This is the final part of the interview I had with Allan Gardyne of Associate Programs. If you haven’t yet, I recommend that you read Part 1 of the interview

Q: Without getting into specifics, it’s clear that you make a more than a decent amount of money from your online business. But I’d venture a guess to say you have more significant expenses than the typical beginner in affiliate marketing.

What tips, techniques, and tools do you utilize to keep track of your revenue and expenses? What types of expenses do you have now that you initially didn’t anticipate having?

A: In 1996, when I first began tinkering around with a hobby business online, I had a very simple accounting system. I slim book with Expenses on the left page and Income on the right page. I was careful to write down every expense for everything related to the business.

It worked well when the business was very small.

Now I use QuickBooks software and I hire a bookkeeper to enter all the commissions and expenses, allotting categories and classes so it’s easy to see at a glance how much I’m spending on, say, web hosting, wages, advertising or distributing the newsletter. It’s also easy to see whether a particular website is making a profit, and how that compares with the previous month or year or whatever.

I don’t like QuickBooks much. It’s very easy to make a mistake and then an account won’t balance and you have to hunt around and try to find the mistake. That’s why I pay someone to input the data. He’s obsessed with getting details correct, so he’s perfect for the job.

QuickBooks is also very useful for instantly preparing details to present to your accountant. It automatically calculates GST (Goods and Services Tax), which is a pain to deal with. Australian businesses which generate over $50,000 a year have to register for GST and I have to charge it, for example, if I sell advertising in my newsletter to an Australian, but not to someone overseas.

Since we bought QuickBooks, I’ve been told that MYOB is better. I don’t know. Do your own research on this.

Don’t get accounting software unless you really need it. Writing figures in neat columns in a book and adding them up with a calculator each month works well.

Expenses I didn’t anticipate? Just about all of them!

When I started out, all I was hoping for was enough money to replace the income from my part-time job. I used free web hosting, and then cheap web hosting, a free newsletter distributor (now defunct), I had no employees, no bookkeeper, I didn’t buy advertising…

I didn’t anticipate spending thousands of dollars a year on ebooks and marketing courses and viewing that as a normal cost of doing business.

I didn’t imagine that one day I’d fly from Australia to the U.S. for conferences. Joanna and I have done that four times.

I certainly didn’t imagine that I’d start collecting water views.

None of that was planned. It just all gradually happened as the business grew. I adjusted my goals as time went by.

A side note from Robert: I used a similar notebook method as Allan describes. You can read more about that here.

Q: Starting, managing, or growing an online business is no easy task. What 3 traits would you recommend someone possess or improve upon that are essential for the greatest chance of success?

A: Persistence is HUGELY important - far more important than any other factor, I reckon.

When I started, I lived in a tiny village without a shop. For my first year on the Net every access cost me a toll call. A fluctuating power supply kept making my old computer crash. I got wiped out by a virus. I built a site and nobody came - well, almost nobody. A hacker froze my first message board, my main page disappeared from the server a couple of times . . .

I remember trying to describe to a friend what I was doing. I was working just about every possible hour I could, bringing in about $10 or $20 a week - and spending a LOT more than that. I’m not surprised that she thought I was mad.

But I didn’t give up.

You have to be persistent.

Q: A common problem for many non-US affiliate marketers is receiving earnings in US dollars, but then paying a fee to cash the check. In addition, although the Internet is a global marketplace, many affiliate programs initially or primarily serve affiliates based in the US.

Could you summarize some of the issues you’re faced with based on your geographic location and how do you deal with these types of problems (besides moving to the United States)?

A: Fees on overseas checks are dreadful. With our bank, Joanna managed to negotiate a reduced fee which lasted a few years, but now we’re paying $10 (Australian) on every overseas check we bank. We’re thinking of shifting to another Australian bank -
Bendigo - which has lower fees.

Some affiliates reduce bank fees by dealing only with an affiliate network which consolidates payments into one check. I think that’s risky. I wouldn’t like all my business to rely on one merchant, one industry or one affiliate network.

The most expensive checks we’ve received are when three countries are involved, for example an affiliate merchant in Canada pays a check in U.S. dollars to us in Australia. Our bank charges about $80 (Australian) to process such a check.

We learned the hard way that the simplest solution is to ask a Canadian merchant to pay in Canadian dollars or a British merchant to pay in British pounds.

A lot of commissions are now paid by PayPal. Although we pay a lot in PayPal fees, I like PayPal because it’s so reliable. We receive the funds instantly and we don’t have to worry about checks going missing in the mail.

Unfortunately, PayPal isn’t available in all countries. It provides a severely limited service to India, for example.

I feel sorry for affiliates who live in India, where apparently a large proportion of the mail is stolen. They have to keep asking for replacement checks. I think there will eventually be a lot money made by someone who comes up with a good solution to help Indian affiliates. If it has already been invented, I’d like to hear about it.

Q: In less than a month, 2006 will be upon us. As things wind down for 2005, I generally do two things:

1. Review my goals for 2005 to see what I accomplished and what I
   didn’t (and why).
2. Plan my overall business goals for 2006.

For 2006, while being as specific or as vague as you like, what do you see your business goals as being? And on the topic of goals, do you have any methods or recommendations on how others can accomplish their goals for next year?

A: For me, a large part of 2006 will be a time of consolidation. I want to work on improving the things I’m already doing. I’ve experimented and grown in a variety of directions and I’m not doing any of them as well I could be. I want to improve what I’m doing before trying new things.

There are probably a lot of affiliates like me who need to figure out what they do best and what also what they like doing, and do more of those things. It’s so easy to be distracted and try new things when we haven’t fully mastered the things we’re already doing.

In 2005 I hired a very talented man who’s half my age and who has about 10 times my energy. Jay is keen on tracking and testing, so one thing we’ll be doing is working to improve our conversion rates. As I’m sure you know, if you can increase a web page conversion rate from 1% to 2%, you’ve doubled your income from that page. Often it’s easier to increase your income by improving what you’re already doing instead of starting something new.

I’m also playing with some ideas for some new, challenging ventures. Later in the year, I want to try something fresh, just a little bit different from anything I’ve seen out there.

I usually do my best creative thinking when I’m on vacation so I’ll think about these ideas more when I take a break early in the new year.

To improve your chances of achieving your goals, here’s one of the most effective things you can do. Every night, make a list of the six most important things you should do the next day, in order of priority. The next morning, don’t read newsletters (except mine, of course), don’t check email, just start working through that list of six things.

I must admit that most of the time I’m not disciplined enough to take my own advice. On the occasions when I do, I feel as though I’ve suddenly rocketed into top gear.

Try it and see if it works for you.

That wraps up Part 2 of the Interview from Allan. I hope you were able to learn something new about managing and setting up your affiliate business to make it more successful.

If you haven’t yet, check out Part 1 of the interview.

And thanks again for the opportunity Allan! To anyone interested in learning more about the basics of an affiliate business, I recommend you check out Allan’s site, AssociatePrograms.com