Best Internet Business Tips #3 – Stop Loss

If you are new to investing you may not have heard of one of the most important terms for any type of investment, regardless of if that is a website, shares or business.

That term is ‘Stop Loss’

Now I know that the majority of online marketers love to focus on the positives of running a business, but how many of you have run into trouble with a business that just keeps losing you money?

We all know the frustration of a website that just seems to have everything go wrong and ends up costing you more than you make back (and yes, even the guru’s usually have a few unsuccessful websites in their sordid pasts).

If you have experience with the share market or big business you may be familiar with the concept of Stop Loss.

If you intend to run the best internet business this is something that can save you months (if not years) of frustration and buckets of money.

What is Stop Loss?

Stop Loss is simply determining a cut off point for an investment that is losing money. Everyone wants to make a profit, but sometimes you will end up with a niche that will not buy, or an idea that just does not work.

You can use these situations as a learning experience, however do not make the mistake of holding on to a website in the vain hopes that it will magically improve.

If you choose to keep a site that is losing you money then you need a very strong reason to be anticipating it improving.

The most important reason to use a stop loss strategy is to redirect your money away from what does not make a profit and invest that in an idea or website that does.

Set yourself a Stop Loss strategy

There are two different factors you can use to set your stop loss strategy.

You can have a set period of time that you will work on a site to try to make it profitable (eg 3-6 months), review the status of the site at the end of that period and if it is running at a loss consider remodeling or selling the website.

You can have a certain amount of money that you will invest into the site and a set percentage or amount that you are willing to suffer a loss on short term and if the percentage or amount drops lower (eg making more than 5% loss) then remodel or sell the site.

But shouldn’t you sell on a high point?

Ideally, yes, however some sites will never reach a good point to sell, in which case the best strategy is to minimize your losses by stopping spending money on a failing site and selling it to get as much as you can so that you can invest that money into something that will work.

How long should you hold on to a website that is running at a loss?

This varies only in relation to the forward predictions for your site and the process is the same regardless of if you have a $100 business or a $100,000 business.

Have you been investing in promotion, software enhancements or making any other changes that will increase the revenue and/or value of the business?

Do you have a valid reason (other than wishful thinking) to expect the website to begin turning a profit?

If the answer to both of those questions is no, then unfortunately you will probably be better off cutting your ties.

What are the advantages of using a Stop Loss strategy?

Your website will not reach rock bottom since you would be selling before that happened
You would stop wasting time on the site
Less stress from not having to worry about a losing website
You can use the money you would have spent on the site, along with any proceeds of the sale to invest in another business or idea

What else can you do if your website is running at a loss?

Find out why the website is not making money.

You can carry out a full website review yourself, or alternately use a service such as SEO Review Guide’s Preliminary Assessment SEO package to see if the site can be turned around, and if so how much would need to be invested and if it would be worth it.

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