This is a lightly edited version of my reply. It seemed too good to leave as a reply that will soon be buried in history so I've copied it here.
Domaining isn't one business, it's several different businesses. Some domainers buy domains to use for the revenue they generate while held, some buy domains to sell on reasonably quickly as stock in hand, and some buy to hold onto for some future payout.
Let's concentrate on those who buy to sell fairly quickly, at first glace this looks like any other trading operation, but it's different from other businesses for three main reasons:
- Domain names aren't fungible as bulk commodities are. If you're a greengrocer you buy vegetables from the auction and sell them on. Each tomato (of a particular grade) is the same as every other tomato; if you're a foreign exchange dealer, each US Dollar or Euro is the same as every other US Dollar or Euro. On the other hand, every domain name is unique, this creates its own problems and has its own benefits.
- This is a highly speculative business, you find and buy a name then need to find a buyer to sell it to:
- You must have a good eye for likely names, there is no point buying ZXCVBJKP dot com (trust me here)
- You only have a limited market, you can't just sell any name to anyone, you need to find customers for who that name makes sense. Using my examples from above the greengrocer has no use for ForexTraders dot anything and the foreign exchange dealer probably doesn't want Greengrocer dot whatever so you have to put the right name in front of the right prospect
- You not only must find your buyer at a time they want to buy and you need to do that finding before you run out of cash.
- This is a very new field and changing constantly. Domaining today isn't what it was in 2005 when I started and it isn't what it was in 2008 before the crash, it isn't even what it was in 2009. In every business today's reality is today's reality and you can normally expect it will only change slowly (although the 2008-2009 crash shows it can change fast). In domaining expect today's reality to change pretty rapidly.
- For the above reasons and more, there isn't a school where you can study for a few years, get your NZ Certificate in Domaining and have a good chance of going out into the field and making a living.
Of course it is like other businesses as well.
- You will need to work hard to make a return.
- You will need to work smart to survive. You aren't going have a boss or a franchising company who tells you what you need to do and when, you need to know yourself what is the right thing to do and when to do it.
- You are going to be selling, this means you need to be able to sell. Can you go down to a local market or car boot sale with a table full of mixed junk stand there and actually sell to people? Try it one day, it's a lot harder than it looks from the outside.
- You need to expect to make some mistakes, more in your early days than in your later days, but you will always make mistakes. You need to pick yourself up after them and move on.
- You need enough capital (or a day job) to keep you going while you get started, and to cover the inevitable mistakes.