Making money online - myth and reality

I went online, did a bit of writing and became rich overnight.

You can read such success stories, in books or e-books, sold by people who claim to have made it. Their success model looks like this: “How to make money online – buy now”

Most stories are tales we don’t know whether or not to believe. They are written to make you believe and to get your money and leave you back with the illusion that there is no way to make online money other than that.

Yet there are more ethical possibilities to make money online while working from home, and it is possible to make a decent income from it. However, there are some misconceptions around as to what is involved and how much money you can make in a given time with a given knowledge and effort.

A big fascination about internet money is the myth of passive income. You work once and earn forever.

Passive income feels unreal, and once the first small amounts start dripping in, we like to forget, how it all began. How much time, how much effort and how many mistakes we invested in order to earn those few dollars or Euros or pounds at the end of the month. We seldom put our income into relation of our initial time investment, and realize that the income is not so “passive”.

Passive income is the harvest from earlier activity, the payback from an investment in time and/or money. Calculating our income per hour, your will notice that it takes awhile before our hourly income becomes positive and grows as time goes by. We would love to believe that this flow of payback would go on for ever and dream the dream of “money came in abundance and they lived happily ever after”. Unfortunately this rarely comes true and most of us cannot afford the luxury of staying passive for the rest of our lives.

Still, there are successful people out there who manage to earn their living or even more by working online, with and without passive income schemes. What can we learn from them? What is their business strategy? What is their key to success?

They have a business purpose, they have a strategy, they set goals and they work hard and purposefully to achieve them. Working online is like a small business, do the same thing you would do if started your own business. What is your purpose, your goals, your strategy, your business plan? Who are your target audience? How do you address them best? What is the investment you can afford to make your business take off one day? How does this all fit the rest of your life?

1. What is your purpose?
   Why do you want to work? Why do you want to work online? Why do you want to work from home?
   For example, when I read through hubs and comments it seems that it is not only about making money. There are other underlying motives: dealing with topics you enjoy or your are passionate about, learn to write, learn to web-design, learn from your experiences, interaction with the community, autonomy and freedom to choose your work and topics, the time to work, the amount of work to name a few. Your purpose deals with the underlying values and motives that drive you to work or start an online business (as opposed to an employed job). You may notice that money is only one of your goals, and maybe even conflicting with other priorities in your life. List all the drivers that apply to you.
2. What are your goals?
   Your goals derive from your purpose or drivers. While purpose deals with the “why”, the goals are translating this into the “what”. What do you want to achieve with your online business? What do you expect to get out of it? List your goals in order of importance or priority.
3. Conflicting goals
   You may find, that you have some conflicting goals. There are different approaches to deal with goal conflicts: one is to set priorities and work on goals in a sequential way and focus all your energy on achieving this one goal. If this is making money, chances are there that you’ll be successful in making money. The other approach is to balance your most important goals, similar to the “work-life-balance” concept. This will slow down progress, as your energy is divided, which can work well, provided you adjust your expectations regarding quick success, and provided that you don’t have too many goals in conflict. You can mix of these strategies, depending on the goals and your personal situation and values.

SMART goals
Once you have decided which goal(s) you find worth going for, make them SMART. Concentrate at a maximum of two at a time. SMART goals are specific, measurable, attractive, realistic and time bound and build a bridge to your action planning. Choose the top 2-3 goals from your list, concentrate on the “must haves” and leave the “nice to haves” for later.

For example:
NOT: “making money online with Hubpages” or “Elance”
BUT “writing a minimum of 10 quality hubs each month with a traffic of at least X page views and Y clicks per month”.
OR “sign up for 3 freelance forums and work on X tasks / a value of Y Dollars per month”

NOT: “write many hubs in order to learn how write”
BUT “write 30 hubs in 30 days with an average hubscore of 75”

Then go ahead, do your work, measure the performance, compare with your goal and rework as necessary. Make your goals challenging but still realistic and give yourself enough time to achieve them. This will force you to learn from mistakes or absence of success. If you fail to set clear goals you will have an easy way out of your commitment at any time.

