Affiliate marketing can be a great business opportunity. It can provide you with a consistent stream of passive, often more than you ever imagined. One problem with affiliate marketing as a business, however, is that if it’s done incorrectly, your cash flow could quickly evaporate. This article discusses some steps you should take to make sure you affiliate marketing business is sustainable.

Making Quick Money

The great lure of affiliate marketing is that it’s possible to create a substantial monthly income in a very short amount of time. I certainly wouldn’t argue with this. My first affiliate marketing campaign, which I started back in June 2004, was making about $7,000 per month by September. That’s less than 4 months!

But along with the ability to generate quick cash flow comes the tendency to become lazy and rely on it. I can guarantee you that none of your affiliate marketing campaigns will last forever. You might run into problems with your traffic sources, the advertiser might pull their offer, or the market might simply go bad. If you don’t count on these things happening, your business an an affiliate marketer will never be sustainable. Just like any other business, you must constantly work at growing it.

Building Assets

The best way to build a business is to increase current assets and add new assets. Assets can be define as anything that contribute to the worth of the business, such as client relationships, properties, contact lists, etc.

Instead of taking your affiliate marketing profits lightly, and spending them on your lifestyle, reinvest them into building a stronger business core. This mostly includes getting into more markets, collecting more contacts, and building more websites, but can also be broken down further. Here are 9 ways to continually strengthen your affiliate marketing business.

1. Collect Email Addresses

This doesn’t work well with every market, but it is something you should always test. Your email list can be one of your strongest assets if utilized property. This means building a solid relationship with your subscribers so that they actually look forward to your emails and recommendations. It is also something that no outside companies can take away from you. The only way you could lose your email list is if all of your subscribers unsubscribed (or maybe if you abused the list and got sued).

The great thing about collecting email addresses is that you can set it up once and collect them forever. Your total list will get infinitely larger, and more profitable, as time goes on. The larger your list is, the more leverage you have to do join ventures, promote your own products, and recommend other related products.

To build your own email lists, I would recommend Aweber for an easy solution and AutoResponsePlus for a hosted solution. I have used both of them and I prefer the hosted solution because you are charged once for a license, not monthly based on the amount of subscribers you have.

2. Reinvest Profits

Once you start making money through your business, you need to put some (or most) of that money back into the business. The obvious correlation here is buying more traffic from pay-per-click engines, but I don’t really see that as reinvesting. Buying traffic is a necessary expense for running your business, it isn’t something that goes above and beyond that.

When I speak of reinvesting your profits, I am talking about spending money on things that might not provide an immediate ROI, but that will provide far greater improvements to business in the long run. This includes many things that are within this post such as building new websites, developing a robust testing & tracking system, and creating valuable content, but can also include things like developing products of your own. All of these things can be done yourself or they can be outsourced.

The idea of reinvesting your profits doesn’t even have to be constrained to putting them back into affiliate marketing. You could choose to use your profits as a means to completely diversify your business through avenues like building content websites, building community websites, developing products (software, training videos, books, etc), buying existing websites, or anything else that you can handle.

3. Always Innovate

While some markets are simply fads, others are timeless and will last forever. But just because they are timeless doesn’t mean they are unchanging. Every market that you participate in will be in a constant state of change. The competition is getting smarter, the consumers are changing tastes, and the merchants are trying to compete with one another.

The only way to protect yourself from (and actually embrace) this change is to constantly be innovating. This can be done one of two ways.

The first way is to change and adapt within your current markets. It makes a lot of sense to stick with a market that you know inside and out. The more knowledgeable you become, the more advantages you will have against new and existing competition. To stay proactive, make sure you are always trying out new landing pages, new ad creatives, new offers, new merchants, and ultimately, new ideas.

The second way to facilitate growth through innovation is to take your knowledge and skills and apply them to new markets (including global markets). Direct, pay-per-click, and affiliate marketing have many universal principles. What you learn from profiting in one niche can almost always be applied to any number of new niches. The benefits of entering new markets are that you spread your risk through diversification, can attract entirely new consumers, and can stay interested in your business by adding variety.

4. Build New Websites

Going hand-in-hand with the previous point is building new websites. Affiliate marketing isn’t really a business for building just one website and making it huge. If you are looking for that type of business model, you should probably be focusing on more traditional web development.

Every time you enter a new market, you are going to need to build a new website. Even with the markets you are already in, it is a good idea to continually create new landing pages and possibly to create new “competing” websites for yourself. They could be large, authority affiliate sites or small, simple affiliate sites.

You could build your affiliate business around one website, but unless you are getting traffic from organic sources that can be taken away from you, it probably isn’t going to be very sustainable. Always remember that your traffic sources can dry up at any time, without any notice. To mitigate this risk, you should have multiple web properties.

5. Add New Revenue Sources

Diversifying your affiliate business isn’t just about expanding into new niches, you also need to be expanding within your existing niches. Merchants as well as offers will come and go. They expire, become ineffective, and lose their high payouts.

