Domain investing: Liquidity and cost control are key to survival

Posted by: Admin  :  Category: Domain Names & DNS

Linux Cpanel shared hosting: 600 GB disk space, 6 TB bandwidth, free domain, unlimited databases and ftp accounts, web hosting cheap and pro at Hostony

Business costs or expenses and liquidity do matter in every business. In every brick and mortar business, there is usually the prospect of tying capital in the form of slow moving inventory. Think of a car dealership that has purchased 10 cars each worth USD$ 30k which equal to USD$ 300k in total committed capital. Depending on the size of the car dealership, that might be a significant dough tied in car inventory. If the business owner has borrowed a loan of $ 300k at a simple interest of 5% p.a. then he still has to  generate sales volume to settle the outstanding borrowing interest expense of $ 15k plus principal per annum. In order to maintain sufficient liquidity or cashflow, the dealership needs to design an aggressive marketing campaign to better it chances of survival. This is another expense in the form of marketing. I will assume that the owners of the car dealership were smart enough to do due diligence and determine market demand for the cars (not sure what model) before investing $ 300k capital. If the marketplace doesn’t respond positively to the dealership’s marketing campaign, this could spell doom for the business. Now back to domain names. As every internet marketer scrambles for their share of the few advertising dollars on offer, it is becoming apparent that certain groups are winning while others lose. It is difficult to say whether domainers and SEOs are losing more than web developers. Let us take domainers for example. I think domainers with relatively large domain portfolios worry about annual renewal fees. If a domain name does not pay its cost, then its makes no business sense to keep it. If you have a high quality gTLD (CNO) type-in traffic domain portfolio build many years ago chances are that your domains cover their annual costs. However, for speculators or domain investors whose acquisition strategy could be driven by brandability and keyword quality, then circumstances might be a bit complicated. Domain investors should keep a close eye on their cashflows. This could be a challenge especially when you they have to rely on a lucky deal/sale every blue moon. In order to survive, then I would think that domain investors should focus on quality not quantity. For instance for every 5 domains sold for say $ 2k each make sure that you invest $ 6k in one quality name and keep the other $ 4k in the bank for a rainy day. Do not follow the crowd in your investment strategy – do your homework and due diligence! For example, ICANN is just about to allow registration of hundreds of thousands of new gTLDs (.brand, .generic, .communities). This will have serious implications on type-in traffic (domainers prepare for it).  Any smart domain investor would not waste money in some of these extensions without a clear exit strategy. In the meantime, you should not think that domain flipping will last forever. Learn SEO and develop one of your best keyword domain names into a sustainable business. I know it is easier said than done – let us go back to work. Good luck!

Linux Cpanel shared hosting: 600 GB disk space, 6 TB bandwidth, free domain, unlimited databases and ftp accounts, web hosting cheap and pro at Hostony

DNSblogs.com

Linux Cpanel shared hosting: 600 GB disk space, 6 TB bandwidth, free domain, unlimited databases and ftp accounts, web hosting cheap and pro at Hostony

Leave a Reply

*