Starting an online business can be less expensive in the long run than starting a traditional business. However, there are still a variety of items that you’ll need to budget for beforehand. Why before? The idea is that at least once during the life of your business, you will have to borrow money to keep your business running. By starting out borrowing money, you’re placing yourself in a bad situation that heightens your chances of failure.
The typical expense categories of an online start-up are different than those experienced by a traditional business as well. While you will still need to budget enough money to pay your family living expenses for three to six months if you plan on making this a sole breadwinner (if you’re quitting your normal job, for example), there are several expenditures that you’ll need to look at that are quite different. Let’s take a look at those categories, and I’ll offer a few tips on keeping your costs low.
Web Space and Design
Look at it this way … if you were opening an office, or a retail store, you would spend time finding the perfect location – one that balanced your monthly rent and visibility – and then you would spend quite a bit of time painting and decorating.
Online, your website is your location. You don’t have to worry about visibility when you start your website, because that’s something that you’ll work on over time with marketing and search engine placement. Instead, you will want to concentrate your efforts on finding a very reliable web host, and then get a quality design that reflects your company. The costs that you will typically face include:
Set-Up Fees: Many web hosts require a one-time set-up fee for getting your web space ready to use. Some domain name services require the same. On hosting, most set-up fees are about $50.
Yearly costs: Domain names must be paid for on a yearly basis. Your cost here will range from $5-25 depending on what domain name registrar you work with. Your web space can usually be paid for monthly – but take a look around, and you’ll find that many web hosts will offer you a month or two free if you pay by the year. Costs here will range from $60-250 depending on what web host you decide to work with.
Monthly costs: If you don’t want to pay for a year of web hosting, you can pay by the month. This should be looked at as your “rent” – without a web host, you have no where to place your products and services for sale. Web hosting costs usually range from $5-25 per month.
Web Design – Unless you are a professional designer, you will save yourself a lot of time and frustration by hiring a professional web designer. Work closely with them to develop a site that you can stand behind proudly. Designers all charge vastly different fees, but this will usually run you somewhere between $250 and $2500.
How can you save some cash as you take this step toward establishing an online business? Do some research, and visit the following websites:
NameCheap – www.namecheap.com – Dot-com domain names are only $8.88 a year at this website, including Whois Guard ™ which will keep your private information private. After doing business with several domain name registrars, this is the only one I recommend because it is very easy to set your domain name up, they don’t try to force you into buying a lot of extras that you don’t need, and managing your domain names is really easy with their online account manager.
FullURL – www.fullurl.com – This website offers three levels of website hosting that starts at $4.95 a month with a bevy of features including CPanel access, unlimited monthly transfer (which is vital for businesses who hope to get a lot of traffic), web-based email and pop 3 accounts, FrontPage support, and Fantastico. If you pay for one year of hosting, you get two months free, which will help you breathe very easy when setting up your budget – and they charge no set up fees.
TemplateMonster – www.templatemonster.com – Over the past few years, this website has become a standard. Everyone who has had anything to do with websites has at least heard of Template Monster, because they offer something of true quality: website templates that are easy to use, and look fantastic because they’re designed by pros. Instead of hiring a designer, take a look through the huge database at this website and you can get a full website design for about $60. Then, all you have to do is add your text and images and get your site uploaded. When you order through Template Monster, you also get a lot of support, stock images and icons, logos, fonts … a huge variety of things that you would have to pay a lot for to get separately.
Equipment
Spending a little bit of time to find the best electronic equipment will allow you to run a one-person home business as professionally as large competitors. You will definitely want to look around, because prices are constantly dropping on electronic equipment so by doing a bit of shopping, you’ll save tons of money.
The types of equipment you’ll need will vary greatly depending on what type of online business you’re running, but these are the generally accepted standard “basics”.
Telephone: You’ll want to get a very reliable phone for your business. Even if you go for just a standard one-line phone, you need to make sure that it will really give you the best reception possible. Any phones that support headsets are a plus – these will allow you to speak to your customers while you’re at your computer, which becomes an asset very quickly. Plan on spending $30 for a good one-line phone, and about $60 for a reliable two-line phone.
All-In-One Printer: In the long run, it’s far more economical to plan for the “what-if’s” before you even get going. An all-in-one printer includes a printer, copier, scanner, and fax machine. This will allow you to do anything you need to do, from making color copies to sending or receiving faxes, immediately and professionally. Good all-in-one printers with strong warranties run about $175-300.
Computer: Take your pick! Variety is the spice of life, and computer selections definitely offer variety. You’ll want to educate yourself a little bit beforehand, so that you understand what main computer words mean and how particular features affect speed or ease of use. You’ll want to know what programs you need to be running before you start talking to computer suppliers – some programs like Adobe Photoshop or Macromedia Dreamweaver use a lot of computer resources and require a more robust system to operate properly. And, of course, the more robust a system, the more money you’re going to spend. Depending on your needs, the computer will run you anywhere from $400-2000, so definitely look around and don’t forget online sellers of computers like Dell and Gateway.
How to save money in this category? There are a lot of things you can do, but it all amounts to the one thing I’ve repeated over and over: Shop around. Get your hands on some catalogues and look all over the Internet. Here are some good places to start:
FC Surplus – http://www.fcsurplus.com/phone/telephones.htm – The website doesn’t look like something you would expect … but the quality of their products and the prices that they offer definitely outweigh the less-than-stellar web design. Offered here are Northern Telecom Phones, Discount Telephones, Specialty Telephones (including headsets), Cordless Phones, Answering Machines, and Phone Accessories at prices that you can’t beat because they’re all surplus.
Electronics.com – http://www.etronics.com/listproducts.asp?catid=4265&store;= – Any all-in-one printer you could possibly hope to buy is offered on this site at really budge-conscious prices … most of them start at just over $100, which is a fantastic deal.
eBay – www.ebay.com – Never forget the online auction site for a good bargain. What I recommend is to do your research and find the computer that you think is absolutely perfect for you, write down all the features it has, and then look on ebay to see if you can’t find it for less. Chances are – you will.
Summing It Up
When you total up all of the categories of a start-up online business, you might be shocked at the total. If you include a computer, your costs can easily run over $3000, without any contribution toward living expenses. Take some time planning your start-up, getting the best deals possible on your equipment and hosting fees, and you’ll be off to a roaring success.
