Today I thought I’d describe another example where outsourcing + having a plan = money. The inspiration for this blog post came from this thread over on the Warrior Forum.

The original post, by “The RedFox” describes how he build a $5,000 per month business by creating about 200 websites and generating revenue via Google Adsense. In case you aren’t sure what this means, he is setting up wordpress sites, posting about 5 content-rich articles, and then placing Google text ads on the site.

The Process:

  1. Search for keywords that have a CPC (cost per click) of at least $1. Below this it is hard to make enough revenue to justify the investment in a site.
  2. Filter the keywords so that you are left with phrases that get at least 1000 searches per month (exact match)
  3. Determine if the keyword presents an opportunity for a top 10 ranking. Figuring this out will seem complicated if you are a novice, but within a couple weeks you’ll have a very good feel for what is rankable and what is not.
  4. Purchase a domain where the exact keyword is in the domain if possible.
  5. Setup WordPress on the site. Do all of the usual SEO setup for the site (takes very little time)
  6. Publish 5 articles to the site. Each article goes after the main keyword. I assume these are published as “posts” and not “pages”. At least that is what I would do.
  7. Monetize with a large rectangle add directly below the title of each post. Also put a 160×600 skyscraper in the sidebar and a link unit near the navigation bar at the top of the page.
  8. Build a few links using article marketing and/or Web 2.0 sites. Personally I would use Unique Article Wizard for this.

The Economics:

He spends $10 on the domain, and about another $50 for all of the articles that go on the site. He generally outsources this but sometimes writes them himself. Doing the work yourself is a good idea for the first site, just so you understand what is involved. But once you understand the tasks, it is much more sensible to hire someone else to do it for you.

Income: His budget is about $60 per site and he considers it a success if the site does $15/month in revenue. Seems like small potatoes, right? Yes it does, but remember he has built about 200 of these sites now. So his average income per site must be about $25/month. If you think about it, this translates into perhaps 1 click per day from each site. This is reasonable if there are 1000 searches per month (30 per day), and you are on the first page of Google. Maybe each site gets 5-7 visitors per day and one single click. That’s a rough guess.

Return on investment:
His payback period (time to get is $60 back) is no more than 4 months. At that level, his return on investment is 200% per year. There are not too many stocks or other investments that can give you such as strong return.

How I Would Improve the Process

What RedFox has done is prove the model works, so now it’s about scaling it up. As I said before, if this were a new strategy for me I’d do everything myself for the first site. If I completely sucked at writing I would outsource only the articles but I would do the keyword research and site building myself. This equips you to teach it to someone else later.

Then I would ramp it up so that I had ONE employee working on this for me full time. I would expect him to be able to finish one site every 2 days including 5 original articles on the site and two articles used for promotion via Unique Article Wizard.’

Total cost $450 for 10 sites. After one month I should have about 10 of these sites built (average 21 working days per month). My total outlay would be about $100 for domains ($10 per domain x 10 sites) and another $350 for the employee salary (typical for a decent writer).

Income expectation of $150/month.
Let’s say we achieve only $15/month on average for all sites. Some are flops that earn nothing, and some earn $30+ per month. So $15 is a nice average. RedFox is clearly averaging $25 based on his comments. I’m being more conservative.

Scale it up with more writers.
I would add a 2nd employee for the 2nd month such that we’d now be launching a total of 20 sites in the 2nd month. The costs for month 2 would rise to $900 and be offset by $150 of income from the sites that were built in month 1.

After two months we should have 30 sites in total. We should be doing $450 in monthly revenue which more than pays for the first employee. At this stage, you’d still be cashflow negative because you invested $450 for the first 10 sites, and $900 for the next 20 sites ($1350 total) but only generated cash of $450 in those two months. So you have a working capital decision to make.

Do you flatten out and only build 20 sites per month? If you do, after the fourth month you’ll have 70 sites active and earn about $1050 per month, clearly putting you in cash flow positive territory. Every month that goes by creates more passive income.

Or do you double up again? Start building 40 sites per month at a cost of $1800 per month. If you do, you’ll have 430 sites (first 30 sites + 40 x 10 months) after the first year is up. You’ll have spent about $19,350 in site building costs and you should now have monthly income of $6450.

Does the upfront investment scare you? Fine. Stick with building the first few sites yourself and then hire ONE person to grow your business. You’ll still build 120 sites in the first year and you’ll be well on your way.

Tools to Consider

First, you need to think about hiring employees, and I recommend using

Second, you need to be able to build WordPress sites quickly, such that they are Adsense ready. The FlexSqueeze theme is absolutely ideal for this.

Third, you need an article marketing strategy to promote your sites (building backlinks). I recommend Unique Article Wizard for this. It’s what I use.

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