Purchasing a big domain with credit?

[JayJay]

Im curious as to what the large developers opinions are on my situation. Ive been thinking lately about grabbing a pretty high $ domain from a member here that I would use for development maybe 4-5 months from now. Thing is Id be purchasing it with credit so Id like to know is it generally a bad idea to go into an internet business without using only cash. For example domain is around 15k, and id obtain about 10k to start off with advertising, so 25k debt starting the first month roughly. Looks like possibly my father would front the cost of the domain and Id use a credit card for the advertising.

OR

Am I just better off putting money aside from my job until I can afford to at least pay the advertising start up costs with cash, or also look for a cheaper domain? Your opinions (think of when you first started)

Thanks guys/gals/its

 

[Jeff]

The latter (and specifically in these economic times ... ), IMHO. :yell:

All the best,
-Jeff

 

[Ross]

I would have to agree with Jeff. Buying with credit will only put you in the hole, especially if you get lazy with development or your idea does not take off. Plus depending on where you are advertising and the niche 10K can go really quick.

I would suggest saving the money and while doing that create a business plan and/or a business model for the domain name in question or group of possible domain names. This way you might be able to pitch the idea to some investors instead of hinging on credit itself.

Good Luck!

 

[dbtbandit67]

that sounds like a dangerous idea, and i reccommend that you not go through with that

the figures you are talking about is a lot of money. any business is risky, especially domains. when you borrow that much money to get into it, you magnify your risk, on top of the pressure to return a profit asap because of the minimum dues and interest applied. and it seems like you're still relatively new at this

you don't need to spend that much on domains to get started. there are a lot of domains, especially in todays times, that sell for less than $100 in which you could get started developing a mini-site right away. gotta run before you crawl. reverse that

 

[Seabass]

If things did not work out, would it make you depressed? Would that decision rule your life and how you feel every night? Possibly make you lose weight and become a nervous wreck? What if other big bills come down on you? Do you have a plan B to help get out of a financial trap if you get in one?

This is a gamble on prosperity/failure and you may suffer severe pain, depending on your personality, if it does not work out.

I did kinda' like what you are suggesting, but it worked out for me. I was a young punk when I did it, but I still struggled for a long time to get that investment money back I had spent.

Another question is........is it a passion like coin collecting, hiking, race cars, football, etc.... I think that makes a difference. If things are not working out well for you it will be no fun working on a page about mutual funds, for example, if you don't care for the field that much.

Can you flip the domain and get some money back to pay off some of the bills if you are forced to? How fast can you sell this puppy if you need to?

Lastly, whatever it is make sure it is a decent/high margin business. Don't get caught selling dental floss as you will be out of business probably before you start and you will still have those bills.

 

[Traveler]

I would look for an alternative domain name that won't put you in the hole out of the gate. $15 grand is a lot to spend on a domain name. Maybe with a a bit of searching it is possible to find an available domain name that would work just as well for SEO and brandability. I think it is a real bad idea to use credit to purchase a domain name, especially right now.

Since you don't plan on developing the name for 4 or 5 months. Use that time to search for another name. If you hit a brick wall looking for another name, just make a new thread and ask for suggestions.

For $15 grand, unless you are getting the exact perfect match, in the .com, with high searches, than you are probably paying too much. Even then, depending on the niche you still might be paying too much.

You have time, keep asking questions and don't jump into anything.

 

[-REECE-]

Been there, done that once before... Have creditors calling you when you start missing payments, destroy your credit score... Not worth it.

 

[Seabass]

Another thing I just thought of......is it a good domain in a recession/depression like CD Rates, gold coins, or mixed drinks ?

Think about what do people do in bad times related to that domain. Is it really something they need or a vice they rely on.

Overall however this is risky biz.......but on the flip side a down market can be an opportunity to steal market share. It sounds like you don't really have the money to make a strong showing and steal significant market share in most any meaningful category.

I'd hate to start any serious business without a minimum of $100,000, possibly much more, even though I have opened many businesses with less. I have learned that it's better to have much more money to start with than to start by scraping it together. Tons of expenses pop up that you could have never planned for in a business plan.

 

[domainsusi]

Search for and buy a similar or related domain name for regfee.

With a 10K budget for advertising and if you have all your pins in place, it won't matter what the domain name is.

 

[JayJay]

I really appreciate everyones responses thank you, yeah im going to look for a name that might work almost as well and then just save up money to spend on advertising/development eventually....and prolly not spend 10k maybe start off with say 5k cash, and I do need to wait it out it seems and see what types of sites are doing good as our recession possibly continues for a while.

