. They can reach out to me at any time if they experience any difficulties. I wanted to be the first person to know if customers were having problems. In conversations with clients I’m always looking for how we can add value and then repeat it. At the moment ParkLogic repeatedly processes around 40 million pieces of traffic per day and we add significant value with each one.

So how do you develop a blog and make it successful? Write articles that readers find engaging and don’t just write the same thing as everyone else. Next, do this three to four times per week year in and year out…..Google will love all the new content!

About 8 years ago Whizzbangsblog started out as a big experiment. I wanted to see if I could develop a brand that was so “way out there” simply by consistently adding value. Many of the other blogs seemed to be repeating news (some do a great job btw) but I wanted to dig a little deeper and bring some business insight into what was happening.

So here I am, still enjoying writing and readership is consistent (thank you!). Within the space of around 30 minutes of publishing an article around 200 people have read it and overtime many of the articles have been read by thousands of people. I’m not trying to brag about the success but rather to use it as an example of how anyone can actually develop a domain into a business.

So how do you make your business successful? There are many parts of this which I will go through in future articles but start with adding value and repeat this for your own customers. It’s a simple formula that works!

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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How Domainers Get Into Financial Messes

How Domainers Get Into Financial Messes

So many business owners have an incredible desire for profit but so few actually understand why it’s so important or how to attain it. So I’m going to first ask a really dumb question, “So why is profit so important?”

At its core, profit is a measure of a business’s sustainability. If year after year a business is not profitable then it will ultimately fail. Yes, you can keep on raising capital but at some stage investors will stop investing and demand a return on their investment. This will either be in the form of a dividend or a capital increase.

Escrow.com

So in terms of a domain portfolio, unless you are earning a profit then your business will fail unless you (ie. the shareholder) keep on funding it through cash injections. This is very different from running short of cash to pay domain renewal fees….more on that later.

So the question needs to be asked, why do domain business often fail? I personally believe that there is a really simple answer to this question. Most domain businesses aren’t businesses at all. They have more of the characteristics of a hobby than a business where the owners are collectors rather than investors.

Just ask yourself the following questions:

1.      Do you have a cashflow?
2.      When was the last time you looked at your balance sheet and profit and loss statements?
3.      Do you have a clearly defined business model for each of your domains?
4.      When was the last time you cleared out non-performing assets?
5.      Does your accountant about how to treat domain names?
6.      Why is tracking both the purchase and the sales price so important for your business?
7.      What is the return on your investment and could you gain a better return elsewhere?
8.      How much do you value your time in your business plan?
9.      When was the last time you seriously considered outsourcing to free up your time?
10.  Do you understand the difference between cash and profit?

Let me tackle point number ten with a little story as it’s often really confusing for people to understand. It’s very easy to have a highly profitable business that doesn’t have any cash....let me show you how.

Imagine a domainer looks at their bank account and sees a whole lot of money has accumulated for the year from their domain parking earnings. They clap their hands with glee and go out and spend it all by purchasing a $30,000 premium domain that they've always wanted to own.

Sadly, even though they’ve spent the $30,000 in cash they actually can’t expense it. In most countries the accounting/tax rules insist that they take this sized item to the asset side of their balance sheet. Here’s the problem, let’s imagine they have $10,000 worth of expenses during the year. This means their profit is revenue less expenses or $30,000 less $10,000 = $20,000.

The government will put its hand out for their fare share of the profit. In the case of Australia, they want 30% or just under $7,000. But hang on! The domainer just spent the $30,000 and don’t have a spare $7,000 lying around.

I hope that this simple example illustrates the traps that many domain investors fall into. They completely confuse both cash and profit. This often compounds if they’re able to defer their taxes and can result in what seems like a double whammy if they continue to make the same mistakes.

So let’s imagine they managed to borrow some money from a friend to cover their taxes and this is secured against the $30,000 domain. If the friend is charging interest on the money then the domainer can expense it during the financial year that it was incurred BUT the capital payments will ultimately need to come out of the following year’s profit (not going to get involved with depreciation here). Yep, it’s starting to feel like a knotted ball of string already!

