In this post, I am going try to answer the question of are PBNs safe and do they still work?
There is no black and white answer but by trying to look at this from a few different angles and my years of history building and buying and selling websites I hope to be able to provide a deeper understanding for you to make your own informed decision.
The decision ultimately around the risk vs reward will be unique to your situation.
There is no form of rank manipulation that is risk-free, even supposed white hat strategies of outreach / guest posting comes with risk. The short answer is PBNs are still effective and being used by many. However, once site builders are established and have very long term time horizons and sites of significant size many move away from using PBNs.
This post is going to cover…
A PBN is an SEO tactic where you purchase a group of domains, typically recently expired domains with quality backlinks to them, and then build a relevant site linking back to your money site. This shows Google that high authority sites in your niche backlink to your site and backlinks are still the #1 ranking factor in Google or another search engine.
Risk is the probability of a negative event occurring and the consequence of that event. So in the context of are PBNs risky the question becomes…
Let’s go through a few examples first before we dig into the data.
In this case and using the formula above your current probability of getting penalized by Google for the use of PBN backlinks is near zero and the consequence is very high.
Therefore, it would not make sense to increase the probability of a penalty by building PBN links.
In the case where the site already has PBN links. You are currently living with the potential of a penalty and therefore building additional PBN links (if they are built properly) does not increase the probability/risk in a significant way.
Therefore, adding additional PBN links to your site would not significantly change your risk while helping you rank.
This becomes a very personal decision for you based on your timeline, aggressiveness and overall appetite for risk. As shown below when we look at do PBNs work it is clear PBN links are still effective in 2020, however, are you wanting to optimize for short term success or long term success.
Therefore, it depends on your personal risk profile.
I first started using PBNs in 2013/2014 and created some ultimate guides which have been used over the years and stayed remarkably relevant.
However a few critical things are different then they used to be…
Now to try and answer this question I am going to look at a few sources of data.
First, looking at the histo
EmpireFlippers provides some great data by publicly identifying the content sites on their marketplace that use a PBN. I have done this analysis other years and therefore can compare is the rate of use of PBNs in content sites increasing or decreasing.
Looking at the number of content sites
Big Pile of Data to Answer These Questions…
A smaller % of people are now using PBNs to rank their Amazon Affiliate websites. Those that do use PBNs make 31% more per month than those that don’t and the valuation multiple is unchanged between the two groups.
Google has made it more and more difficult to build a network of sites to help another website rank effectively driving up the cost to build a quality network of sites.
As a result, what we have seen over the last 5 years is fewer people making the decision to invest in building a PBN to support their site but the answer to the question of do they still work is clear.
PBNs are still effective in 2020 however they are not without risk.
Should you get an SBA loan or any other form of debt to buy your first online business? The math and potential is undeniably attractive! But at what risk?
I strongly believe buying most online businesses (especially your first) with personally guaranteed debt (SBA or other) you can’t afford to pay back without the business is a VERY BAD idea!
Despite my strong bias, I will try and present both sides of the borrow, or not question.
In one purchase you can transform $100k of your money (or even an equity partners money) combined with a loan (SBA or other financing) for 90% of the purchase price and have a Million Dollar online business with ~$300k+ in discretionary earnings.
You want out of the 9-5, be your own boss, have financial freedom and be location independent? Great… just one business purchase away… right?
Hack the startup process and live the successful entrepreneur lifestyle immediately all while running a fully remote business.
Sounds pretty great… in fact, it is a great way to live… as I write this I am at my Cottage during the workweek loving my new 2 days entrepreneurs schedule
No path in life provides a greater ability to engineer your own lifestyle then as an entrepreneur, so I definitely get the desire!
But what are the risks and is it worth it?
This post will look at the risk vs reward of purchasing an online business (especially your first) with an SBA Loan or any other form of debt.
As mentioned above if you can successfully pull it off the results are incredible. Shortcut YEARS of hard work and buy your way with leverage to the entrepreneur lifestyle.
A fantastic book that looks at buying businesses and then building them is Walker Diebels book Buy then Build. In this book, Walker makes some great arguments in his book for the use of debt. I just finished it and its great… I agree with much of what he says and specifically the application of the margin of safety when using debt to buy a business.
Compared to traditional financial investment alternatives with bonds at incredibly low returns and the stock market typically returning 4%-8% the ability to get 100%+ ROI using debt is attractive.
So if it works out and the business even stays flat you can achieve full financial freedom at a cost of under $100k! Very incredible.
Before I dig deeper into the downside there is one scenario when I think adding debt into the equation of an online business acquisition makes sense. If you have…
Under that very restrictive model I believe it is not fiscally irresponsible to borrow.
However, I would ask someone in that situation if the juiced returns impact the quality of your life or would needing to pay off the debt impact the quality of your life. If borrowing risks your chosen lifestyle then you are trading financial security for (I hate the word but…) greed? I am not anti-greed and there is nothing wrong with a person that makes that decision as long as they are aware of it.
So why do I think if the debt you are taking out would risk your family’s financial security it is a terrible idea?
In value investing a popular term is margin of safety.
