A fairly common question I get is how much should I reinvest in growing my business every month? There’s really no easy answer to the question and it depends on quite a few factors but I’ll do my best to outline a few ‘profiles’ that you might fit.

You Have a Single Site Sales Page for a Product > $10

You have a long pitch, a few testimonials, and eventually collect an email address and later sell a product or sell your product right on the spot. In this case your investment should focus on no more than trying to bring potential customers to your site. Your brand isn’t extremely important but your traffic is. In this kind of scenario I usually invest roughly 30% back into the business. Basically every 3rd sale you make, take that money and experiment with driving more traffic to your site via paid reviews, Yahoo or Google Ads, or paid links. Businesses such as this can get great results from free search engine traffic, so make sure you’re also building up organic links to your site with the anchor text you’re optimizing for.

You Have a Small Informational Site and Depend on Ad Clicks

You have a small site, probably running a content management system like Wordpress, and you have a few articles on anything. Suppose it is a site about tennis.  You would probably have a few articles on proper technique, the world’s best players, equipment reviews, and general information on the sport. All of your revenue comes from qualified visitors clicking ads related to the topic in either a PPC (pay per click) model like Google Adsense or commission based ads from selling products like racquets and tennis shoes through places like Amazon.com. I can almost guarantee a positive return on a site like this. The key to reinvesting into this sort of business is to have a lower acquisition cost vs. click return from Adsense or your favorite advertising service. For example, lets say your site about tennis earns you $0.25 every time someone clicks an ad about tennis. If you can figure out how to bring in visitors for $0.10, you’ll earn $0.15 on every click, and be able to scale accordingly. Spend $100 on clicks and you’ll bring in $250. Joe provided some great tips on how to find keywords to target in the post How to Dominate the Google Search Results. An important factor here is to find the ’sweet spot’ where your earnings and traffic are maximized. I’ll post more on that later.

A Forum/Social Network is the Heart of your Business

You rely on others to generate your content for you. Without visitors your site would die, and you need your users to discuss, share, and spend time on the site. Reinvestment is essential to keep the site going. Long Tail keywords in search engines are your path to success. It is possible to boost your traffic in the search engines by taking a closer look and investing more heavily in acquiring traffic via these keywords. ROI on a forum can be lucrative if you can maximize your new visitors from free search engine traffic. In this type of scenario I usually recommend investing up to half your revenue (50%) back into the business. It is essential that your forum be sticky and hangout place for your users. In order to make this happen you’ll need to keep things fresh, and this takes investment.

Conclusions

Any business will require some sort of investment for optimal success. Find the right mix that works for you and don’t be afraid to experiment. The best results often come by accident!

I’m glad to be posting again, I’ve been in Washington DC the last few days picking up a car and it was quite the drive back to Canada. Here are some pictures!

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