Most domain investors are very familiar with the direct cost of domain renewals but from experience, I find that many are not as aware of many of the other costs associated with running their business. It’s very easy to get so enamoured with the thought of selling one of your domains for a million dollars that you forget that time is ticking by and costs are mounting up.

There are two types of costs for any domain investment business. Direct costs are those that include, domain renewals, accountants, lawyers AND your time. I want to particular highlight your time as it’s often the forgotten or neglected cost.

Many domain investors have another job that puts food on the table for their families and they end up running their business more like a hobby. It’s fun finding domain names and making a few bucks on the side either through traffic revenue or selling domains but the question that all of us needs to answer is whether we are running a business or enjoying a hobby.

Let me be very blunt here. If you value your time at zero, then you aren’t running a proper business at all. You need to be tracking the number of hours you spend managing your domain portfolio and attributing an hourly rate for your time. As well as being prudent it will help you work out if your time would be better spent in some other activity rather than on your portfolio.

I’ve written about this before but I’ll mention it again. It may be more cost effective to outsource all of your domain management to external experts so that you can focus on other projects. For example, developing a domain into a profitable business.

Strangely, the other cost I would like to highlight that is often ignored by portfolio owners is tax. I should state up front that I’m not across the tax laws in every jurisdiction and I would highly recommend you seek your own professional advice.

That being said, if you buy a domain name for $100 and sell it for $1000 then you have a capital gain of $900. Not so surprising, most governments want a piece of that windfall.

Some investors have done some fancy accounting with their portfolio by burying these types of gains in offshore tax havens. I don’t know about the rest of the world but the Australian government is really cracking down on this type of behaviour and throwing around words like “fines” and “jail time”. Both are never good to be on the receiving end of.

I personally believe in legally minimising my tax but I also do whatever I can to be squeaky clean. If I have the tax book thrown at me then I want to know that I’ve made an honest mistake rather than tried to dodge an obligation. As an aside, there’s something pleasant about sleeping soundly at night knowing that I’ve paid my dues.

A number of years ago I was chatting to a major domain investor in the industry and the subject of tax came up. They calmly informed me that they hadn’t put a tax return in for the past seven years. I must admit that I didn’t know what to say as I pay my tax every quarter. The conversation quickly moved onto another topic.

If you don’t pay your tax, then your business has now become a ticking time bomb that has the potential to bury you in the future. I remember receiving a call from a domainer that was desperate to sell a portfolio because the sheriff was about to repossess their goods due to them not paying tax….never a good position to be in.

I’ve used an account since my first business over 30 years ago (showing my age here). A good accountant and lawyer for that matter are worth their weight in gold while bad accountants/lawyers can cost you everything.

I’ve learned that when selecting an accountant there are three rules which I apply:

1.      They need to be prepared to understand my business
2.      They are part of a firm (just in case the individual leaves).
3.      They are absolutely ethical.

When dealing with accountants and lawyers always, always and I repeat always, share everything with them. The level of advice they provide can be greatly influenced by the information that you provide them. Don’t ever be embarrassed because you forgot to do something or potentially did a “questionable” deal…..these are people that are in your corner fighting for you. Tell them everything as it will be kept confidential.

In the next article I'm going to discuss what I do with my domains and renewals followed by many of the hidden costs in running a domain portfolio.

I recently had the privilege of interviewing Jackson Elsegood, the general manager of Escrow.com. During the interview we discuss all the latest news from Escrow.com of what they have been doing and what they plan on doing in the future.

Escrow services are a critical part of the domain ecosystem and Jackson expresses Escrow.com's ongoing committment to the domain space. I hope that you enjoy the relaxed interview and gain some new insights for your own domain business.

A client recently purchased a .XYZ domain for an application that they were developing. Everything was working fine until today when suddenly the domain stopped resolving. It just so happens that in their infinite wisdom the .XYZ registry had decided to suspend the domain. So what actually happened?

When you sign-up for a .XYZ domain name you are coming under the terms and conditions of the registry. A part of the terms is they have the right to suspend a domain if they deem the domain is being used for inappropriate reasons. The stated goal is to keep the .XYZ namespace safe…..sounds interesting.

Here’s the problem. For the domain in question SpamHaus, Google Safebrowsing, SURBL, URIBL (all recommended by the registry) flagged the domain as safe. Virus Total has 68 sub-organisations that they relate to and one of these organisations flagged the domain for possible phishing reasons.

Why was this the case? It just so happens that at some time the domain had been sent to advertising networks and I’m guessing that one of these networks may have had a problem with a “spam advertiser”. This sometimes happens and the networks immediately kick these types of advertisers out. In the case of the .XYZ domain this resulted in it being banned.

What was really annoying is that neither the registry nor the registrar communicated anything like, “I think you may have problems with your domain. If you don’t do something, then we’ll have to suspend it.”

One day the domain was working and the next day it wasn’t. To track back to a registry suspending the domain wasn’t trivial when the client was in the middle of a development cycle.

And the client’s registrar wasn’t immediately helpful.  First came the “it isn’t resolving, check with your hosting provider”, then lots of apologies while the client pushed back that the problem was in the DNS somewhere, and finally the registrar pointed to the status of “Server Hold” in the Whois information and pointed our client to the unsuspend site for .xyz.

And on further quizzing the client’s registrar indicated that this was a common occurrence with .XYZ domain names…..which didn’t sound very good, and would have been useful if that was the first thing they checked.

