When I first started my online business, it was as a sort of hobby. I was basically looking for ways to boost my existing offline business income.

Unfortunately this was completely the wrong mindset to have. Treating my online business as a ‘make money online' hobby enabled me to lose money with almost every opportunity I chose because I didn't scrutinise the viability of the various opportunities I joined, and because I didn't fully understand the key principle involved in turning a venture into a reliable income source.

This is because online business is exactly the same as offline business, in that it relies on one all-encompassing statistic that determines whether your business grows or simply fails.

Most online businesses fail because they don't base their activities on this one statistic – the ONLY statistic that really matters if you want to succeed at this ‘making money online' thing you've started.

OK – so what is that statistic?

It's called ROI and it stands for RETURN ON INVESTMENT.

Whatever online business model you're involved with, this is the only thing that really matters in terms of whether you become successful, give up or just continue year after year with an expensive and stressful ‘hobby'.

If you're involved in investment, it's very obvious that ROI determines how well you do.

It is less obvious, but no less true, that ROI completely determines your success if you sell products online too.

Whether you have a biz opp, an MLM, an affiliate store, your own digital product or any other kind of home-based online selling business, ROI is the ONLY thing that determines whether or not you succeed.

Obviously, it's important from an ethical position that your business helps other people, but, in terms of whether it will work – ROI is all that matters.

OK, let's say you're a bit risk adverse and only use free traffic methods to promote your online business..

How does ROI affect you?

Well, simply because the thing you are investing is TIME, and if you have any sort of business acumen, you'll realise that time is the most valuable investment resource you have.

In order to have a successful online sales or affiliate business you just need 2 things:

  • a funnel (a ‘telling and selling' mechanism – eg. my site FreeBusinessBuilder.com)
  • some traffic (ie. people seeing the products presented by your funnel who are likely to be interested in them)

Both of these things are tricky but as long as you get both of them right – you literally CANNOT fail.

The funnel has to be coherent and effective enough to turn some of your prospects who see it into customers (and I personally believe it must do this without lies or exaggeration).

The TRAFFIC (and how well it matches your funnel) is where ROI becomes really important..

If you spend more on traffic than is generated by your funnel in sales over the course of your intitial lead capture and subsequent follow up sequence then your ROI is <100%. Obviously too many <100% ROI campaigns means that your business becomes unsustainable. We all experience these now and again though 🙂

If you spend less on traffic than is generated by your funnel in sales over the course of your initial lead capture and subsequent follow up sequence then your ROI is >100%. When you test a campaign and find that the funnel and traffic source is generating >100%, you are ready to scale your campaign. Scaling successful campaigns is what turns small ‘occasional commissions here and there' type marketers into real entrepreneurs.

I know you could say that investing ZERO on ad spend and therefore always earning at least 100% ROI on any campaign would appear to some to be an effective business model, but this is only the case if your free traffic campaigns are generating enough leads and sales to make them a worthwhile way to spend your time.

I know of several marketers who drive traffic by producing reams of content on social channels and YouTube,  or by reverse engineering SEO algorithms to make their content rank well for targeted and profitable keywords, but I cannot do it personally and I have tried.

You can also acquire a lot of advertising by rooting around online looking for free advertising opportunities, probably enough to make a fairly regular stream of sales but probably not enough for a full-time income, at least I would be very surprised if free advertising could yield a job-replacing income, although I have always been a bit too impatient to try anything like that, whilst I have no reservations about spending money to test potentially profitable new traffic sources and funnels.

Setting up at least 1 Good Funnel and promoting it with at least 1 Profitable (& Scalable) Traffic Source is literally the ONLY step you need to take to create a substantial and regular online income if you haven't already reached that stage.

Obviously, there is an element of ‘chance' involved in whether or not a particular individual seeing the offer(s) presented in your funnel will choose to make a purchase (or not).

However, if you measure ROI properly with a sufficiently large sample space, then this probability aspect becomes irrelevant.

In the same way that it is practically impossible to win the lottery 100 times consecutively, it is also practically impossible not to create a large income simply by correctly applying the ROI statistic to your online business.

If you found this post via this page, here is your promo code for the 10000 ad credits from FreeBusinessBuilder, Digiproducts, TargetProfits & RealityAffiliate:

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Peter Turner

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