I was chatting with a friend of mine the other day and he asked me a question that in many respects stopped me in my tracks. “What are the keys to business success?” I paused before answering and I thought that it would be worthwhile sharing my answer with readers.

Vision
Having a vision is fundamental to providing a direction for your business. Without a vision you may be successful for a time but eventually you won’t know what problem your solving or even why customers keep returning.

A vision is less about having some grandiose statement that is pinned to a wall and more about the DNA of your company. It’s tackling the why you are in business more than what you are doing. If you can answer the why then customers will be drawn to your philosophy as much as your products.

Talent
Whatever your business is you will require some skills to become successful. You may not have all of the skills you need right now but over time you must be open to personal growth and acknowledge the fact that you don’t know everything.

Those businesses that have a vision for their future tend to create it. A vision isn’t just a plaque you put up on a wall but a rallying call that gets people excited. It’s inspires them to go “above and beyond” for not just the monetary rewards but because they are building something great!

I remember back in the early nineties I had a web development company. It was the early days of the Internet and people were only just getting online. There was one thing that I clearly understood and that the Internet was a global phenomenon.

Even though we were a tiny little startup I decided to inspire the team with a big and very audacious vision! It was, “We change the world!” Every time we published a website we could see people from all over the world going to it…..therefore, in our small way, we changed parts of the world.

One of the biggest challenges many businesses face is deciding which opportunities they should focus on and which they should leave for another day. It’s so easy to become seduced by one opportunity after another, only to find that none of them are concluded and their value isn’t realised.

Over the years, I’ve watched a number of businesses go bankrupt by mismanaging opportunities and becoming confused over what they should be working on. The owners didn’t make the difficult decisions to shelve a great idea, not do some development or say no to a fantastic potential partnership.

If you find yourself surrounded by opportunities and wondering which one you should pursue then there are a number of questions that you may wish to ask yourself. By addressing these questions then you’re very likely to gain a clarity to your thinking that will help you make wiser decisions.

Why am I in business?

This may seem obvious but it really gets down to the bedrock of why you’re doing what you’re doing. Some people get into business because they want to make money, others for the lifestyle and yet other individuals just want to create something. There are innumerable reasons for starting a business and the great majority of them are very personal.

Let’s imagine you enjoy the lifestyle provided by your business, then selecting opportunities that will take up all of your time is probably not a good option. Everyone assumes that all businesses need to grow….this is not always true and asking this question will help you come to grips with what you really want.

What does the business do?

Working out what you are good at and where you add value for clients is critical to understanding where your focus should be. Believe or not, your business can’t do everything.

I’ve walked away from a lot of deals because they would be a distraction to our primary business of monetising domain name traffic. I’ve had untold numbers of people approach me about partnering with them to develop an awesome domain but in the end, I inevitably way no. Developing websites just aren’t our thing right now….they may be in the future but not now.

So many domain owners believe they are domain managers, traffic monetisers, stock item salespersons and are awesome at selling their premium domains. Their time is soaked up with a multitude of tasks and although they are busy they really aren’t focused on what they are good at. To be quite honest with you, each of those tasks require specialised skills and to expect yourself to do all of them well is nigh impossible.

Where’s your business going?

Sounds pretty obvious but thinking about where you would like to be in the future is an important consideration that will have a direct impact on the opportunities you pursue. If you plan on becoming a domain monetisation specialist then you really have to ask yourself why you’re brokering domains.

Having a clear picture of what your business will look like in the future is the only way I know that will allow me to build towards that future. By not having a vision for your business would be like building a house without a set of plans.

Of course, there is only one thing worse then a lot of opportunities…..and that’s no opportunities. If this is your case then you have a very different kind of problem to solve and my guess is you’ll need to address it very quickly or you’ll end up burning a lot of cash.

So this past couple of weeks I’ve been working like mad expanding one of our product lines. It fits in with the three questions but even still my business partner wisely insisted that we do a check against the third question. This has brought crystal clear clarity to the project that would have otherwise not been evident.

These questions have really helped me stay focused on what we do at ParkLogic and I hope they can help you in your own decision making. I look forward to catching up with you all at NamesCon in Vegas.

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”.

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.