Suddenly, the ultimate business opportunity arises for their $30,000 domain. A major developer would like to partner with them to develop out the domain on a 50/50 basis. The developer is the ideal fit and they are absolutely convinced they’re going to make a killing. All they have to do is put their domain into the venture and the developer will match it with $30,000 of development.

Hang on a second……they’ve now essentially encumbered the domain twice. Their friend’s $7,000 is secured against the domain and if they default on the payments they won’t be too happy if the domainers gone into a partnership that involves the domain with someone else. At this point in time I’ve seen many domain owners say, "I just won’t default"….and try to slide the second transaction on through.

As time goes by, this scenario gets played out across more partnerships and more domains. Documentation of the transactions becomes scarce and before they know it, the wheels come off the cart and the domain owner is in a complete mess, defaulting on payments and trying to understand how they got into the mess they’re now in.

Fundamentally what it all comes down to is that the domain owner really doesn’t understand business but they love their hobby. They didn’t really know what profit is and how it’s different from cash. This level of naiveté is played out across all of their other business dealings.

Here’s a few sage words of advice, “Have a good account that you talk to regularly. Avoid all deals which involve forming equity partnerships…..they rarely, if ever work out.”

I’ll share more on business thoughts in future blog posts.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

Recent Comments
letsbehonestaboutit
I'm like a crack addict but for domains but end up burning most of money but cannot help buying them, i get caught up in auction w... Read More
02 December 2015
DA
We are working on it http://domainersanonymous.org/ we aren't done with the site just opened in fact plan to have it up and runnin... Read More
29 January 2016
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How to Run Your Domains as a Business

How to Run Your Domains as a Business

I recently had a great time speaking at DomainFest in Fort Lauderdale. It was more of a chat than a formal session and it allowed for me to share some of my experiences in the business of domain names. I thought that I’d share some of what was covered in this article as it could benefit many readers.

The first lesson in business is really simple, revenue less expenses equals profit. In my experience, in their love for their domains an incredible number of domain investors forget this simple equation. They have a little story about how they acquired or registered each of their domains and like Gollum from “The Lord of The Rings” they constantly say, “my precious”.

Escrow.com

Yes, your domains are precious but if you forget the fundamental business equation then you’re not running a business, you’re enjoying a hobby. That’s fine to do but don’t expect to get business outcomes if you aren’t running your portfolio as a business. If you are running a business then you may have to drop a few domains into “Mount Doom”.

As much as I love my domains I’ve discovered that my wife loves my bank account far more. As she so lovingly puts it, “It’s very hard to cook a domain and serve it to the kids for dinner”.

The second mistake that many domainers make is to focus on the revenue side of the business to the exclusion of all else. These domainers are always holding out for the ultimate sale which is going to pay off the mortgage and allow them to sip margaritas on a far off beach. Seriously, for many of your domains you have more chance of winning the lottery than getting your asking price. My advice, get realistic with your pricing.

I was speaking to a domainer this past week and they were at their wits end because they had only sold a couple of domains in the past few years. They absolutely believed that their domains were worth millions. Here’s the problem, when the market tells you that your prices are too high then you can either listen or continuously fund the renewals out of your own pocket. It's your choice.

The biggest problem with the market is that it’s what we all live and die by. Promises and wishes are great but unless you actually convert a deal then they are pointless. I’ll quote my wife as she reminds me time and time again, “The deals not done until the cash is in the bank!” I couldn’t agree with her more.

If you aren’t selling your domains then either examine the price or your business model. For example, most domain sales are aimed at the small to medium sized business….I don’t know any businesses of that size with a spare $20K to spend on a domain. I know plenty that have $2K or $500 per month though!

Let’s get back to our equation and the other little factor that we have to consider, that is, expenses. Expenses go much, much further than renewal fees. Please, oh please, don’t forget to count the cost of your time. If you value your time at zero dollars then don’t be surprised when other people do so as well and waste a whole lot of it.

The time spent renewing your domains, keeping track of any PPC revenue and ensuring nameservers are set correctly is a direct cost to your investment. By the way, around 10-15% of your domains have incorrect DNS settings – if you don’t believe me then go and check. While you’re at it, don’t forget the costs of your accountant, any legals, bookkeeping etc. You may soon discover that your profit takes a significant hit.

