Long before Craigslist- the famous business directory made a name for itself in the online business directory space, I ran an online business directory for a small city.
Unlike most of my businesses, the business directory model wasn’t planned.
As a matter of fact, the business was started because of our core business failing to sustain and offer a decent revenue.
As they say, “necessity is the mother of all inventions”.
In our case – Necessity was “Survival”.
Before I take you through my journey of running and succeeding with a business directory, how about we understand a few basics of an online business directory?
In this blog, you will be able to learn how to setup a online business directory plan, create an online directory business model which includes the steps to start an online business directory website and how to make money with a business directory website.
By the end of the blog, you should have all the knowledge about running a successful online business directory website business.
Let’s get rolling!
What is an Online Business Directory?
An Online Business directory is a platform with information in the form of business listings sorted in an organized way under categories and subcategories.
You as a customer can easily search information of business listing based on simple and advanced search parameters.
Plainly speaking, Online Business directories do exactly what yellow pages or printed local business directories in past did for us.
There are thousands of online business directories across the globe catering to different niche and locations.
What are the different types of business directories?
The ever-growing reach of the internet has given a boost to the business of Online Business Directories.
Today, we have generic business directories catering to the needs of cities (our business directory was one of them) or country-based business directories (think of yellow pages and google business) providing information of businesses in the country.
And then there are niche business directories like Yelp and Zomato (directory for food businesses).
Some of the famous names in Australia include – Truelocal, Yellow Pages, Start local.
The plan to start an online business directory website starts with learning the steps to set up the website and then building a revenue model around it.
In the next few sections, i will take you through all the necessary sections to help you put together a business plan of the online directory business model.
Steps to start an online business directory:
Book a Domain Name
Start by finding a name that resonates with your business. You can jump to one of the domain name booking websites like GoDaddy, HostGator and buy your self a domain name.
tip: If it is a location-based directory, go for a domain name that is country-specific. For example, if it is a directory focused at Australian customers – buy a domain name with .com.au extension.
The domain name extension helps google identify the country you are targeting.
Decide the CMS and start the website
You can easily find one of the ready to use business directory wordpress theme on the internet and get rolling with a business directory for as low as USD 100 (my favourite business directory theme over the years has been the theme from engine themes – it is simple yet powerful with features).
If you are well versed with WordPress, you can do it yourself (I strongly recommend all Entrepreneurs to know WordPress. It is one of those easy to use platforms to help you manage your online business. Here is a course to help you learn WordPress – WordPress : Build Websites without Any Coding Skills )
On the other hand, if you are not interested in WordPress – you can easily hire a freelancer from platforms like upwork, freelancer, etc to set up a wordpress directory theme.
Setting up the business directory is easy, running it might not be as easy 😊
As soon as the online business directory is set up, you will come across a few terms used in the business directory.
Here is a simple explanation to help you understand the online business directory setup better:
- Admin: The Administrator of the website. He/she has complete control over every single feature of the website.Admin has to the power to approve, edit, delete, add – Users, business listings, Comments, activity, etc. Also, admin can define the revenue model for the website by controlling the membership options and advertisement rates.
- Vendors: They are the ones who post their details on the business directory.
- Business Listing: A business listing is the listing of business, service or product posted on the website by a Vendor.
- Category/ subcategory: The categories and subcategories are nothing but a method to properly segregate business listings properly in a business directory.
For example, if you run a business directory that provides information about restaurants in your city. The category could be cuisine and subcategory could be the type of meal (dine-in, buffet, home delivery, etc) .
Most of the business directives have N Level of hierarchy for categories/subcategories.
- Client/users: These are the users who will visit your website.
The usual facility available with them in the directory is to manage their profile, rate and review a business listing, comment and share on social media.
Buy a suitable hosting space
An online business directory on wordpress can be hosted on a hosting space optimized for wordpress. You have 100 options to chose from. However, I strongly recommend selecting between Site ground, Bluehost and HostGator
Time to decide the online directory business model (revenue)
Like the business model of good old bulky printed directories, the business model of online Business directories revolves around highlighting paid listings. i.e, giving preference to the ones who have paid extra bucks and selling the advertisement space.
The revenue model of online business directory-based business (the majority of cases) revolves around two models:
- Membership fees:
The concept is simple. Online business directories set up a membership structure where they charge you based on the facilities availed by you.
Let me explain you with an example. I am running a business directory and want to have a revenue model around the facilities I offer to vendors who list their business on our business directory.
I decide to have 3 membership levels: Platinum, diamond and gold.