Always try out new merchants, products, and offers. Try to get direct deals, test them on various affiliate networks, and don’t become too reliant on any single one.

It has happened to be many times in the past where a great performing offer is suddenly cut from existence because the merchant didn’t pay their bills, violated some kind of agreement, or simply wasn’t making a profit from the leads they were buying. I have also watched the conversion rates of certain affiliate offers slide from extreme profitability to break even.

Depending on the circumstances, you might even want to consider adding revenue sources that are not related to affiliate marketing. Offer some kind of consulting or service through your landing pages, create your own products to sell (along with an affiliate program), promote indirectly related offers to your email list, or flirt with the idea of selling third-party advertisements.

6. Maintain Positive Cash Flow & Reserves

In case you haven’t noticed, there is a time delay between the time you earn your commissions and the time you receive them in your bank account. One of the biggest profit killers in affiliate marketing is not having enough cash flow. Just imagine finding some great new keywords that are producing insane volume and conversions, but you don’t have enough money to buy the traffic.

This has happened to me before (back when I was getting started) and it really sucked. I had to pause my advertising campaigns, apply for as many credit cards as would accept me (I was only 18 at the time), and ask family to borrow money for a short time period.

Later on in my “affiliate marketing career” I came across situations that were ripe for taking advantage of, but required extreme budgets to sustain. I was able to support these campaigns by negotiating new payout terms with the merchants and networks (weekly or bi-weekly), building up large credit card limits from past credit history (PPC charges), and having cash reserves in the bank.

The lesson to learn from all of this is that you need to be prepared to take advantage of situations that present themselves to you. Make sure you keep some of your profits in your business as cash reserves, have plenty of credit available (be responsible with it), and have the relationships with your affiliate managers to negotiate faster payout terms.

7. Analyze Feedback & Test Results

Finding profits in affiliate marketing is great, but expanding them is better. It’s a lot harder to start up in a new market than it is to improve upon your efforts in an existing market. Because of this, you should always be testing and and tracking your campaigns.

In addition to standard optimization through testing and tracking, you can solicit feedback from your visitors. Don’t put any type of direct feedback collection on your landing page (it will hurt your conversions) but certainly send emails asking for feedback. Once you have built and email list, and have created a relationship with your subscribers, they will be happy to help you out. Ask them questions, send them a survey, or just listen to their reply emails.

Your customers know what they want better than you do. Allow them to tell you exactly what it is that they want and then give it to them. It can’t get much easier than that!

8. Build A Team

At some point in the life of your business, you have to admit that you can’t do everything on your own. You can try, but your success will be severely limited. There are only so many hours in a day and you could find yourself wasting all of them on little jobs. Or, you may not even have the expertise required to do certain jobs.

Building a team of go-to freelancers can greatly help you out in this area. You could hire a designer to create your landing pages, a programmer to build them and develop dynamic systems, an accountant to manage your finances, and writers to create your content. The first three positions are probably suited for one good partner each, but when it comes to creating content, I would recommend choosing one per niche.

With all of those business functions outsourced, you can spend your time generating ideas, networking with affiliate managers, and building advertising campaigns. These are the jobs that really make the money. If you are too busy with all of the technical aspects, you won’t have any time left over to grow your business on a mass scale.

9. Focus On Growth Activities

Finally, the one thing that can hinder your affiliate marketing business more than anything else is spending too much time on activities that do not contribute to the growth. Much of the larger tasks were covered in the previous point, but there are smaller tasks which are even bigger time wasters.

Reading too much information can prevent you from ever taking action. Many people read forums, blogs, and ebooks while watching videos and participating in conference calls. All of this is great, as long as it’s managed properly and done in moderation. There is nothing wrong with furthering your education, but what is the point if you are never going to use it?

Another time-sucking task is stat checking and calculating. I spend a lot of time checking stats on new projects, but hardly ever check up on established campaigns anymore. I didn’t used to be this efficient though. For the first year and a half of my affiliate marketing career, I was calculating daily stats for every campaign I was running. This provides a lot of data, but it isn’t really any more useful than weekly or monthly calculations. When I stopped doing this, I freed up at least an hour per day that could then be used on growth activities.

Too much stat calculation can also subconsciously limit you. I knew how much time it took me to calculate my daily stats, and I knew what was required to add a new campaign into my spreadsheets. Because of this, I was hesitant to try out lots of new markets for the fear of them messing up my “perfect” cost/expense/profit spreadsheets.

Is Your Affiliate Marketing Business Sustainable?

I know this is a lot of material to digest, but you should be able to get the gist of it simply by reading the headlines. If you are making money through affiliate marketing, do you think your business is sustainable? Or are you worried that your profits could evaporate at any given moment.

If you are like most affiliates, and aren’t building a real business with real value, consider the points of this article. They will help you transition from the “quick profits” mentality to “long-term profits” stability.