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How to start an affiliate business

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Category : > New Business Setup
Posted On : Tue Dec 13th,2016

An ultimate guide to setting up an affiliate business

What is an Affiliate?

In a business context, the term has two general definitions:

According to corporate law and taxes, an affiliate is referred to a company that is linked to another company usually offers the position of a member or a subordinate role.

In online retailing, a company may affiliate with another company to sell services or products. The seller should have a website to sell products. The seller has the control of the site and pays commission to affiliates. This relationship is sometimes called affiliate marketing.

The idea behind affiliate business that you promote the products of other companies/people and earn a commission.

Key benefits of setting up an affiliate business

There are numerous advantages of running an affiliate business against conventional offline and online business:

  • No financial risk

There is no overhead cost with setting up an affiliate business.

  • No manufacturing or production cost

Since it is very simple and easy that you are only promoting and selling the services and products while the owner or the distributor does the other work.

There are three main parties in the process of affiliate marketing:

  • Advertiser or merchant:

The merchant is the person who pays other person or company to sell his services or products.

  • Affiliate:

In affiliating marketing, an affiliate sells the products and services and gets a commission. In fact, he does not own the service or product but he introduces the ways to attract the customers.

  • Customer:

The consumer is an individual who buys the services and products. If an affiliate describes every information comprehensively regarding the product and also giving the answers of customers queries, he will earn good traffic.

Why an Affiliate Marketing?

Affiliate marketing is a strong medium to promote your products and services all over the country.


  • Pick up your niche

Picking up your niche means to sell the products of the interest of your own. You can choose it as per your expertise.

  • Start your website

Before signing up with a company, maintain a website. Most of the companies see your content strategies before signing up with you.

  • Sign up for an affiliate program

After selecting the program, you are required to sign up with the company who is offering the affiliate program.

Choosing an affiliate program, observe these points:

  • The success rate of the program. It will help you to grow with the particular affiliate program
  • How much commission you are going to make after starting an affiliate business
  • Associate with the products or services- it means you are sure about the quality of the products because it is crucial to delivering the sales pitch to your audience

Affiliates as Independent Contractors

An affiliate is not the part of the company whom it affiliates. While an affiliate has a separate identity, an independent contractor. So affiliate agreements can be taken as any form of business from a corporation to sole proprietor.

Why start an affiliate business?

Affiliating with other companies provide you an opportunity to promote the business and earn more money to join a company with a proven and set a record.

What is an Affiliate Agreement?

An affiliate agreement is considered a contract between two parties: host and the affiliate business. like any other business type, it is important to put affiliate agreement in writing.

What is affiliate disclosure?

U.S. Federal Trade Commission has stated the guidelines to promoting the products and services as an affiliate. It means any blogger or social media maven gets money to promote product, brand, or service he will have to disclose the relationship.

What Should an Affiliate Agreement Include?

Consider the following points before to join an affiliate program:

  • What are the terms of the affiliate agreement and the circumstances under which each party can terminate the agreement?
  • What can be the definition of affiliation in that regard?
  • Write the relationship between the parties
  • What are the various responsibilities of both parties?
  • What type of promotional material is available to the affiliate?
  • What are the restrictions using the promotional material?
  • Which type of license both parties are required? Who will own the intellectual property (service and trademarks)
  • How will affiliate payments be made?
  • What if either of the parties leaves the business?

What are the Standard Contract Language One Should Know About?

Reviewing an affiliate agreement, observe standard contract terminology; two standard clauses are:

  • Non-disclosure clause/confidentiality- it forbids an affiliate to share proprietary business details
  • The indemnification clause- it keeps both parties safe from the harmful actions of each other.

Can a small business concern be an LLC, corporation or sole proprietorship?

  • A business concern can be in the legal form of, partnership, an individual proprietorship limited liability company, joint venture, corporation, and association.
  • Starting an affiliate business is not a difficult process. You only need to decide the market in which you want to build your affiliate business. join a reputable company and start your promotion.

The Author of this article is a M.Phil in English Literature

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