Choosing a business model is one of the first decisions you will make – and arguably your most important decision – after deciding to take the affiliate plunge. Here we will look at some of the questions you will want to consider when weighing your options.

Opportunities in affiliate marketing are abundant, and there are incredible success stories to be found for every model out there. This means that motivation to take a certain path is not hard to find, even if you are a complete beginner when it comes to affiliate marketing.

However, before getting too excited after hearing about the latest get blockbuster affiliate model, it pays to sit down and think through a series of questions – just as you would in starting up any other business. Starting out in affiliate marketing is just like starting up any other path of entrepreneurship (except that you can do it in your pajamas). Your first steps should be the same – creating a business plan and deciding how your business will be making money. In other words, choose a business model.

Question #1: Your Time Commitment

First and foremost, decide how much time you can dedicate to your new business. Building an affiliate site may sound easy and quick, but once you actually start out, tasks will quickly build up and multiply. Not to mention that time will be needed for regular maintenance, keeping up with news of the affiliate marketing space, communicating with your merchant partners, and so on.

Decide how much time you can realistically spend working on your new business, both now and a couple of months down the road. By thinking ahead, you can create a better plan, and do the heavy lifting in the periods when you can dedicate more hours to the new project.

Another aspect of the time issue to consider is how long you are willing to wait to realize your financial goals. Of course, the answer can be the more money, the sooner, the better. But just like in other business areas, the break-even point – where your earnings surpass your invested resources – comes at different times for different business models. “Get rich quick” schemes may promise tens of thousands of dollars within days, but most often turn out to be unrealistic. Building a serious affiliate business, on the other hand, may take years to develop, but reaping the rewards later may turn out to be more profitable in the end.

Question #2: Your Financial Goals

Work out your revenue goals for the short and long term and see if your business model fits the bill. Within your business model, the themes and products with which you want to work and are willing to work (they’re not always one and the same) also have an impact on your earnings. You can start promoting high-commission luxury goods and work for fewer but more profitable sales, or you can build volume on smaller-margin items to achieve your goals.

A similar question to consider here concerns the business area in which you get involved. Are you willing to tamper with potentially risqué business areas such as gambling or adult sites, or do you  prefer to stay on the safe side? Controversial products tend to be very profitable ones, but also bring with them unique risks and pitfalls you may prefer to avoid.

Be realistic, and consider your financial goals in light of the previous question concerning time commitment. If you are only going to spend two hours a week on your business, it is unlikely that you will be cashing in a million-dollar check at the end of the year.

Question #3: Human Resources

Are you going to work alone, or will you have help available? Do you want occasional helpers, or are you planning to build a team? Will you hire people, or sign up your family or friends to the cause? Or, are you looking to leverage the community of your users to do some of the heavy lifting in your business?

In today’s age of Web 2.0 and user-generated content, the latter may seem like the perfect step to save time and money. However, for every step you take in handing over control to your users, you will also be creating a new task for yourself, because you cannot afford to outsource your business. Recruiting moderators from among the community in your forums means you won’t have to check every single forum posting yourself, but you will need to supervise the moderators and deal with conflicts should they arise. Similarly, you will spend less time actually writing content once you let your users take over some of that task; but since you will need to keep a close eye on the results, you will spend more time reading and editing. Consider these before outsourcing any part of your business.

Question #4: Running on “Auto-pilot”

How much are you willing to tinker with your site manually? Or are you looking for an “automated” business? While there is no such thing as a 100% automated business, some models require more input by you, while others can be automated to a certain degree. For example, a datafeed site of cheap airfares can be programmed to update itself from merchant datafeeds on the fly, while a product review site needs constantly added new and unique content.

Whether you are working on your business part time or full time could also be a factor in deciding whether to go for a less time-intensive business model. If you are dedicating only some of your time to your new business venture, you might consider automating at least part of your business. This way, if your other job or business suddenly takes up more of your time, your affiliate business will keep running – and hopefully, building – in the background. A neglected, unmaintained affiliate business can deteriorate, or even fall apart, much more quickly than you may think. And your competition will not be sleeping while you are out there working on different things.

Question #5: The Personal Factor

Last, but not least, how personalized do you want your business to be? How much of your own personality, style, preferences, and taste do you want to show in your affiliate business? You will need to have a unique edge to differentiate yourself from the competition, but you can do so to varying degrees. A blog with personal comments on products or a unique writing style is one example, while a price comparison engine with focus on data and numbers falls on the other end of the spectrum. In the former, your personality and style will be a selling factor; in the latter, you can remain behind the facade.

The More Eggs in Your Basket…

There are dozens of affiliate business models to choose from, from mash-ups to pay per click, from coupon sites to blogs, and everything in between. After you have considered the above questions, decide on as many as possible that fit within your plans and goals. Diversifying with multiple revenue streams, from multiple business models in the same affiliate venture, will create a more secure and likely much more profitable business. Start out with one model, but have a plan to diversify with more.

It Never Hurts to Ask Again

Finally, just because you decide upon a particular business model doesn’t mean you should “set it and forget it.” As with any business decision you make, you should reconsider your past choices, current standing, and future options regularly. Don’t be afraid to switch to a different model if your expectations and projections aren’t being met. Making the switch if things are not working according to your plans is better than working with a business model that doesn’t fit your business.

Also, don’t be afraid to make these “reconsiderations” even if your business model exceeds your projections. Other factors that come into play after you start up your business, such as having more (or less) time to focus on your business or more money (or less) to invest in it, may lead you to consider minor “tweaks” to your model. Such tweaks might keep your business running smoothly, or they may make it even more lucrative for you.

Regardless of what your answers to these five questions are, asking the questions the first time will provide you with a firm grounding as you set forth building your affiliate business. And continuing to ask these questions on a regular basis will help you keep that business running smoothly.

About the Author

Katalin Torok is an independent marketing consultant with a focus on Web 2.0. Her website and blog contains many helpful tips at: http://mktg.idared.net .