The margin of safety is when the market value is significantly below the intrinsic value of a company.
So what is intrinsic value? In financial analysis this term is used in conjunction with the work of identifying, as nearly as possible, the underlying value of a company and its cash flow per Investopedia
For a high margin low overhead online business with no assets beyond the domain name and some content (ie affiliate site) the intrinsic value includes no “real” assets and only the present value of future earnings (ie the value is set at some multiple on the websites income 3x annual income as an example).
Many online businesses have a single point of failure that can send the business to ZERO. Some of the common single points of failure for online businesses include…
So if the amount of money being borrowed is more than is capable of being repaid then if the business fails you are taking a SIGNIFICANT risk with your family’s financial future for years(decades) to come.
Not all online businesses have a single point of failure, but many/most do.
Let’s estimate the stability of an online business based on both SBA loan defaults and the volatility of online businesses.
I would argue that the volatility of online business is higher than the typical SBA eligible business, but even if not many people are going in with a 20%+ chance at a negative life-changing financial consequence. Granted a <80% at a positive outcome.
Lets use a couple gambling analogys…
If it is so risky then why is most of the content discussing SBA loans being used to buy online businesses positive?
The majority of the information out there that is pushing the mandate of borrow money and buy an online business is coming from the ecosystem that benefits from the liquidity being injected into it.
I am not immune, I contemplated not posting my strong views as less liquidity could drive down multiples, the value of my businesses and the number of deals done at MotionInvest.com would be negatively impacted.
For anyone that is selling you the dream make sure to separate out their bias… SBA lender, business broker, accountant, lawyer, seller or investor not on the hook for the personal guarantee all benefit when a deal gets done. If your source of information is someone who benefits from the transaction then do your own research (DYOR always a good principle with money to be able to avoid the worst scams like IncomeStore).
Don’t you hate people who point out a problem without a solution, I will try not to be a debby downer.
It sounds like I am saying I am not a believer in this asset class of online businesses if I don’t think they are credit worthy. That is definitely not the case, they provide an unparalleled opportunity for income scale while operating them efficiently fully remote. As an example of what is possible one of my former employees has scaled his commerce business to half a million dollars in monthly sales with reasonable net margins within ~1 year!
What I am a believer of is finding exposure to this type of business that is a fit for your unique situation. Everyone coming to this asset class has some combination of…
Based on where you sit between those 2 factors should dictate where you are prepared to start. If you have limited time and loads of money with the ability to get a manager than looking at larger deals may be the right decision. If you have <$100k but want out of your day job…make a multi-year plan and start off with what you can afford.
Invest the money you can afford to lose (this might mean starting from zero), grow the crap out of the business then scale up to bigger sites!
I tried to layout the landscape of the online business buying world on a graph with capital on one axis and time/skills on the other to paint a picture of where people can start their online business search.
MotionInvest Buying Guide…
I hope this article has been helpful in presenting a different view point than the common view being shared online currently.
Summer (especially in Canada) is short! So how do I optimize my schedule to maximize summer family fun while pushing the business forward?
For entrepreneurs who have the ability to modify their schedule how do you optimize summer while still pushing the business forward?
Assuming my kids will be less interested in hanging out with me by the time they are ~15 (optimistic) given my low level of coolness I am 50% done the summers I get with my oldest.
Maximizing summer family fun is definitely a priority.
This post looks at some past attempts and the structure I have for this unique COVID-19 summer.
However, despite me wanting to maximize summer I also want to make sure the businesses get pushed forward!
4 Day Work Week + 2 Weeks Off
This has been my attempt in the past couple of summers to maximize family time while still making sure everything needed gets done for the business.
This summer I am trying a more extreme schedule to try and deal with the major downsides of the last schedule specifically no growth time to push a new project forward and no grit building. While increasing the amount of time we can spend at the cottage.
2 Work all Day Days, 5 Stay on Top of Email Days
Now my schedule has 2 days where I work from 8am to 11pm at the office and then the other 5 days I work 1-2hrs just staying on top of email.
Total hours is still near full time at 40hrs/wk but highly concentrated making every weekend a VERY LONG 5 day weekend.
The Bad – Not sure yet but could be…
Visually what does this look like…
I am interested in hearing other peoples schedules… what do you do?
Many of these entrepreneurs continue to work at the strategies that they adapted during these turbulent months. Although many of them found different methods to succeed, it definitely helped that they were in the world of online commerce and content. They have taken advantage of a time where many people were on their computers, and have found a way to shift their offerings to cater to people’s specific wants.
#1 Takeaway – Stay the Course – In the past few months, we focused on how these online entrepreneurs shifted to the changes in the world economy. Now, they are sticking to these strategies and seeing their efforts pay off. Sometimes, success is all in the follow through. Keep doing what’s working, and you’ll see it pay off.
Quick May Update on my End:
My Reason for This Round Up:
When I started my online entrepreneurship journey I took a lot of inspiration from others that were sharing everything they did online. Seeing that people like me were making REAL money and that the opportunity to replace my day job was possible.