The Platinum Members:
- Pay $ 100/month
- They get featured in the top 2 listings in 3 categories (featured means getting that highlight around your business listing).
- They are also given a facility to upload 15 pictures
- Lastly, Platinum members get to link their 5 social media accounts to show regular updates posted by them on social media directly on their business listing page.
The Diamond Members:
- Pay $ 70/month
- They get featured in the top 2 listings in 1 category.
- They are also given a facility to upload 5 pictures
- Lastly, Platinum members get to link only one social media accounts to show regular updates posted by them on social media directly on their business listing page.
The Gold Members:
- Pay $ 30/month
- They get featured listings in 1 category at the bottom of the page (not the top listing just a highlighted listing of their business at the bottom of page).
- And they are given a facility to upload 2 pictures
Now, you can design own revenue models based on the market response and demand of the online business directory website.
– Selling of Advertisement space:
Think of good old times (not the king of good times ….Hint-2!) when the internet was just a tool to send emails. “Online” business directories were non-existent. The business directory sales guys would come to our office to sell us ad space on their printed directory-based. If remember correctly.
The ad on the cover page was the most expensive one and the one on inner pages was a little affordable. The pitch always went based on how good the circulation of last business directory was and which page received how much appreciation.
Fast forward today and not much has changed, when it comes to selling ad space on the business directory website. Although, there are some complexities involved at times which is understandable, considering how advanced markets have become.
The core as a base revenue model remains the same. For the sake of simplicity, let me explain to you the advertisement revenue models:
– A fixed price for a banner space:
The simplest and easiest revenue model of advertisement is where you have a flat rate for fixed ad spaces on the website. The customer takes a banner space and pays an X amount for the same.
– CPC or CPM business model:
Most of the business directories find it difficult to get paying customers(especially, the new ones). Hence, they rely on taking 3rd party ads from Google and other platforms.
The ads are placed on the website at space which is usually meant for paying customers. Well! Since there are no paying customers – why let space go waste? The business directory website owner is paid based on CPC or CPM (CPC stands for Cost Per Click and CPM Stands for Cost Per 1000 impressions) at a rate decided by the advertising platform.
The same model (CPC and CPM) is implemented by famous directories for their paying customers where the customers are charged on CPC or CPM generated on the ads on the platform.
-Revenue-based on lead generation:
What really matters at the end of the day for any business spending money on market and promotions is the number of leads and quality of leads. To address this, some famous business directories have started committing a minimum amount of leads as a part of their membership package.
I remember buying a similar package from a famous business directory last year. Although the number of leads generated was good – the quality of the lead was quite bad. We did not renew our membership with them. There are business directory websites that have well-designed revenue plans based on the number of leads.
You buy a plan of say X dollars for 30 leads and so on.
Marketing the online business directory website
Marketing a business directory website can be challenging. To start with, you need to have a good amount of traffic to ask your members (vendors) to pay you membership money.
And getting that traffic is not easy as the users only come to your website when they find a respectable number of business listings to help them with their searches.
I know of guys who want to get rich asap. From day one, they have a membership structure proudly displayed on the first page of their online directory website asking business owners to give money to get a space on their website.
And days pass without any registration.
Let’s understand the problem here. The complex scenario where you have to strike a balance between the number of business listings and keep the website visitors engaged is a difficult one.
And, there are good chances of online business directory websites failing to either attract vendors or users. Thereby, leading to failure.
You need a smart strategy to market a business directory website.
Here is the strategy I suggest: Within 3 to 4 months
- Start by populating the information of business listings yourself. You can get a lot of data from the internet.
If your hands are full, hire a data entry operator to populate all the data for you.
- Send an invitation email to all business owners (whose listings you have created) to verify their listing. In addition to verification, ask them – if they want you to remove the listing or make some edit to the listing. Do not forget to mention that “It’s free and how much you appreciate having them on your website”.They are the sole reason for users to stay on your website. Make them feel special. As far as I know, no one minds a free business listing.
In fact, there are good chances some of them will come back to you suggesting edits to their listing. Make a relationship with them.
- Once you have a respectable number of listings on the business directory, focus on driving traffic to the online business directory by using methods like:
-Social Media Marketing
- Remember, Business directories can be “boring” at times. Think of adding new sections such as:
-Latest news in your industry.
-The latest blog with tips, tricks, advice should help.
-The latest events in your industry can do the trick.
Be ready to bide your time waiting for that perfect balance of website visitors and registered vendors to happen.
Most of the online business directories I see failing are the ones who want to generate revenue from day one.
Alas! It does not happen so soon with new brands. Especially, online business directories.
What are the challenges faced by online business directories?