Speaking of profit…..never get confused of the difference between cash in your bank account and profit. Just have a chat with the tax man and I’m sure that they’ll educate you on the difference. I’ve seen many domainers spend their cash only to forget about the fact that they need to pay their taxes.

Some of the hidden value in a portfolio can also be access via how you treat your domains for taxation purposes. My recommendation is to get some really good advice on this for your jurisdiction. I hate to say it but your little local accountant is unlikely going to cut it….there are just so many variables when it comes to domains.

For example, are they assets, expenses, contract rights or and expiring contract like an insurance agreement? If they are an asset then how is it that they can potentially be taken away from you? All good questions for an accountant in your own country.

Now that you have the most basic business equation under control let’s take a look at the next step….more on this later.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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whizzbang
this is great advice for crap domains like Whizzbangsblog.com
10 November 2015
mgilmour
Many years ago I founded whizzbangsblog off the back of my reputation in the forums under the pseudonym of whizzbang. it was a gre... Read More
11 November 2015
mgilmour
Couldn't agree with you more....but the market is what the market is. The challenge is to educate the market and create a competit... Read More
11 November 2015
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Practicing What I Preach!

Practicing What I Preach!

Why is it that the lights at an electrician’s house don’t work, taps malfunction at a plumber’s and domainers seem to forget why they bought their domains? At the recent domain conference in Florida I found myself sharing about domains and I thought to myself, “It’s about time that I reviewed my own portfolio!”

Escrow.com

Too many of us are so busily acquiring domains, working on projects or just having a good time that we risk forgetting that we’re actually running a business. Unlike a hobby, a business needs to have an outcome that involves some sort of profit….and in many cases it’s really simple to generate but we just don’t seem to bother.

Take me for example. A few days after they poured me off the plane (it’s a 30 hour journey from Fort Lauderdale) I began working through my personal domain portfolio and noted beside each of them what business model I was applying to them. This isn’t really that hard as there are 4 primary business models to think about.

1.      Traffic domains – revenue comes from domain traffic

2.      Stock turn domains – selling the domains for around $X,XXX

3.      High value domains – selling domains for $XX,XXX+

4.      Development

The next thing I did was contact Chris Leggatt at domain holdings and said, “Hey Chris, how’d you guys like to broker gx.com.au?” It’s a two letter com.au that would be great for a forex website as it could stand for “global exchange”. I’ve had the domain for years I thought that it was about time I did something with it or sell it off to someone that will.

I then looked at another portfolio that had about 30 three and four letter .com/net domains in it that once again I’d been happily renewing year after year. I called up Tessa Holcomb at Igloo (like Chris, she’s an awesome broker) and passed these across to her. If you’re interested in these domains then reach out to her at “sales at igloo.com”.

Making sure that my traffic domains were looked after was a breeze….after a review, I handed them all over to ParkLogic. Even though I’m one of the founders of ParkLogic, let me say that I eat my own dog food….!

The developmental domains are already secure in various businesses that are progressing forward quite nicely (whizzbangsblog.com is one of them).

So once the brokers have completed (or not) a series of transactions I will just move through my list. Anything that doesn’t have a business model gets rejected and dropped.

What am I actually doing here? I’ve essentially outsourced all of my domain management to experts in their fields. I’ve been in the industry for way too many years and there’s one thing that I’ve learned….don’t try and do everything yourself! Speak to experts in their fields and get them onboard working for you.

I will unabashedly say that I’m an expert in traffic monetisation….there’s very little I don’t know about how to squeeze every last penny out of domain traffic. Although I also know quite a lot about selling domains I pass the challenge onto experts who do this day-in and day-out. This will maximise my sales and also frees up my time to focus on other opportunities.

I said it at the Florida conference that one of the problems that domainers often have is that they value their time at $0. Don’t fall into this trap…..outsource your different tasks to experts and move on. Whatever you do….don’t be like the electrician and plumber!

Have a great weekend!

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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