Just for the record, getting a domain unflagged by some of these “monitoring companies” is next too impossible. In fact, at one stage I had whizzbangsblog.com flagged by a company (no idea why) and after months of filling out forms I gave up. In the end I took the attitude that if Google flagged my blog as safe then that was good enough for me!

So what’s the problem with all of this? If any .XYZ domain is flagged by any monitoring company in the world (false positive or otherwise) the domain can be banned. In fact, given our client’s experience, if the domain is not banned then the .XYZ registry is acting in a preferential manner and my guess this is breaking either their contract with ICANN or the registrars.

If you’re looking at your .XYZ domain portfolio and parking them then I’d think again. There is actually an obligation on the part of the XYZ registry to ban the domain and there goes any potential revenue (small though it may be) to help pay for the re-registration costs.

So let’s imagine you’re a business (like our client) working away at developing a brand on a .XYZ domain. A dinky little backwater monitoring company has a glitch in their software that flags your domain as suspicious. Immediately your website is taken down (by the registry) and as a business owner who knows nothing about phishing etc. you’ve got to find out what the heck happened while you’re losing sales! This is crazy!

In the end, our client gave up with the .XYZ domain and went with a .COM….probably what they should have done in the first place. There’s many good reasons why .COM is so big and one of them is they don’t behave in this ridiculous manner.

One of the great things about the Internet is that it allows everyone to express and opinion on whatever topic they desire. One of the bad things about the Internet is it allows anyone to express an opinion on whatever they desire, regardless of whether they have any authority to do so.

I was debating whether I would write on this topic as it can be somewhat controversial as some people may view it as a censorship on free speech. I’m actually all for people being allowed to express themselves but as readers we need to be really careful about who’s advice we listen to and adopt in our businesses.

For example, the other day I was having a really “vigorous debate” in a forum about monetising domain traffic. The person I was debating was very outspoken and to be quite honest with you at times insulting and sarcastic. In the end I found out they did about thirty cents a day in traffic revenue. If you didn’t know this then you could be mistaken into thinking they were an authority on their topic and earning millions of dollars per year.

There’s a really good saying which goes somewhat like the following, “By their fruit you shall know them.” This means that you should look at what a person does and has achieved rather than just what they say. On the Internet anyone can speak but very few people can do.

The classic book, “The Richest Man In Babylon” puts it this way. Go to the jeweller to learn about jewellery and the baker to learn about baking bread but you will lose your shirt if you get advice about investing in domains from the brick layer.

Was the author of the book having a go at brick layers? Heck no! What he was saying was be really careful who’s advice you apply to your business. Seek out a somebody, not an anybody as you will save yourself a world of pain.

I’ve been involved directly in the domain industry for over 15 years and during that time I’ve seen people come and go. Many have been like meteors screaming, “Hey look at me!” only to burn up in their own self-importance and disappear. There are some that have stood the test of time and are achieving amazing things.

When I attend domain conferences I like getting alongside some of the really successful “doers” in our industry to get their thoughts on a wide range of topics. These people are often the quite ones that sit in the corner and generally mind their own business while they finalise deal after deal. These are the people that I absolutely love and cherish listening to. Many of them I call my friends.

Does this mean that we shouldn’t listen to new comers to the industry? Absolutely we should but look at their “fruit” before you decide to completely adopt their business idea.

If you are new to the domaining my suggestion would be to get alongside those investors that have survived and flourished in the ups and downs of the industry. Don’t be afraid to pay for good advice and be very discerning whom you listen to. Remember, we have two ears and one mouth. Act in the same ratio.

I must admit that I was really nervous writing this title today because it suggests that I have the answer to the underlying question of “How can I be successful in life?”. Well, I hate to disappoint you but I don’t have all of the answers…..but I do have some.

To me, success has less to do with bank accounts and more to do with relationships. The most important relationship in my life is with my wife. Roselyn and I have been married for nearly 30 years (big anniversary next year!) and like any marriage it hasn’t always been smooth sailing.

We’ve had difficulties to overcome but over the years we’ve discovered an amazing secret. It’s really simple, “Don’t be selfish”. What we found was the more we tried to meet each other’s needs the more our own needs got met. It’s actually pretty cool.

I’ve seen a lot of marriages fall apart and normally the parties say at some point that their spouse didn’t meet their needs. My advice, stop focusing on you and focus on the other person. The risk here is what happens if they don’t meet your needs still…..trust me, they will. This isn’t a solution for all relationships but it goes a long way to helping out.

So likewise, I try and bring this mindset into business relationships. How can I help out this client even if it means I don’t get the business? For example, just today I recommended to a domain owner that they should keep on doing what they are and not move their domains to ParkLogic. They were in a unique situation and trying to twist their arm would have been a disservice.

What focusing on your relationships forces you to do is take a long-term view. I may not do a deal with someone today but there’s always tomorrow. It means you’re focused on building trust rather than just your bank account.

What ends up happening is you do business with good quality people where you have developed strong relationships. Like a marriage, those relationships will be tested at times and if they are strong then they will last for years and years. It also means that you’ll have a lot of fun in business with great people along the journey.

Anyone can do transactions, buy or sell something to someone you will never see again. Business is different. It’s all about repeat transaction where people trust each other and look out for each other.

I have the privilege of counting many of the people that I do business with as friends. They may run parking companies, hold large portfolios or monetise traffic in unique ways but what’s special about our friendships is there is a commitment to the relationship that is beyond just business.

Next time you talk to one of your partners, business colleagues, clients, children or wife ask yourself, “What can I do for them?” You may be amazed by their response.

Have a great weekend!