 

[Traveler]

I really appreciate everyones responses thank you, yeah im going to look for a name that might work almost as well and then just save up money to spend on advertising/development eventually....and prolly not spend 10k maybe start off with say 5k cash, and I do need to wait it out it seems and see what types of sites are doing good as our recession possibly continues for a while.

Good choice. In this market there is no hurry. Take your time and plan it out.

 

[VisualArtistFrankBonilla]

Im curious as to what the large developers opinions are on my situation. Ive been thinking lately about grabbing a pretty high $ domain from a member here that I would use for development maybe 4-5 months from now. Thing is Id be purchasing it with credit so Id like to know is it generally a bad idea to go into an internet business without using only cash. For example domain is around 15k, and id obtain about 10k to start off with advertising, so 25k debt starting the first month roughly. Looks like possibly my father would front the cost of the domain and Id use a credit card for the advertising.

OR

Am I just better off putting money aside from my job until I can afford to at least pay the advertising start up costs with cash, or also look for a cheaper domain? Your opinions (think of when you first started)

Thanks guys/gals/its

You would probably never pay off the 10k on your credit card. If you did pay it off, you would probably wind up paying $20,000-$30,000! That is just for the advertising. You would still owe your father the $15k for the domain name. Your business would be in the negative foe how long?

Frank

 

[JayJay]

You would probably never pay off the 10k on your credit card. If you did pay it off, you would probably wind up paying $20,000-$30,000! That is just for the advertising. You would still owe your father the $15k for the domain name. Your business would be in the negative foe how long?

Frank

My problem is that Ive ALWAYS been under the impression that if you have say a premium 3L.com that gets high traffic, and you added big advertising $$ on top of it, and you sold a real product and ran a real business off of it, you would make enough within a 1-2 years to pay off your startup costs entirely. Im sure though that its just my lack of knowledge of what traffic really means and how I guess you could have 500 views and hardly anyone interested in actually purchasing something. I should realize this easier though since I myself do it all the time.

 

[-REECE-]

I used to have a blog on a subdomain which had a better rank than my LLL.coms, including the one I had developed...

Truth of the matter is that many of the domains domainers value (2-4 letter/number domains) receive very little type-in traffic.

10k worth of web design, SEO from a good firm, quality incoming links, and advertising (press releases, adwords, banner ads on relevant websites) will go much further than 10k on a domain name for anyone who has a good product to sell and knows how to market.

Domainers like type-in traffic domains because most don't have a clue how to develop a website. Once your site is developed, not many people are going to care whether you have WhiteShoes.com or JaysShoes.com.

My problem is that Ive ALWAYS been under the impression that if you have say a premium 3L.com that gets high traffic, and you added big advertising $$ on top of it, and you sold a real product and ran a real business off of it, you would make enough within a 1-2 years to pay off your startup costs entirely. Im sure though that its just my lack of knowledge of what traffic really means and how I guess you could have 500 views and hardly anyone interested in actually purchasing something. I should realize this easier though since I myself do it all the time.

 

[Traveler]

. Once your site is developed, not many people are going to care whether you have WhiteShoes.com or JaysShoes.com.

Very good point! The domain name alone will not make or break anyones development efforts.

 

[Ross]

Very good point! The domain name alone will not make or break anyones development efforts.

No but by having at least your main keyword in your domain, it will make your efforts easier in the long run. Trying to brand a name in to an already existing industry is extremely hard without deep pockets. If you are smart about it and optimize well with a built in domain name, you can select your advertising and press releases carefully and hopefully start a buzz along with a blanket of SERPs.

 

[ezimedia]

HI

If it is a 3 letter .com domain no I would not do it, but if it is a one word domain or a very popular two word domain I would think about it... only if it is a .com

Research the market... and see if there is a demand for it..

Does the domain get typin traffic looking for the product/service in the keywords of domain.

It is a product or service that will be around for a long time to come.

If you say yes to many of my questions , then it may be worth while...

Thanks
Tom

 

[Michael]

I would not do it unless you can handle the minimum monthly payments on that amount of debt comfortably if your business does not make any money. If you were just talking about the domain alone, and it was fairly liquid (LLL.com, Generic, Geo, etc.), I would say go for it, because you can always sell it and pay off the CC if things go south. But borrowing for advertising is dangerous because it is not an asset you can cash out.

You could also look into getting a small business loan. If you create a company and put it in your mother's name you can qualify for loans and grants based on the company being owned by a woman. You could also create an LLC and borrow in the company's name, that way if the company fails and you have to claim bankruptcy it doesn't affect you personally.

An overwhelming majority of small businesses are started this way, so you shouldn't be afraid to borrow to get things rolling. Just have a good business plan, and most importantly, a good exit strategy.