I've been building my primary membership site, RotarySwing.com, for 10 years now. During that time, it's been on a ballistic upward trend in terms of growth because I've made a lot of great decisions on how to grow it over the past decade - but I've also made mistakes along the way. Mistakes that have cost me money and I HATE losing money!
Believe it or not, given all the seemingly risky things I've done in my life from professional snowboarding to racing cars, I'm not a big risk taker - at least when it comes to my business and my finances. My goal is to always maximize my return and minimally invest. This "bootstrap" mentality has served me well and it seems that every time I've stepped outside of this and tried to take a bigger risk, I've been bitten.
One example was when I was first starting out with my golf instruction website and I was approached by a direct response marketing company out of Kansas to sell one of my instruction DVD's. This DVD had done quite well selling about a thousand copies a year at $50 each just to my followers on my website. But these guys wanted to take me to another level - TV.
When it comes to spending money to promote a product, there are a lot better experts out there than me. If you want someone to show you how to promote a business online using free methods, I'm your guy. But this deal was way outside my element - which is going to be the moral of the story here soon!
This company purchased unsold slots on sports channels and had a relationship with The Golf Channel. There deal was that they would buy $50,000 in commercial time in a test market if I'd pay them $8,000 to offset some of their cost in producing the commercial itself. The test market was going to be Southern California, so this seemed like a pretty good deal on the surface to me as that's obviously a hotbed for golf.
However, this was early on in my company's life and $8,000 was still a lot of money to risk putting into something I had never done before and knew nothing about. But, I figured, worst case scenario I'd probably break even, even after the expenses. We split the profits from each DVD and discounted the price so my total take home per unit sold was about $8, meaning I'd need to sell 1,000 copies to recoup my investment, which is what I was selling in a year.
After a lot of hemming and hawing, I decided to pull the trigger. You have to spend money to make money right? Go big or go home?
The commercials aired late at night on The Golf Channel for 30 days in Southern California. I never actually saw one on TV since I was in Florida, so I had to rely on this company's reports they were sending me that showed the air times, viewership, etc.
After the thirty days had run its course I received my final report and analysis. I was expecting us to be deciding which market to go into next, but instead I found something horrifying.
We had sold ONE &@#$%! DVD.
Are you serious? Between the $50k they had spent on the ad buys and the $8k I invested, one lucky person in SoCal bought the most expensive golf instruction DVD in history - $58,000 we spent to sell it to him!
I was devastated, embarrassed and pissed. Losing the money was painful, but it taught me a very important lesson that I live and die by today.
I never invest in something I don't fully understand, ever.
I've had the opportunity to invest in a lot ventures since then. One of the plus sides and downsides of becoming financially successful - everyone wants you to invest in their next big idea. I've turned down far more than I've invested in, and I can proudly say that I've not lost money on a business venture since "DVDageddon". But that's because I've stayed within the circle of things that I know like the back of my hand.
If you're starting a new membership site, you're going to have to take some risks. But, make certain that the risks you take are extremely well thought out and that you fully understand every aspect of the opportunity. If your membership site idea revolves around selling pet food and you know absolutely nothing about pet food, don't do it. Plain and simple. Don't force a business idea out because you're desperate to make money online. That's a sure way to get your butt handed to you. Instead, launch a business in something that you're already an expert on, or at least very well versed. Leave the speculation to the stock market.
The last thing you should do is make sure you find someone to help you along the way. You don't have all the answers, no one does, but there is someone out there somewhere that has done something similar to or exactly the same as what you want to do. Ask for their advice. That's what I'm here for. I know the subscription model very well. I don't stray from it and because of that all my energy is focused into becoming even more proficient at it. Even though I've been at it for over 16 years and was one of the pioneers, I still learn something new every single day that I share with my members just like you.
If you're looking to start a membership site, let me help guide you so you can avoid your own "DVDageddon" story and put that money towards making your business grow! For that $8,000 I wasted on that one DVD, I could've bought years of personal coaching advice on how to grow my membership site and avoided this mistake in the first place!