Building from Nothing, not Building from $5,000

I would never ever recommend that someone new to Internet Marketing spend large sums for a coaching program, software package, or any other huge investment into online business. When I first began working online I did invest a bit more money than I had earned – that’s a bit hard to avoid in the beginning […]

I would never ever recommend that someone new to Internet Marketing spend large sums for a coaching program, software package, or any other huge investment into online business.

When I first began working online I did invest a bit more money than I had earned – that’s a bit hard to avoid in the beginning when you are still figuring things out, getting your sites up, and maybe making a few pennies on pay-per-click ads.

But I started with under $50, not with a $5,000 coaching membership.  My start-up investment included the cost of Holly Mann’s Honest Riches, the cost of web hosting, and the cost of a domain name.  That was it.

After my sites began to earn some consistent income, I began to use that income to invest in other products, services, or information, which I could use to expand and improve my sites, increase my reach, and thus increase my income.

On a simple Excel grid I kept track of everything I spent vrs everything I earned.  For a while, even when I was earning some money, I was sometimes “in the red” a bit, in terms of having invested more than I earned.  But this was something like $100 in the red at the worst, not $5,000.

When I see or hear of people promoting coaching programs for new Internet Marketers, for $5,000, I cringe.

That does not mean that there is never a good time to invest $5,000 in your business, online or otherwise.  But where Internet Marketing is concerned, the beginning is not the right place to start with big investments!  Unless you fall under an exception which I will explain below.

Here are a few of the reasons why I would never recommend that someone invest large sums when they are new to the field:

  1. How do you know yet if Internet Marketing is for you?  This is a unique field.  Some people are made for it, but some aren’t.  Internet marketing requires a passion, a persistence, a self-discipline, and a willingness to learn.  But most of all, if you don’t have enough interest and drive in the field, to persist long enough to begin earning a substantial income, you might wind up quitting before you start.  And you know what? That’s okay!  There is nothing wrong with dipping your toes in the water and taking them out if you decide that mountain streams are not to your liking.  Drive back into town and find the nearest heated swimming pool.  If you follow my metaphor – my point being, that some people test the water of Internet Marketing and then find it’s not for them.  Some jump right into it and keep right on going with complete enthusiasm – even if it takes them two years to make their first dollar!   But if you have made a huge financial investment and then find out that it’s not for you, you might have a serious problem.
  2. When you are new, you are less familiar with the field and can not differentiate easily as to which products or services you really need, and which will be the most useful for you in terms of Return-on-Investment (ROI).
  3. Internet Marketing is a big field and there are many forms of online business. You might eventually find that your heart is in blogging.  Or it might turn out you do great with running Pay-Per-Click advertising campaigns, or membership sites, or mini-sites, or some other form of online business.  When you are just starting out, you may not have found your place yet.  You could invest too much in a product or service which turns out to be in the wrong field and thus of little use for you in the long run.
  4. When you are new, it is more difficult to differentiate between scams and legitimate products and services.  When you become more familiar with the field you will be able to recognize these things much more easily.

These are a few reasons I can think of off hand, but you can probably think of more.

There is one exception I should mention.  If you have money to throw around and you feel like throwing it around, by all means, go ahead.  Just be aware when you are throwing it around and when you aren’t.  If you are a multi-million-dollar hotel chain owner and you are considering trying your hand in Internet Marketing, $5,000 may be pocket change for you and it might even make sense for you to invest that when you start out, particularly when this investment might save you time.  In that income bracket, your time is much more valuable as compared to your money.  As long as you know that you might lose it if things don’t go as planned, and you are okay with that, then I would say, go ahead.

As a general rule, in Internet Marketing, I would ask yourself these questions before paying for any product, service, or information which is meant to help you earn money online:

1.  Does it make sense to me that this product can help me earn money online, and do I understand how and why this is?  Or am I just taking someone’s word for it?  (The answer to the first question should be “yes” and the answer to the second question should be “no!”)

2.  Can I invest this amount of money without putting myself at seriuos risk on some other front?

3.  If I invest this money, and lose it if things don’t work out as I hoped, could this situation be described as “disaster,” “life crisis,” or “financial catastrophe?” The answer to this question should be “no.”

I hope this helps.  If you meet a new Internet Marketer or Internet Marketer-to-be who is hemming and hawing about their first investment or purchase, please feel free to send them to this page.

This post was inspired by Disclaimer and What to Expect at a Marketing Event on Honest Holly.

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12 Responses to “Building from Nothing, not Building from $5,000”

  1. Mark Sierra at MeAndMyDrum.com
    July 9, 2009 at 6:38 pm #

    I cringe, too, Anna. 🙂

    Not only because people are buying into this sort of thing, but mainly because there are people out there that will charge what amounts to be a princely sum. Are there people out there that are worth it? Sure, but I feel there are far more people out there profiting from that tactic than actually earning their living from what they are teaching others to do.

  2. Anna
    July 9, 2009 at 11:22 pm #

    I understand Mark! I’ve wondered that myself sometimes. It would be interesting to ask them how much money they earn outside of the “teach others to earn money” niche. Some people are very transparent about that and I always appreciate when they are.

