Starting an affiliate marketing business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful affiliate marketing business.
Importantly, a critical step in starting an affiliate marketing business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start an Affiliate Marketing Business:
- Choose the Name for Your Affiliate Marketing Business
- Develop Your Affiliate Marketing Business Plan
- Choose the Legal Structure for Your Affiliate Marketing Business
- Secure Startup Funding for Your Affiliate Marketing Business (If Needed)
- Secure a Location for Your Business
- Register Your Affiliate Marketing Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Affiliate Marketing Business
- Buy or Lease the Right Affiliate Marketing Business Equipment
- Develop Your Affiliate Marketing Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Affiliate Marketing Business
- Open for Business
1. Choose the Name for Your Affiliate Marketing Business
The first step to starting an affiliate marketing work is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your affiliate marketing business:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your affiliate marketing business.
2. Develop Your Affiliate Marketing Business Plan
One of the most important steps in being an affiliate marketer is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your affiliate marketing business.
- Company Overview – this section tells the reader about the history of your affiliate marketing business and what type of affiliate marketing business you operate. For example, are you a merchant-driven, network-driven, or affiliate-driven affiliate marketing business.
- Industry Analysis – here you will document key information about the affiliate marketing industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your affiliate marketing business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your affiliate marketing business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Affiliate Marketing Business
Next you need to choose a legal structure for your affiliate marketing business and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the affiliate marketing business and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start an affiliate marketing business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for an affiliate marketing business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for an affiliate marketing business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your affiliate marketing business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Affiliate Marketing Business (If Needed)
In developing your affiliate marketing business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for an affiliate marketing business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in an affiliate marketing business that they believe has high potential for growth.
5. Secure a Location for Your Business
Having the right space can be important for your affiliate marketing business, particularly if you’d like to meet clients there.
To find the right space, consider:
- Driving around to find the right areas while looking for “for lease” signs
- Contacting a commercial real estate agent
- Doing commercial real estate searches online
- Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space
6. Register Your Affiliate Marketing Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your affiliate marketing business’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your affiliate marketing business to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
In order to start an affiliate marketing business, you will need to obtain the appropriate licenses and permits. You may need a business license, a seller’s permit, or a zoning permit, depending on your location. Contact your local government office for more information.
10. Get Business Insurance for Your Affiliate Marketing Business
Other business insurance policies that you should consider for your affiliate marketing business include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Auto insurance: If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost affiliate income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Affiliate Marketing Business Equipment
Some basic equipment needed to be a successful affiliate marketer includes a computer or laptop with internet access, a phone, and a printer. You will also need to set up a bank account and a merchant account to process payments. You may also want to invest in some marketing materials, such as an affiliate website, business cards, and flyers.
12. Develop Your Affiliate Marketing Business Marketing Materials
Marketing materials will be required to attract and retain customers to your affiliate marketing business.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your affiliate marketing business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional affiliate marketing business website provides potential customers with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your affiliate marketing business.
13. Purchase and Setup the Software Needed to Run Your Affiliate Marketing Business
To start an affiliate marketing business, you will need some essential software. This includes a web browser, an email client, and a word processing program. You may also want to consider using a content management system (CMS) to help you manage your website. A CMS allows you to create and edit your website’s content without having to learn HTML or CSS.
14. Open for Business
You are now ready to open your affiliate marketing business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start an Affiliate Marketing Business FAQs
Is it hard to start an affiliate marketing business?
No, it's not hard to start an affiliate marketing business. In fact, there are a lot of different ways that you can go about doing it. You can start by finding a product or service that you're interested in and then finding a company that sells that product or service. You can also join an affiliate program and promote products or services that way. There are a lot of different ways to get started, and the best way to find out is to just dive in and give it a try.
How can I start an affiliate marketing business with no experience?
There are a few different ways that you can start an affiliate marketing business with no experience. One option is to join an affiliate marketing program that offers training and support. This can be a great way to learn the ropes and get started. Another option is to attend a live conference or workshop on affiliate marketing. These events can be a great way to learn from experts and network with other entrepreneurs. Finally, you can also read books or online articles about affiliate marketing to learn more about the topic.
What type of affiliate marketing business is most profitable?
There are a few different types of affiliate marketing businesses that you can start, but the most profitable is likely to be a business where you are an affiliate marketer for products or services. With this type of business, you will need to find a product or service to promote and then drive traffic to the offer. You can do this by creating your own website or blog, making affiliate campaigns, or by using paid advertising methods such as Google AdWords.
How much does it cost to start an affiliate marketing business?
Affiliate marketing businesses can be started for relatively little cost. The most important expense is the cost of advertising and marketing your business. Other costs may include website development, design and hosting, and any other tools or services you may need to operate your business. You should also factor in the cost of acquiring customers, which can be done through advertising or by providing valuable content that encourages people to visit your website.
What are the ongoing expenses for an affiliate marketing business?
Affiliate marketing businesses have relatively low ongoing expenses. The main costs are for the domain name and web hosting, which typically cost between $10 and $50 per year. You may also need to pay for a subscription to affiliate networks, which costs around $100 per year. Marketing and advertising costs can vary widely, depending on the methods you use to promote your business.
How does an affiliate marketing business make money?
Affiliate marketing businesses make money by earning commissions on sales they refer to other businesses. When a customer clicks on an affiliate link to a product or service, he/she is redirected to an affiliate site and the affiliate marketing business is paid a commission by the other business.
Is owning an affiliate marketing business profitable?
The answer to this question largely depends on how successful you are in building your affiliate marketing business. There are many people who earn a full-time income through affiliate marketing, and there are also many people who fail to make any money at all. The key to success is to put in the hard work necessary to build a successful business.
There are a few things you can do to increase your chances of success:
- Choose the right niche: It's important to choose a niche that you are interested in and that has a large potential market
- Build a website: This is essential for any affiliate marketing business. Your website will be your primary tool for attracting visitors and converting them into customers
- Create valuable content: Your website must have high-quality content if you want visitors to stick around and convert into customers.
- Promote your website: You need to actively promote your website in order to attract traffic and convert visitors into customers. There are many ways to do this, including SEO, social media, and paid advertising.
- Track your results: It's important to track your results so you can see which strategies are working and which ones aren't. This will help you optimize your marketing efforts and improve your chances of success.
Why do affiliate marketing businesses fail?
The main reason affiliate marketers fail is because the people who start them don’t do their research first. They think it’s going to be easy money and they don’t put in the work needed to make it successful. One of the affiliate marketing mistakes is that they don’t have a plan or an affiliate marketing strategy. They just start affiliate marketing and hope for the best. If you want to start an affiliate marketing business, you need to do your research and have a plan in place. You need to know what affiliate products you’re going to promote, how you’re going to promote them, and what your goals are. You also need to have a budget in place and be prepared to invest time and money into your business. If you can do all of that, then you have a good chance of making your affiliate marketing business successful.