In Message #1630, I started this series of articles for Early to Rise about the information marketing and publishing business.

Today, I’m going to address a question that I’m often asked: “If I kept all my knowledge but had to start over with little or no resources, how would I enter the information marketing business?”

For many people, a great answer to that question is one I’ve repeatedly used, as have many others, to quickly launch an instantly profitable newsletter business.

Let me show you a few examples … and a moneymaking formula just about anybody can use.

First, I’ll take you back to 1978, when I was just getting started in the field of professional speaking. After making $100,000 in the first year, I went to a workshop of the National Speakers Association to soak up some information from the pros. I discovered that a lot of people were much better speakers than I was, but hardly anybody knew one-tenth of what I knew about marketing.

So I came home and started a newsletter for speakers called Marketing Your Services. I sent a sales letter to about 2,500 speakers, a list I compiled at zero cost from the association’s membership directory. From that very first effort, I picked up almost 100 subscribers at $179 a year: $17,900. I hadn’t yet produced a single issue of the newsletter or made any other out-of-pocket investment (aside from mailing the sales letter).

That’s one of the many virtues of a newsletter business: You never need to tie up capital in product inventories. You’re always paid first and publish afterward, month to month. My little business quickly hit 300 (or so) subscribers, with over $53,000 of subscription revenue. I also had revenue from special reports I created and published, an audiocassette program, and a seminar. In total, well over $100,000 that first year.

Next, in 1983, I was doing a lot of speaking on marketing in the chiropractic profession. The list of chiropractors was (and is) readily available, and I followed the same model. I created The Practice-Building Letter, the only newsletter exclusively about marketing for chiropractors. I sent out a sales letter, and almost instantly put together my first 100 subscribers. By first year’s end, I had over 300.

Today, my broader-subject-matter, mainstream newsletter, The No B.S. Marketing Letter, has tens of thousands of subscribers. It was created from a very different business model. However, in 2004, I launched two other specialized newsletters – one on information marketing, the other on copywriting – and reverted to my old business model.

That model is this:

1. Identify a small niche market of people who have a strong common interest and/or need and/or desire.

2. The niche market must be directly and easily reachable, preferably via direct mail. It should also be known to buy from direct mail, preferably via compiled, free-use lists.

3. Create a specialty newsletter that precisely matches that target market.

1. What I mean by “small niche.”

Well, today, I wouldn’t do The Practice-Building Letter for all chiropractors. I’d judge that market too large (over 45,000) and cluttered with competing publications. I might do The Practice-Building Letter for Chiropractors Using Non-Force Adjustment Techniques. Or The Practice-Building Letter for Chiropractors With Multiple Clinics. Or The Practice-Building Letter for Small-Town Chiropractors.

I would slice ‘n’ dice the big niche into a teeny niche, so I could very precisely create a newsletter that got a “Hey, that’s for ME!” reaction. And you really have to understand the power of that reaction. When somebody sees something that they instantly feel is totally and exclusively perfect for them, they can’t help but pay attention.

So, for example, “A Weight-Loss Plan That Really Works” is something I might not pay attention to, even though I work at keeping my weight down. But, go back a few years in my life and hit me with “The Weight-Loss Plan That Really Works for Constantly Traveling Executives and Salespeople,” and you connect.

2. What I mean by “directly and easily reachable, preferably via compiled, free-use lists.”

Renting commercially available mailing lists is expensive. You must pay a rental fee for each use (so sequential mailings to a prospect group can include list-rental costs of $200 to $300 and more per 1,000 names). Plus, dealing with list owners, managers, and brokers can be difficult.

But most businesses have national, state, and even local associations. Most subcultures (golfers, tropical fish hobbyists, Harley Davidson owners) have national, state, and local clubs. And most of these associations and clubs publish member directories.

What do we know about the people in such directories? They have a very high level of interest in their “thing.” They pay dues for membership. And they likely get, read, and respond to direct mail (as well as e-mail) offers from their association or club.

And we can get this list for the price of the directory. This gives us a small, highly responsive sub-section of any list. For example, there might be 100,000 people who own and breed guinea pigs, but only 1,000 of them belong to the Show Guinea Pigs Professional Owners and Breeders Club. For sure profits, I’d rather sell to the 1,000 than the 100,000.

(Incidentally, if you do have or develop a broad-subject-matter newsletter like my No B.S. Marketing Letter, you can slice ‘n’ dice your own subscriber list. In 2005, for example, we launched the No B.S. Marketing-to-the-Affluent Letter, promoted only to our own list – and instantly got several hundred subscribers.)

3. What I mean by “a specialty newsletter that precisely matches the target market.”

This is very important for two main reasons.

First, it avoids head-to-head competition with bigger, better-financed newsletter publishers.

Second, it supports premium pricing. As an example, my most-specialized newsletter (on copywriting) sells for about $3,000 a year, while my least-specialized newsletter (on marketing) sells for about $300 a year. Both take about the same work and cost about the same to publish. The very high price made possible by the specialization makes a very nice income possible from a very small number of subscribers. So you can dominate a small niche, operate with zero employees or overhead, outsource everything, and have a stress-free business.

To be fair, there are downsides to the newsletter business – as there are for all businesses.

One downside is the hurdle of selling a new subscriber on a continuing relationship with you, a stranger, before there’s even been a first date. That typically requires strategies like a “big bribe offer” with multiple premiums – and in big markets, the cost of subscriber acquisition can be quite high.

Only by sticking with the small niche model I’ve outlined here can you be “front-end profitable” in getting new subscribers. Typically, that will cap out at about 1% to no more than 10% of market share.

Another downside to the newsletter business: the loss of subscribers from year to year. But this occurs less in tiny-niche, highly specialized newsletters. And, in some instances, it can be countered with continuity rather than renewal pricing.

But, by and large, for the person interested in making $50,000 to $100,000 a year in their spare time with a home-based, business, starting a specialty newsletter is a very, very reliable formula.

“Business is not financial science, it’s about trading … buying and selling. It’s about creating a product or service so good that people will pay for it.”– Anita Roddick

[Ed. Note: Dan Kennedy has enjoyed great success as a professional speaker, consultant, information marketer, and published author.

Dan has been called the “Professor of Harsh Reality,” because he’s provocative, irreverent, sarcastic, and tells it like it is in a disarmingly humorous way. His faithful followers also refer to him as the “Millionaire-Maker.” He moves with remarkable ease from one field to another, working with clients in dozens of different businesses, industries, and professions, and helping them earn as much as $400,000 in a single month.]

Dan Kennedy

Dan Kennedy is internationally recognized as the ‘Millionaire Maker,’ helping people in just about every category of business turn their ideas into fortunes. Dan’s “No B.S.” approach is refreshing amidst a world of small business marketing hype and enriches those who act on his advice.