Stop me if you’ve heard this one before.
I have a friend – I’ll call her Maggie. When Maggie and I get together, the conversation inevitably turns to my online business. How are things going? Do you have plenty of clients? Do you still like working from home? People are always interested in my self-employment experience because it’s so different from what many of them do for a living.
Maggie has a particular interest in what I do because she’d like to start an online business herself one day. We spend lots of time talking about the various niches she could target, what skills she has that would translate well to an internet-based company, and what type of features her website would need.
The problem? Maggie rolls her eyes when it’s time to talk about what it would cost to get her business started. With no personal experience, Maggie can only draw on what she has heard – those annoying commercials from Wix, GoDaddy, and the like, telling her she can start a website TODAY and it will be totally free!
The Zero-Cost Myth: Why it’s Unrealistic
I could tell you stories about countless other friends, acquaintances, and even clients who buy into the “4-hour work week” hype. They truly believe they can put up a generic website and earn thousands of dollars without investing a dime of their own money (or any effort).
Except that’s not exactly true. Actually it’s not even a little bit true.
No matter what type of business you’d like to start, you will not succeed without spending some money. Here are just a few examples of the costs associated with starting a website:
- Domain registration ($10/yr.) – No, that’s not a huge cost, but you’d be surprised how many people don’t realize they have to pay it. You can’t just stake your claim on part of the internet without paying for it upfront and renewing each year.
- Web hosting ($50+/yr.) – Once you have a domain, you need a place to store your website’s files. Yes, you could use a free service like Blogger or Tumblr, but I’d like you to think about that for a minute. How many legit businesses are run on free platforms that allow zero control? Yeah.
- Web design/development (varies) – I’m a huge WordPress fan; it’s all I build on. But the disadvantage of platforms like WordPress is the misconception that anyone can create an awesome DIY website in 5 minutes. The cost of your website depends on a number of factors, but odds are good that you’ll need to hire someone if you want a professional site with consistent branding.
- SSL certificate ($50+/yr.) – Planning to accept credit card payments on your website? If so, you need one of these in place. And even if you plan to skirt around that by using PayPal or another third-party processor, you’ll pay fees for every payment you accept.
So we’re already looking at a significant investment, and I haven’t even talked about things like inventory, software, equipment, or any of the “offline” costs of starting a business. Why do people think this stuff is free?
Let’s Talk About My Business
I feel very fortunate to run an online business that pays my bills. That said, my business expenses are kind of ridiculous despite my attempts to budget. I spend just under $300 a month on regular expenses, plus numerous one-time or yearly costs. In 2013, my deductible expenses topped $20,000 (no, that’s not a typo!) and I expect them to be similar this year.
You know why I’m not concerned about that number? Because every dime I spend allows me to work more efficiently, attract better clients, and/or earn more money. By investing in products and services that make life easier for my clients, I’m able to provide them with added value. That’s why people choose to work with my company instead of a competitor, and that’s why most of my clients stick around long-term. At this point, more spending means more income, and I’m okay with that.
The fact is, it costs money to make money. I talk to people every day who want to start building websites for clients, and so, so many of them cringe if I mention some of the paid tools I use. “Oh, I need something like that, but I don’t want to pay,” they tell me.
Can you build a WordPress website without spending any money on paid plugins, themes, or add-ons? Yes, you can. And if I didn’t want to avoid offending people I consider friends, I could link you to some of those experiments and let you judge for yourself how they worked out.
Want to Start an Online Business? Do These Things.
Accept the fact that it won’t happen for free.
I’m not telling you that you must spend ten million dollars upfront to start a business. But you will spend some money. This is the perfect time to meet some business owners in your niche and find out what you need to get started, what it will cost, and which expenses you can postpone or avoid.
It’s easy to convince yourself that your situation is special or unique and you can do what others can’t. Do not do this. It’s a waste of time. Instead of spending all your time looking for shortcuts, research the actual things you need to run a successful business.
Invest your money (and time!) wisely.
If I bought every font, template, software bundle, app, or gadget that seemed like a good idea, I’d be bankrupt. Every product and service in the universe promises to save you time, walk your dog, and make you a millionaire, but those “must have this” moments are a great time for a reality check.