- Within 3 to 4 months, we almost had 100+ paying members and in a year’s time we, had every single business in the city registering on our website.
- A lot of competitor websites started in our city and started selling the same service. Despite all their ctrl-C + ctrl-v effort, they were always miles behind our popularity.
- We went to sell ad spaces on our website. I still cannot forget the day when I along with my sales guy, closed a good deal for top banner space on our website for one year. I think it was 75K per annum. The money I am talking about does not look big today, but it was a lot of money back then.
- Small businesses started using their email ids on our portals and their business link on our website in their marketing and promotions. This validated us as a famous brand name. There was a time our web portal become more famous than the parent company.
- To meet the high demand, we had to her a team of 3 sales guys to support us in with marketing (they also doubled as operations guys 😊 ).
- The biggest challenge and the most overlooked challenge is from Google My Business. Type any business name in google and the first listing to show up will by google my business listing. You have to beat them to be the best.
- The money required to market online business directories is not the same as setting up a business directory. There is another big misconception about an online business directory. People think it is affordable to run a successful business directory. Let me tell you one thing, it is affordable to set up an online business directory. But when it comes to running one, you will not at all find It affordable. There will be expenses in digital marketing and data entry. Be ready to spend some money.
- The revenue model of online business directories is not easy to set, and I write this with a lot of first-hand experience. We, the customers are a spoilt lot. We will expect a new business to go a little out of the way to give us more than what their simple membership plan offers. Work on a revenue model that is fluid and you can evolve it with time.
- Creating trust between the users and vendors is another challenge. You will have to be on top of activities on the website to make sure, the spammers are always kept at bay.
To help you relate better to what I explained above,
Here is the case study of our business directory business:
How our business directory idea was conceptualized:
The year I quit my job was a happening year (if you know what I mean 😊 ) for our small town.
The city had recently been declared an SEZ area and every known industry ad bought space to set up their industrial unit in the city.
We too started our IT Company in the city hoping to cash in on this huge influx of industries.
This is where our plan went a little awry.
All the industries had their software and websites managed through head offices in big cities. They were not interested in entertaining us.
Those who entertained us did not pay us the money.
They treated us like a small city web development company with little or no credentials to speak of.
We were soon looking at a sad ending to our venture.
As they say, “All that glitters is not gold”.
We were just learning it the hard way 😉
I sat with my business partner, my dear brother (who by then had learned web designing and development on his own without receiving any formal training in it) and we reassessed the IT scenario in our city.
We soon realized, selling to industries was out of the question.
The second target audience – the Local business owners were reluctant to spend money on websites.
The problem was, they all wanted a website to showcase themselves as 20th-century businesses in Rudrapur to the industries setting up base in the city but they did not want to spend a lot of money on a website.
We decided to launch a business directory by the name of rudrapuronline.com and sell memberships on the website at affordable rates.
The business model of business directory:
Remember the revenue model I explained to you earlier. We too (like all online business directory websites) designed a membership-based structure for our clients with three membership structures.
I do not remember the exact amount we charged but it was somewhere in the range of 500 to 2000, where the cheapest membership provided the local businesses with 1 page and 1 picture and no email.
The second membership provided them with 2 [pages, 2 emails and 3 pictures and the most expensive membership offered them 3 pages, 10 images and 5 emails.
And we sold ad spaces on our website.
I don’t want to boast about our achievements but why to let go of the opportunity (it was one of my first ventures and i really want to share the success with you).
- We did not have a CMS like WordPress to support us. Hence, every page had to be designed using HTML/CSS.
- Top it up with every client wanting a different design and colour for their page. The first version was a jazzy website with a lot of colours in it.
Our offline advertisement budget included hoardings, pemplates which at times, put a heavy dent in our pocket.
Although we recovered the money we spent gradually– we had to make the initial investment from our end to promote the business.
- We learned the hard way, the cost of running the offline advertisement.
- After-sales required a lot of support. There were times our guys had to take the camera (yeah we used our own camera as we did not have mobile phones with good cameras back then) and click pictures of businesses.
- Online ad space did not sell like hotcakes. Other than the home page, we found advertisers only on the property and builders page.
Despite all the hiccups, challenges, etc, etc – the business was a success.
To make the website interesting, we added a news section and an online games section (simple flash games we were pulling from other websites).
The portal further added add-on services like a job portal and a property section for the city.
Unfortunately, I shifted out of the city and my brother (tried very hard) to sustain the business.
The times changed and the market slowed down in the city which killed our business.
Anyways, it was good till it lasted and to date, I am proud of the venture.