  3. Normal Joe@Video Marketing Tips
    July 15, 2009 at 5:10 am #

    I agree!! It’s definitely not needed to start out, sometimes not even once you’re going well depending on the course lol.

    But there are definitely things better suited for new marketers that won’t break the bank, honest riches being one of them.
    .-= Normal Joe@Video Marketing Tips´s last blog ..Twitter doesn’t suck it’s probably just you =-.

  4. Anna
    July 15, 2009 at 1:20 pm #

    @Joe – Exactly. There is no point in investing such huge sums and I personally think anyone suggesting a “newbie” (god I hate that word we need another one) do it has other intentions just besides making sure people succeed.

  5. Anna
    July 16, 2009 at 2:02 am #

    Hey Deneil, thanks for your input. I know exactly what you’re talking about. Well I do hope some new Internet Marketers find this post and I hope it helps them. It can be SO confusing for some people who are being told to go every which way after every other product … and thanks for visiting my blog! Hope to see you here again 🙂

  6. Deneil Merritt@Internet Entrepneur
    July 16, 2009 at 1:09 am #

    I am in no means a new internet marketer but I must say that if I was you would have me made really think things through after reading this.

    I completely agree with your article. There is no need for a large investment at the very beginning. I started at $0 and took the time to learn the ends and out. I am still learning things as I go. Since I started at $0 I grab a lot of free reports and ebooks. Spent a lot of time on webmaster forums. (More than I should have) Everything turned out ok. Since I have the budget and know what I need and don’t need. I can make the right choice on what products to buy to help my online business.

    Sorry for the long comment.
    .-= Deneil Merritt@Internet Entrepneur´s last blog ..The Power Of Leverage =-.

  7. Rahul
    July 22, 2009 at 8:01 am #

    I started from 0 $ now earning constant dollars. and learning new things.
    .-= Rahul´s last blog ..Blogging Earn Cash For Life =-.

  8. Ruri @ Free online article directory
    November 22, 2009 at 5:28 am #

    I am half agree half not. When I start online business. I think it best if we put our business correctly on the first time. We should also provide good amount of investment for education and the right tools. maybe not up to $5000. I believe there are cheaper course out there. If we don’t spend our money on education or course, we will need long way to get to the result we want. In the end, we spend a lot in time and hosting. Having the right tools also will have faster our business to the top.
    .-= Ruri @ Free online article directory´s last blog ..Finding the Right Health Insurance Policy =-.

  9. saad@live soccer streaming
    December 21, 2009 at 8:36 pm #

    i agree with rahul , there are many teenagers like me who would start a site for their love of nything like i started a site on soccer, adsense doesn’t pay me great , i get 10cent per click but i love getting the feedback from ppl and i like to help people by providing evrything but again i am not making nything out of this 🙁 i wish i could have started a site on some other niche and worked on it, i have gotten good seprs but no use…

    Regards,
    .-= saad@live soccer streaming´s last blog ..Kazma Sporting (1) – FC Barcelona (1) – Friendly – Monday, December 21, 2009 =-.

  10. Anna
    December 22, 2009 at 11:27 am #

    @saad – It’s important to get practice, and sometimes, starting out with a simple site in a subject you are knowledgeable and passionate about, is the best way to gain a beginning familiarity with internet marketing as a field. Remember, even some of the most successful people in history had to persist quite a long time before they reached their dreams, and it’s astounding how many failures some of them ran into along the way.

  11. Vilma
    January 18, 2010 at 4:31 pm #

    Hi Anna,
    I am fairly new to Internet Marketing. I really feel that a lot of more experienced & successful internet marketers are preying on newbies like me. When I started out 3 months ago, I believed all the promises of the Super Affiliate promoting a very popular affiliate membership site with 8,000 members. After paying for a year’s membership worth almost $350, I realized it was a big mistake. Almost every newbie posts about being overwhelmed, frustrated and lacking in direction. There is a lack of learning structure. The site owners hardly answer forum questions/comments. The sad thing is that they would not give me a refund. Hard lesson learned. I still log-in to that membership site occasionally after realizing it was a waste of my time. I continue learning and found another IM learning program (Commission Ritual) that has helped me tremendously move along. No, I am not affiliate of Commission Ritual but I highly recommend it.

  12. Anna
    January 18, 2010 at 4:42 pm #

    @ Vilma – What was the popular membership site you were so disappointed with? The reason I ask is because I sometimes am asked for advise from new marketers on which services to use (or not use), and any information I have can help me to give the best advice. Additionally, readers of this blog have an earnest desire to know what does and doesn’t work well for others. (But if you don’t want to post it here, you can also email me.)

    I am glad to hear that you are finding success with Commission Ritual. I personally have no experience with it.

    I believe that earning money online as a marketer was a lot easier 4 years ago, when there was a lot less competition. Also, a lot of tactics which worked back then are now considered spammy and no longer work well. It takes persistence, good sense, and the ability to follow a given course instead of dispersing off into all different directions. Building a business is building a business – whether offline or online, and it doesn’t come in a box.

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