If I was to credit a single individual for introducing me to the world of affiliate programs, it would undoubtedly be Allan Gardyne of AssociatePrograms.com. His practical, no fluff advice really hit it home with me; especially in a world of self proclaimed “gurus” peddling any product that gives them a good commission.

As you could imagine, I was excited (to say the least) when Allan offered to answer some questions about the starting and growing of his business, which generates the bulk of its income from affiliate programs and contextual networks.

Q: As your site AssociatePrograms.com states, you’ve been “earning a good living from affiliate programs since 1998.” At what point did you first realize that making money online wasn’t some passing fancy, but a real and sustainable business?

A: For me, there wasn’t any magical “Eureka!” moment - just a gradual, growing realization that what I’d hoped and planned and worked for was coming true.

I do recall, though, my first major success. There was one really exciting month in 1998 when I recommended two new ebooks in my newsletter. Their topic perfectly matched my audience’s interests. I remember taking a couple of U.S. checks - each worth a few thousand dollars - and excitedly showing them to a work colleague. Not long after that, I quit my day job.

Q: What steps have you taken since then (legal, accounting, organizational) to ensure that your business operates efficiently and is protected from economic factors such as a decrease in revenue or traffic?

A: One of the main things I’ve done is diversify. As well as my main sites - AssociatePrograms.com, PayPerClickSearchEngines.com and LifetimeCommissions.com - I also own a bunch of affiliate websites on a variety of non-Internet marketing topics.

I’ve also diversified by using different web hosts and different newsletter distribution companies. I don’t rely on just one affiliate merchant or one affiliate network. Some of my largest commissions come from independent companies that have their own inhouse affiliate tracking system.

I even have staff in three different countries - I suppose that’s a bit more diversification!

So various disasters could happen in various areas without wrecking my entire business.

I probably rely a bit too much on free search engine traffic. However, my main sites get a large proportion of traffic from type-ins and bookmarks and I’ve developed several mailing lists including one of over 26,000 subscribers, so I think there could be all sorts of disasters and the business would still survive.

Anyone trying to sue me will find that my assets and investments are locked away in a fairly complex structure which my tax consultant assures me will protect my assets. The structure also has a side benefit of having tax advantages.

Just a little warning … it is possible to get TOO clever when dealing with the tax man. You want an accountant who has a really good understanding of the most effective ways of legally minimizing tax without crossing the line. The best way to find one is to ask for recommendations from friends and business people you know and trust.

Q: Back in 2002 you ran a case study by having Rupert Farrow create DJ Tips & Tricks to prove that anyone could create a site using Site Build It. While it’s likely that this wasn’t the first time you’ve outsourced a project, this led to other public projects that you’ve had other people work for on your behalf.

It’s no secret that outsourcing site creation is the easiest way to leverage your time and money, from paying authors to write articles to paying someone to manage an entire site. Of the following outsourcing methods, which ones have you tried and which ones have you seen the greatest success with? The least success with? And how do you define a “successful” site?

A: When outsourcing, a successful site is one which earns more money than I pay the person who’s doing the work, involves very little input from me, and looks as though it has the potential to generate income for a long time.

a) Offering a flat rate per month for someone to maintain and build a site for you.

I haven’t tried a flat rate per month. I’ve paid an hourly rate for work done, plus a performance bonus. That’s the system I used for Rupert and am still using for other employees. This can work brilliantly. I’ve had good and bad experiences. The key is hiring the best possible people - and they need to enjoy working alone at home.

I hired and trained one person who worked for me for a year and then decided that sitting at a computer all day didn’t suit her personality. So a lot of training was wasted.

I used to hire totally inexperienced people and train them. I’ve switched tactics. The latest person I hired is very experienced and has skills I don’t have. I love being able to give him tasks to do that I can’t do.

b) Paying an author from a service such as Elance or Rentacoder a flat rate per article written.

Yes. I haven’t done that personally, but two people are doing that for me. We’ve had very good and very bad experiences. It’s not as easy as it sounds. If you don’t find the right person, keep trying until you do.

c) Hiring someone to build and manage a site for a revenue share of the earnings that site generates.

Not exactly. For a share of the proceeds, I’ve hired someone to manage sites that were built by one of my employees. I’ve also bought existing sites for this purpose.

This is working very well. The key, again, is hiring someone with the right qualities. I think I’ve been very lucky. In most cases, someone with the right qualities is going to be busy making money with their own sites and won’t want to work for you.

Perhaps with a bit of imagination you can structure a win-win arrangement. I managed to find someone who enjoys the challenge of boosting the income of an existing website.

Q: Any time I build a new site I consider it as a financial investment. I do as much research before I begin building a new site as I would when buying a stock or bond. Once I’ve determined a worthwhile niche to build a site around, I generally set a budget on how much to spend on content, directory submissions, inbound links, etc.

Then I set a timeframe on how much I expect to be earning the following 6-12 months and when I’ll recoup my initial investment back. Do you go through any process similar to this when launching a new site? If so, what is it? If not, why not?

A: I think that’s an excellent idea. No, I don’t. It just doesn’t suit my personality. I often do things simply because they feel right to me.

I remember once years ago launching a new site and Ralph Wilson emailed me and asked me how I was going to make money from it. I hadn’t even figured that out. There were no affiliate programs in this niche and AdSense didn’t exist in those days.

I’d just gone as far as figuring out that the people I was going to attract had money to spend and were looking for a way to spend it. I was sure I would eventually think of a way to sell them something. Eventually I did and the site makes a nice profit now.

By the way, I’m not recommending this way of approaching website research. All I’m saying is that this is the way I’ve often done it.

The wonderful thing about the Internet is that you can design your business and run it the way you want. You can design it to suit your own interests and skills. You don’t have to follow other people’s rules.

Part 2 of this interview has some great tips for goal setting, character traits Allan considers essential, and information tailored towards non-USA affiliates.