Confession: More than once, I have purchased a Mac app I already owned because I didn’t even realize I had it.
Confession: I have made business purchases on impulse that I regretted later.
Confession: There are plugins, themes, and fonts on my computer that I have never even looked at or used.
There is no substitute for a few hours spent planning your business, getting realistic about what you can afford, and making decisions about what you really need. I say this because (obviously) I haven’t always been smart in this area, and it has cost me money I could have used for something more important.
Know when to give up.
If I felt more motivational today, I might tell you something like, “Never give up on your dreams!” or, “If you work hard enough, success will be yours!” Instead, I’m feeling realistic. And I’m here to tell you that some businesses just aren’t meant to happen. Maybe you’re not the problem – maybe it’s the wrong time or the wrong market or the wrong approach. Or, in some cases, maybe you’re trying to do something that isn’t the right fit for you.
True story: Several years ago, long before I became completely self-employed, I discussed a website project with a guy who wanted to compete with Amazon. (Yep, that Amazon.) No matter how many times I brought up Amazon’s sheer size and power, I couldn’t convince this guy that his online bookstore was a bad idea. With only a few hundred dollars to spend, he didn’t have a prayer, and there was no way I could build that kind of functionality with his available budget.
I’d love to tell you that he gave up on the idea. Unfortunately, he hired another freelancer who swore she could build the next Amazon for him within his budget. It was… umm…. less than successful. And even though this person was willing to invest in his business, the money he spent wasn’t equivalent to the type of website he needed.
If you’ve started a business that isn’t succeeding, it’s time to ask yourself, What’s the problem here? Maybe you haven’t fully planned out how you’re going to make money. Perhaps you haven’t spent enough time on marketing or product creation. But maybe, just maybe, it’s time to be realistic about what you need to invest from a monetary standpoint.
The Bottom Line
You can start a website without spending money. You can start a successful website without spending money. But there will come a day, especially if you want that website to function as a real business, when investing some of your own money is inevitable.
There are people out there with amazing stories of starting a business on a small budget. (Just check out The $100 Startup or The Lean Startup to read about some of them.) But you’ll notice that not ONE of those people succeeded in creating a truly zero-cost online business, because it’s just not possible.
The internet doesn’t owe us anything. Those of us who earn a living online are able to do so by investing TONS of time and money in our respective businesses. We work hard and buy the right tools and continually evaluate what we offer our clients and customers. If you aren’t willing to do the same, maybe an online business isn’t the best path for you.
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Christian Nelson says
Great article. All so true.
I laughed out loud at one point in the article, and was going to tell you how that was my favorite part. Then I found another point that was great. And then, farther down the page, another. And yet another. You got it all.
Andrea Whitmer says
Glad it wasn’t too boring! I’m always worried that my posts are way too long, so I try to inject a little humor here and there. Google seems to like me, for now anyway. 🙂
Christian Nelson says
It’s impossible for an interesting post to be too long.
Claudia Arnold says
Very true. Some colleagues of mine who rent a building and have employees, lab equipment and so on tell me how lucky I am that I have no overhead cost and can basically pocket everything I earn. Ha! Though I work from home and basically turn my client’s amassed data into wise conclusions, I have to spend roughly 35% of what I earn on travel costs (some clients actually want to see me in person), office equipment, my own education, liability insurance and other stuff. And yes, I have too many laptops - my old one was still ok but to heavy and not chic enough for presentations, mobile devices, business books - I read them but implement maybe 1% of everything I read - a car that’s too large for one person, purely for impressiveness’ sake, software tools collecting digital spiderwebs - you name it.
Andrea Whitmer says
I definitely understand what you’re saying re: the costs of running a business. Even without a physical office outside my home, I incur a TON of expenses throughout the year. It’s a whole different world when you have to pay out of pocket for continued learning versus having an employer to pay for trainings, not to mention the cost of equipment! I could buy a car with the money I’ve spent on electronics and software in the last 2 years, but it’s all necessary to do the best work I can. I spent far less money when I was working for someone else, even with the cost of commuting to work 5 days a week.
Todd says
Right on sister! right on
Andrea Whitmer says
Power to the people! 😀