Affiliate Marketing has made it possible for nearly anyone to derive extra income online. Do you Yahoo? Or, MSN, or AOL, or any other ISP (Internet Service Provider)?
Those home pages are filled with affiliate marketing links. Many people decide to start an online affiliate marketing business because it's quick and easy money. You don't have to create a product, you don't have to worry about providing customer support, you don't have to do shipping, returns, deal with fraud, and all those other hassles that come with running a standard sales business.
With affiliate marketing, all you have to do is send targeted traffic to reputable merchants and desirable products. Sales are made and you automatically earn commissions because you sent the traffic. Easy right?
Now it is possible to put up a website or advertisement for an affiliate product and literally make a sale within minutes. And technically you have made money in minutes when this happens. The reality though, is that money doesn't actually make it into your hands - or even your bank account - for weeks. And in some cases... months.
And this seems to be the biggest problem point for many new affiliate marketers. Cash flow. Anyone who has run any kind of "standard" business before understands the concept of cash flow. The same applies if you've run a service based business too. In the case of service businesses, you do the work then send an invoice to your client. Then you wait. Sometimes you wait a long while... before that invoice is paid.
I was hired to build a website for a particular business. Terms were agreed to, preliminary funds were paid in a timely manner, and the site was paid in full upon completion. Then the business owner contacted me for numerous updates.
A price was agreed upon. The site was changed. Payment was not made. A second invoice was sent. Payment was not made. A third invoice was sent. Payment was not made. The next time the business owner went to his website he discovered I had changed the Home Page. The new home page said, "This site has been termporarily suspended." I got paid.
With sales based product businesses you buy inventory, or pay rent on your store if it's a physical location, then you try to sell the products you've bought. There are days you might make $200 in sales and days where you make nothing. If however, you spent $1000 on inventory or rent... you're still in a negative cash flow status even on the day you made $200 in sales.
Cash flow is basically just "how much cash is on hand to hold me over until..." In other words, if you're an offline store you must ask yourself: Do you have cash to cover all your expenses until the current inventory reaches break even? If you're a service based business, you must ask yourself if you have cash to cover regular bills and expenses until invoices are paid.
If you're an affiliate based business however, it works similar to a service based business. Do you have enough cash to cover regular bills and expenses until your affiliate payments arrive?
Lack of cash flow can break a business before it even has a chance to get established. If you spend the last of your available money to advertise for instance... it doesn't matter how many sales you make or how fast you make them. By spending the last of your money to promote affiliate products and services, you've made yourself broke for an extended period of time.
Most affiliate programs pay once each month. And there's a delay built in as well, so it ends up being close to two months before you actually get your earnings in useable form. Affiliate networks such as Commission Junction, Linkshare
and Share a Sale for instance, pay once a month. So if you were to make $1000 in sales on January 1st, you would not actually get that money sent to you until February 20th. Maybe.
Some, if not most, affiliate programs have a minimum payout. In other words, they hold your commissions until you have reached a certain level. Learn from me. I promoted a specialty product once for a specific website. I knew sales would be few and far between and my commission balance showed earnings of $99.95. The minimum payout was $100. A year later my balance still had that $99.95. Not very good for cash flow.
Now there are affiliate programs and networks which pay every two weeks instead, and this can make cash flow issues less of a problem. But there's still a delay built in. Most new affiliate marketers think something along the lines of "Oh I just have to last for two weeks, then I'll have more money". But it can sometimes be three or four weeks before that money actually shows up, depending on the network.
ClickBank for instance, will send you a check on the 1st and 15th of each month, assuming you've earned enough to meet the minimum payout requirements. If that check takes 3-5 days to reach you however, it ends up being closer to three weeks before the money is actually accessible to you.
This scheduling issue is not as problematic once you've become more established, and you're earning commissions on a regular basis. It is important in the beginning though, because that's when cash is needed the most. You're promoting affiliate programs so that you can make some money, but you must be sure you have enough money to survive on until you actually receive money you've earned.
One way to extend your flexibility is proper management of a credit card dedicated to business-only purchases. Many have special introductory programs that allow you to pay 0% interest for 6, 12, or, even, 15 months.
Interest-free funds can really help out when managed properly. Go to http://www.homebusinessop.com/bestcreditcards and you'll see a section of low introductory rate credit cards rated by a top industry analyst.