One Thing I Learned During the Recession
I want to share something I learned during the last recession that might seem like common sense, but it’s something I think about often as the economy seems to be teetering on the brink of a second recession.
My largest source of income is flipping domain names. I don’t always have huge profit margins, but I make up for that in value. For instance, I would rather make 30% profit margin on a $25,000 sale than 300% profit on a $5,000 sale. This is common sense, but it means I need to invest in higher value domain names for the cashflow to continue growing my business.
During the recession, I got scared. I had no idea how long the recession would last, and my primary focus was maintaining liquidity and growing alternative revenue streams via my developed websites. I became far more cautious with my investments and was basically running scared. As a result, my income took a hit, which then made me even more nervous and cautious. It was something of a downward spiral.
Eventually, I made a couple of higher value acquisitions that I flipped, and I was able to turn the tide.
From this experience, I learned a valuable lesson. I always need to be investing in great domain names at good prices. Instead of buying mediocre names for under $1,000, I need to continue buying great domain names. Mediocre names are significantly more difficult to flip than great names. If I buy 10 mediocre names for $1,000/each, it’s far more challenging to sell those than it is to sell one $10,000 domain name. Similarly, it’s more difficult to make enough money to thrive with hand registrations than it is on higher value domain names.
Instead of spending money conservatively on hand registered domain names, save up and buy one great name when it’s available. Put your money aside and wait until the right name is offered for the right price. There seem to be a whole lot more people with 500 crappy domain names than there are people with one solid domain name. Every year, that means it’s $5,000 for renewals.
The next time you are hand registering speculative domain names, think about what I’ve written. This advice should especially be heeded by people who continue to register names but have never sold any before. Perhaps it’s the names you are picking? Stop making the domain registrars rich, and start building value for your own portfolio.
Don’t get me wrong – there are times when it’s smart to hand register domain names, but if you want to take your business to the next level, you’ll likely need to buy high value domain names at great prices.
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