It has been 3.5 years since I left my day job – https://authoritywebsiteincome.com/quit-my-job/
The more transparent the report the more I appreciated and was motivated by it.
Over the years I have tried to be as transparent as possible sharing along the way my goals, business successes/failures and the ultimate results(profits).
After years of sharing monthly income posts I decided that it made sense to stop these… a decision I actually regret as I wish I had found a way to keep sharing some of what I was doing.
My reason for stopping was my online world and “real” worlds became more connected and it was becoming very odd to share these numbers.
Looking at many of the people that originally had an income round up posts they have also stopped. Namely the most famous in the space Pat Flynn no longer does income round ups.
In this post I will cover…
Last Month Profit – $13,246.20
Name – Ron Stefanski
Website – onehourprofessor.com
Business Model – Authority Affiliate Site
Income Report – https://www.onehourprofessor.com/may-2020-monthly-income-report/
Checkout the video I did with Ron and be sure to read his gripping story here!
Last Month Profit – $8,738.29
Name – Johnny FD
Website – johnnyfd.com
Business Model – Mixed – Dropshipping & Investing
Last Month Profit – $28,152.62
Name – Ryan Robinson
Website – ryrob.com
Business Model – Authority Website (affiliate earnings)
Income Report – https://www.ryrob.com/blog-income-report-april-2020/
Last Month Profit – $5407
Name – Anne
Website – www.yeys.com
Business Model – Web Publishing Blog
Income Report – https://yeys.com/may-2020-traffic-revenue-report/
Although they don’t do exactly income reports, there are a few reports that are worth mentioning and when they publish new reports I will be sure to include.
Am I missing any I should include? Please drop a message in the comment section below with anyone I should include next month!
Several this month didn’t publish so I wasn’t able to include but will again when they publish.
It was 4 years ago today as I write this that I didn’t go to work at my at my “9-5” day job for the first time.
Every year I like to reflect on the decision to make the jump and any learnings.
Before leaving I had worked for 8years at Imperial Oil in a variety of jobs and although I for the most part enjoyed my job and appreciated the skills I was developing leaving has been incredible for both myself and more importantly my family.
Here are the new learnings from this year…
When I left the day job I felt like I was increasing my family’s financial risk level significantly. Despite having planned it out with runway I and many others thought that my decision to leave was increasing my family’s financial risk.
However, given the current economic outlook and specifically the outlook for the Oil and Gas industry I am certain my family’s financial security is far greater than if I had stayed at my day job. Layoffs are likely and job prospects within the industry are weak.
Talking with many of my old co-workers the outlook is not great. Although many of my businesses have done well over the last 4 years others have not but on balance it has been a good 4 years financially. However, even if it was not the options and skills I have developed I believe will make me more employable/able to generate income then if I had continued on the career trajectory I was on.
Many large employers are great at creating the illusions of job security but once you get outside of their intentionally created bubble the realization is that it was just an illusions and the perceived security is not as solid as you think
It is such a cliche to say they grow up fast but so often it is true.
This Image was a large part of the reason why I wanted to pursue online entrepreneurship.
Having the ability to get to spend time with both my family and some of the active activities I like (skiing & mountain biking) is something that simply would not have been possible
At the time of me leaving my day Job this was the timeline to retirement vs my age and my oldest Childs age.
Basically by the time I was 65 my oldest child would be 36 (my age) and the number of hours I would have spent with them would have been minimal.
Being able to work around the weather and get to go on an adventure (mountain bike ride, hike or trip to the cottage) during the summer is something I am extremely grateful for.
One “tip” or “suggestion” suggested to me multiple times is to focus on a single business. Although I believe this is likely good advice most of the time.
This year has been another reminder that launching new projects can increase my capabilities, allow me to tap new markets/diversify and learn new things.
Launching MotionInvest has been both fun and gone very well.
My thinking over the last year has evolved to have me focus not on reducing the number of new projects but focus on making sure any new project is tested as efficiently as possible. Testing new projects is great if it can be done efficiently and that is the new focus. Quick inexpensive tests of business opportunities with an unfair advantage to its first customers and ideally have some overlapping benefit to existing projects is the focus.
Focusing on a single project is likely good advice but I have both had fun and some success working to launch other projects since leaving.
My learning this year is to not fight this but work on getting better at building organizational capacity to launch these tests.
Another evolution of my thought over the last year is to try and really focus my personal time on compounding improvements.
As the window of time since leaving my day job grows my timeline really stretches out.
If my focus can be on any of these improvements that have a compounding benefit over time I know I am adding value…
Hustling for the next deal was something I had done for years and still do but making sure I am more focused on implementing improvements that will pay back over years and years as I extend out my time horizon is key.
Tracking my monthly income numbers was something that gave me a lot of focus while I was working to leave my day job.
Reflecting now on why I started down this journey is a very rewarding experience while also helping to shape some of my new learnings.
My hope with this post and serious is it provides a framework for others looking to make the job for them to know it is possible and ideally shortcut the long process I took.
Other Posts in this Series:
I Quit My Day Job – https://authoritywebsiteincome.com/quit-my-job/