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How Much Does an Online Business Really Cost?

Jan 22, 2008
One of the big reasons people seem to think that having an online business should lead to easy success is that it is perceived as being a cheap business. And it's true; an online business costs far, far less than a brick and mortar business. But to really start off well, spending some money is a good plan.

For this, I'm assuming you already have a working computer and internet service. If not, add those to your expenses. It's much better than trying to run a business from a public library computer.

Expenses I Strongly Recommend:

1. Paid hosting.

Yes, there are free options such as hosting a blog with Blogger.com or Wordpress.com. But these are limiting in so many ways.

You have less control over them is perhaps wise for a business. I've seen many people get their blogs deleted with little or no warning from both those services. Wordpress.com has often been quite particular about their free blogs having any association with earning money. But if you host your own Wordpress blog you can do as you like with it.

And of course you may not want the blog format anyhow. If a standard website is more your style, there aren't too many good free hosts about, and you still have that control lost. Most companies, if they give you free hosting, do it because they can run ads on your site. It looks terribly unprofessional.

2. Your own domain name(s).

A domain name of your own, in the long run, will be far easier for people to remember than one given by one of the free hosting companies. Domain names are particularly cheap too, at $10 or less per year at most registrars.

Having a real domain name also makes you look more professional. It says you're willing to do some of the most basic things to look like a serious online business rather than a mere hobbyist.

3. Time (and lots of it).

Succeeding as an online businessperson requires a lot of time, even if you hire help for those things you just can't do on your own.

You'll need to come up with articles, product descriptions, blog posts, keep up with what's happening in your industry... all kinds of things. What all you have to do depends on your business model.

You may have heard of the book out now about a 4 hour work week. And yes, some people succeed on that. But far more likely is that they worked hard for years to reach a point where that was possible for them. It's not a solid plan for when you're just starting out.

Overall Strongly Recommended Costs: Anywhere from under $10/month to a few thousand. Most will begin on the ~$10/month range of this, as most sites don't need a few thousand dollars' worth of hosting expenses. Many hosting plans have annual plans available that reduce the monthly cost, but you have to pay the entire amount once a year.

Potential Other Costs:

1. Website or graphic designers.

Sure, anyone can throw up a website if they have the right tools. Thrown up is probably what it will look like too, unless you have some design experience. If you want to be taken seriously, make sure your site shows it.

Wordpress bloggers have some advantages in this area, in that there are so many free themes available for Wordpress blogs. You'll still need to choose carefully to find a theme that reflects your business and functions correctly, and hopefully doesn't look exactly like 10,000 competing sites in your niche.

2. Advertising/marketing.

How are you going to get the word out about your business? There are free ways to do this, such as writing articles about your topic and allowing other websites to publish them, but as a rule the free marketing options take time.

Well-done pay per click advertising can be highly effective, as can other forms of advertising. This is an area where knowing whether or not you are getting a good ROI is vital. It's easy to spend your money on ineffective sources if you aren't paying attention and testing your ads.

Overall Potential Costs: Generally more than the strongly recommended costs. If you aren't spending money on any of these, it's $0, but could go into many $1000s/month or year if that's your business model. What matters is that you make a maximum profit, however much you spend.

Of course, with all this money spent there's still no guarantee that your business will go anywhere. It's really up to you and how hard you work on it, as well as whether or not you've made the right choices for your online business.
About the Author
Stephanie Foster blogs at http://www.aspectsofhomebusiness.com/blog/ about running her home business online. She has a series on starting an online home business available on her site.
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