Risk and reward of blogging business

Risk and reward of blogging business

Every business investment comes with risk and certainly blogging is no sure thing. The risks in creating a business out of blogging include:

1. Choosing a Low Potential Niche:

Perhaps the biggest risk you run is creating the wrong blog. If you start a blog in a niche that has limited potential either because of the audience, the competition, or the revenue potential, then you create a significant impediment to success. You can shift the blog, reinvent it, invent a new way of finding revenue, trounce the competition somehow, or grow the topic’s audience ... or you can choose a niche with strong potential to begin with! We’ll deal with selecting a niche in the next

2. Not Producing a Popular Product:

Assuming you’ve picked a good niche to blog in, you still run the risk of producing a bad product. Maybe you hire the wrong staff, maybe you don’t figure out what sort of content people want, or maybe you get the frequency of publishing wrong. There are plenty of factors that go into a good blog. The best way to learn about them on an instinctive level, is to read and think about other blogs in your spare hours over a reasonably long period of time. You’ll also get to read about what goes into hiring and content in later

3. Competition:

Every business has competition of one sort or another. It might be other blogs or it might be traditional media. If your business grows beyond blogging, then it might simply be other service providers. Competition vies for audience, for revenue, and ultimately for dominance. Even if you scope out a niche very thoroughly and deduce that there is little competition, you can never account for the competition that is sitting in a garage somewhere plotting and planning their strategy for domination.

Aside from thorough research, the best defense is to be on guard all the time, to always be looking for ways to be the best, and to think about ways to differentiate your product from your competitors.

4. Running Out of Capital:

The simple reality of business is that in the beginning you will burn through your cash with little or no return. Later in this book, you can read about three case studies from my own experience where you will see that each blog took many months of losses before hitting break even, and that one set is in fact still burning through cash!

To combat this you’ll need to make sure you have a reasonable amount of capital to begin with. You’ll also need to look for ways to get some revenue as fast as possible to help slow the losses.

You’ll need to constantly evaluate whether you are on the right track, whether you can save money somehow, and how much longer you can last.

5. Market Conditions:

No one can control the broader market conditions. At this point in time, blogging looks to be a good bet with lots of growth potential and more and more advertising moving online. Whether this is true, whether it lasts, who knows? The most important thing is to keep your finger on the pulse. Stay up to date with tech blogs, advertising blogs, blogs for bloggers and publishers, and stay informed. If you feel a change in market conditions coming, adjust your business plan to compensate.

If you think there are lean times ahead and you are low on capital, pull back on your plans. Conversely, if you think there’s a boom coming in a particular niche, then you might ramp up to take advantage of it.

While blogging is not without its fair share of risks, there are also plenty of rewards. First and foremost is the satisfaction of running a successful publication. Watching your readership grow, seeing comments and discussion happening on your site, hearing from readers who enjoy the site, and seeing link-backs from sites you respect are all incredibly rewarding.

On a monetary level, a blog business can grow very large. One of the earliest blogging companies, Weblogs Inc, which included powerhouse blogs like Engadget (http://engadget.com) and TUAW (http://tuaw.com), sold for a reported $25m to AOL in 2005. Another high-profile sale occurred in 2007 when environmental blog Treehugger (http://treehugger.com) sold for $10m to the Discovery Network.

While a big sale to a listed company isn’t on the books for every blog, it’s certainly possible to do well purely on operating profits and revenue. In the case studies in this book, you’ll read about two blogs that I’ve worked on which have been fortunate enough to hit profitability and turn over enough cash to grow other businesses and to expand themselves to bigger revenues and larger audiences.

In fact, later in this blog we’ll look at how a blog can not only become very successful in its own right, but can also become the engine that drives new businesses such as blog networks, apps, services, or products like books and job boards.