How Much Are The Hidden Costs Of Running An Online Business?

It scares a lot of marketing newbies especially when met with uncertainties. One such uncertainty is how much you’re expecting to spend on your online business every month once you go all in.

Is it going to be just a couple hundred dollars?

Or thousands of dollars?

Or more than that but most people just aren’t saying?

2014-05-17_1536This is just one of the many messages I get from subscribers and customers who are new to the world of doing business online. I singled out this support ticket in particular because it reminds me a lot of myself when I was just starting out many years back.

I had dropped out of college and quit my only full-time job to pursue this, and since I had no active income coming in I could only rely on the savings I earned through my sweat and hard work from the year before. I entered the world of Internet Marketing thinking that my monthly costs wouldn’t be more than $60 a month. True story.

OH HOW WRONG I WAS.

As you can fill in the story, I was in for an unpleasant surprise and I depleted my year’s worth of savings in no more than two months! I was fortunate to ‘crack the code’ in time, covered my losses and grew my business ever since – and I hope no one makes the same misjudgement I had.

The fact I am writing this article means there is NO EASY ANSWER to it.

YES, you can possibly run your online business for as low as few hundred dollars a month. This is all the more so if you are selling non-tangible, digital products (which is the business I am in, and the main focus of my article).

But for most people,  NO it is going to take more than just a few hundred dollars to see a breakthrough. I don’t know your appetite for risks, whether you’re a spender or a saver, if you are willing to do everything yourself or outsource it all.

BASICALLY – IT DEPENDS. (I know no one likes to hear that for an answer but seriously, this is the shortest answer I can come up with)

Here’s the thing: when you are spending just a couple hundred dollars a month in business operations, you are assuming the following scenario here:

  • You Know EXACTLY What You Are Doing. Put a small capital of $200 in the hands of a pro and he can turn it into an income-generating asset. On the other hand, even if you put $5,000 in the hands of a clueless amateur, the fool is going to part with his money sooner or later.
  • You Are Doing EVERYTHING Yourself For The Most Part. I have accomplished this many a times and even in ‘no-money down’ scenarios before – such as the one time I took up a challenge on The Fast Lane Forum to see who can generate the most income in two weeks with a starting capital of $50.  By doing almost everything on my own I saved on costs but it comes with a drawback of spending my personal energy. At least, I know it is hard for me to go broke now even if everything else is taken away from me today, I can rebuild my wealth again.

And That’s Also With The Assumption That You Stick To Strictly The Basics.

  • Domain name – get it from NameCheap. ($10/year)
  • Hosting – shared hosting for starters like HostGator (around $10 a month)
  • Autoresponder – Aweber or GetResponse. (around $20 a month)
  • PayPal account – start accepting payments. (FREE)
  • JVZoo account – accept payments and manage affiliates. (FREE)

Unfortunately, most people don’t subscribe to the above mentioned scenario.

Here are some more things to factor into your overall costs:

  • Program To Create Your Sales Pages. If you already have a HTML editor like Adobe Dreamweaver then you can build your own web pages. But if you don’t know HTML and need a more user-friendly way to create your web pages, I recommend using Optimize Press – this costs you anywhere from $97 – $297.
  • Product Creation. If you are not going to do it yourself you are going to have to hire someone else to do it. Whether it’s an e-book or a video course or a software, this can cost anywhere from a few hundred dollars to thousands.
  • Graphics. Again if you’re not making your own you will need to hire someone else to do it for you or at least get a user-friendly software. $100 – $300.
  • Autoresponder – Especially As Your List Grows Bigger! Nowadays autoresponder services charge more when you have more subscribers stored in their database. At this stage, it won’t be a mere $20 a month anymore but higher.
  • Dedicated Server – When Shared Hosting Is No Longer Enough! Likewise when you are getting more traffic and grow a network of websites, eventually you need to come out of your small shell and get yourself a dedicated server. These two scenarios apply to you as your business grows. Fortunately at this point it also means your profits soared so costs like these are somewhat negligible by then.

I could go on and on with other things such as hiring a Virtual Assistant (VA), paying freelancers to do other works, etc. so you can see that like any other business, Internet Marketing isn’t one dimensional and there’s no clear answer or even a ballpark figure to arrive at when it comes to costs.

Let’s Not Forget:

  • Marketing Costs. Paid traffic can go from as cheaply as a few dollars a day (think Facebook Ads) to even high end ones that gobble up thousands of dollars and above yet again. Personally, I favor free traffic most of the time and even then, I acknowledge the advantages of paid traffic – which is why recently I paid $10,000 in paid traffic to break into a brand new niche.

marketing-cost

  • Education Cost. If you want to truly make it in Internet Marketing, you are going to need a mentor and constant coaching. Mentoring costs can go anywhere from a few hundred to high end ones costing 5 figures (which is where Masterminds are made of).
  • Making Mistakes. No one is truly spared here. Again I don’t know your appetite for risks and how prone you are to making mistakes – I will go as far as saying that human error is INCALCULABLE!

If you read all the way here and feel your confidence level shaken up, well sorry to say if this is not what you want to hear. If this scares you and you feel the risks outweigh the rewards, then I am going to be frank up front that being an Internet Entrepreneur is probably not for you.

Sure, in the grand scheme of things an online business has lower risks, lower startup and running costs and more leverage compared to a conventional one, but it still needs to be treated as a BUSINESS rather than a HOBBY. I’ve been marketing online since 2005 and when I look at the rewards of financial freedom and mobility, there is no reason to fret at the cost to get there!

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