Hello, happy Monday, and welcome to another Domaining MBA Monday here on MorganLinton.com. Today I wanted to talk about a topic that escapes many new investors but is so incredibly critical, I’m talking about none other than cold hard cash. In a world of virtual real estate it can be easy to forget about cash, and while I’ve talked about the fact that cashflow is king, it’s important not to forget that cash is also king.
Cash is king in the domain investing world for the same reason it is king in the real world. It can be very exciting when you make a sale, so exciting that you assume more sales like that will keep coming in like clockwork. So you spend every dime you make and then when a month goes by without a sale you start to panic. This panic causes you to make bad decisions and the domino effect begins.
I recommend that all domain investors keep a minimum of six-months in cash reserves. This means that you have enough money to pay your registration fees, hosting fees, etc. for a full six-months. Since Domain Investing represents 100% of my income I keep a minimum of a one-year cash reserve and I recommend others in the same situation as me do the same.
Luckily, Domain Investing businesses tend to be low overhead since you don’t need an office or much physical equipment. If you haven’t done so already, take a look at your monthly expenses and multiply them by six or twelve. Keep this number in your head at all times and every time you make a sale or get an affiliate commission make sure to add more money to the bank.
This will help you curve reckless spending so that when you see an expired domain that you really want to buy, you’ll know if you can afford it. The same goes for conferences and events. If you have enough money to go, then do it, but if this means dipping below your six-month cash reserves, don’t do it, you can’t afford it.
The peace-of-mind this will give you is worth it, even if it does mean you have to pass on a few opportunities from time to time. As you continue to build up cash you’ll feel good knowing that the money you do spend is yours to spend.