How much do you want to earn?
If one of your more important drivers is money then set yourself a goal of how much you want to earn and in which time frame. Do you want to earn some extra money or do you want to make a living by working online?
Then create a strategy and plan the steps how to achieve this. Relate your potential income to the time you invested, estimate your earnings per hour. If you want to make your living online: what is your minimum wage? The official US federal minimum wage is $ 7.25, and the states vary around this. Depending on your needs and your skill level you may want to see a potential to earn more in the longer perspective.

Some math
Say you want to earn 7 Dollars per hour to start with and increase your target as money starts to flow. If you start today, you won’t earn 7$ right away, but you will need a period of investment to e.g. find out how it all works, write your first hubs or blogs or articles, understand affiliate marketing and SEO (search engine optimization), and choose the forums you want to work with. So, your initial milestone will be when will you start to create a flow of income, and the second, when will your accumulated income amortize your investment so far? Reading the wisdom on hubpages, you may expect the first cash flow start after three months – if you work consistently for it. For example, suppose you work 6 hours a day to learn and publish quality, that makes an investment of 360 hours à 7 Dollars, in total 2.520 Dollars you will need to earn back on top of your targeted regular income of 840 Dollars per month. That is a lot of money to earn, certainly not a quick win, and it will require you to work very focused and efficiently with your goals in mind. Money will start coming in as you continue to produce, but be prepared for some patience until you have achieved your monthly target.

Look at the results of your calculations. If the passive income scheme won’t do for you, because you don’t have the time to wait for revenue, do something else.

There are other online opportunities, which give you a payout per project without too much of an initial investment. Check out the alternatives for regular or freelance jobs in the web and via your virtual and real networks.

If you want or need to work from home via internet, consider ghostwriting, translating, virtual assistance, book-keeping, data entry jobs, web-design, doing research or statistics, tutoring students, helping others to sell their stuff via ebay or Amazon etc.

You are still investing time to figure out how it works, how to bid, how to do the job in a way that is efficient enough to offer you a decent hourly pay.

Unfortunately it is not enough to determine, how much you want to earn.  You need to know what you need to do in order to get a cash flow going.

Going back to the example of writing online:

There are many hubs about how to write hubs, how to choose the right keywords and what else you can do to increase traffic to your hubs. There are more hubs revealing secrets about affiliate marketing and books for dummies and advanced professionals.  There are of course lots of other online opportunities and providers like Helium, Squidoo, Suite 101 etc. You will find plenty of discussion about them here on Hupages. In the end it is a matter of taste where you start, and how many of those you can serve well at a time. Do your research. Read it, do it, and evaluate your success and learn from it. The more you learn the more you will find a routine that generates money. It will not do to peep in, realize there is no cash flow in the first month and then leave to look for a different opportunity only to start over again.  

The same persistence required for other internet jobs. Most of them operate with a rating or star system which you have to understand. You have to earn the reputation, which will give you the bids.

Make your goals and plans specific and give yourself enough time to achieve it. If a goal is too big, break it down in smaller, more manageable steps. It is more motivating to achieve small milestones in regular intervals that to sit in front of one task that will take months to accomplish. Provide for small successes to keep your motivation and energy level up.

So, the success formula is

GOAL-directed EFFORT and PERSISTENCE.

Without a goal in mind, your will pick up some money randomly.

Without effort, you won’t improve your quality.

Without persistence you won’t get the payback to your investment.

Making money online is not different from freelancing or having a business offline. It is rather a different medium to deliver and communicate. You depend on what the market pays for your work. As an “online entrepreneur” you are responsible for your business and marketing strategy, achieving your goals by producing quality and marketing your products successfully. These are pretty much the same challenges every small business owner and freelancer is facing. Small business owners also need to understand SEO when they want to drive traffic to their websites. They need to understand the needs and behavior of their customers if they plan to advertise in magazines, brochures, communities or through networking. The basic skills you need to apply in order to be successful remain the same. The basic conflicts like work-family balance or the “do I want to live my passion or make money” remain the same as well.

The internet offers many advantages:

• It facilitates a quicker and wider communication and distribution,
• It provides you with quick feedback, which can help you to regulate your actions.
• Fast money on the internet is fast because the internet offers efficient payment methods, but earning the money it is less fast than spending it.
• The internet technology allows you to establish a home-based online business with a maximum of flexibility in terms of time and place while you are working to earn money.

The internet does not spare you to use your brain and to work for your money.

Of course individual experiences with making money online can differ considerably from each other. Feel free to share yours.