If you’re an entrepreneur, or budding entrepreneur, making money online can sometimes seem like a real challenge. In my opinion, that’s often because entrepreneurs focus on the wrong thing. They want to create a ‘startup’ and become the next Facebook or Twitter.

That’s a tall order and, for most of us, a recipe for disappointment. But if you’re willing to start out small and work hard, profit on the internet isn’t so elusive.

In the absence of a blueprint, that’s not very encouraging so I thought I’d give an example: how you can profit from a decent domain name in four simple steps.

Step #1: Get It

You can’t profit from a decent domain name if you don’t own one. If you’re looking for inspiration, it always helps to:

  • Think of domains that are relevant to markets you have some knowledge of or experience in.
  • Use Google’s keyword tool to find words and phrases that people are searching for, and to check out how competitive the bidding is for them on AdWords.

Since most of the good .com domains appear to be taken, be sure to read my post on how to find the perfect domain.

Step #2: Develop It

If you happened to own a domain name like attorneys.com, for instance, you could almost certainly throw up a bunch of ads on an ugly landing page, wake up at 1 pm every day, and still make enough each month to put petrol in the Bentley. But chances are you don’t own a domain like attorneys.com, and even if you did, a healthy level of greed would hopefully push you to do more.

The key to making money from a decent domain name: developing it. While you shouldn’t be deterred from building an incredibly sophisticated website if you want to, domain development doesn’t necessarily need to be difficult.

My favorite technique: set up WordPress, spend a modest amount of money on a spiffy theme, customize to your heart’s content and fill your new WordPress website with relevant content that would be helpful to someone searching for information about your site’s subject.

Step #3: Promote It

While your domain name alone can be an important ranking factor when it comes to SEO, don’t neglect the low hanging fruit (e.g. easy-to-implement SEO best practices).

Even then, don’t be fooled: getting top SERPs and keeping them requires some link building. Fortunately, once you’ve developed your site a bit, it’s usually not too difficult to get a few people to link to you when you ask nicely. And for those who don’t fear the Google Gods, I’d point out that paid links are still in vogue with those who think they can fly under the radar, although you shouldn’t touch paid links unless you’re prepared to see all of your development work go down the tubes.

Step #4: Monetize It

You’ve got a decent domain name, you’ve developed it and your promotion is starting to produce results. Now it’s time to make money. The easiest monetization technique: throw up some AdSense ads. This is rarely a bad idea, but if you do this, read my tips on boosting your AdSense revenue. If you do nothing else, pay attention to placement and be sure to use section targeting tags. These two things will often make a big difference in my experience.

But don’t stop here. It’s not all about ads, something many professional ‘domainers‘ don’t seem to recognize.

Let’s say you’ve got a great domain related to auto insurance. You’ve developed a website with relevant information (e.g. detailed auto insurance information, what to look for in a provider, etc.). And you’ve thrown up some well-placed AdSense ads which could do very well given that the CPCs for auto insurance-related ads are very appealing. But you’re leaving money on the table.

Why not do the obvious: generate leads? You’d be in luck. There are a number of affiliate programs that will pay you handsomely for each auto insurance lead you generate. For instance, 2Insure4Less.com has starting payouts for auto insurance leads at $8/pop. InsuranceAgents.com starts at $9.50/pop. It’s not hard to do the math. Even if you only generate, say, 250 visitors a month from organic search referrals, chances are they’ll be quality referrals. If you convert 25 — 10% — of these visitors into leads (a number that I know from experience is possible if you follow some simple lead gen tips), that’s close to $250/month in revenue from lead gen alone. Over the course of the year, that amounts to $3,000 from a site that probably didn’t take you more than a week to build. Build one site like this a month, achieve similar results and within two years, you could be making $36,000/year from 12 simple websites.

Obviously, I’m simplifying things a little bit here and your results will vary depending based on many factors, including the quality of the websites you build, how successful your SEO efforts are and what monetization options you have (e.g. lead gen, affiliate programs, etc.). Getting all of this right can be a lot of work, especially if you’re new to this. But the process is by no means any more difficult than any other job you’re likely to perform for an employer. Lots of people make good money using this process and some make really big money.

So if you’re sitting on a great domain or have an itch to build something online, what are you waiting for? Let’s get started!

Photo credit: viZZZual.com via Flickr.