How Much Does it Cost to Start an Online Business?
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Are you considering starting an online business but unsure about the costs involved? Don't worry, you're not alone. Many aspiring entrepreneurs have questions about the financial aspect of launching and running an online venture.
In this blog post, we'll look at the costs associated with starting and operating an online digital product business. By the end of this post, you'll have a clear understanding of the investments you'll need to make and how to budget for your new online enterprise. Let's get started!
How Much Does it Cost to Start an Online Business?
Just like any other business, you'll encounter start-up costs and ongoing expenses as you set up and run your online venture. Here's the minimum you'll need to get started:
- Website URL and hosting - There are lots of options. That will cost about $30.
- Yes, technically you could start with just using social media, but I strongly recommend that you don't do that. When you rely on someone else's platform, you lack of control and customization. You're at the mercy of their policies, algorithms, and design limitations. Social media platforms are notorious for constantly changing their algorithms, policies, and features. This can have a significant impact on your business's visibility, reach, and engagement with your ideal customer. And finally, you have limited ownership of audience and data, making it harder to effectively analyze customer behavior, preferences, and trends, which are crucial for making informed decisions and growing your business.
- Web presence - Ideally, you'll want a website, but you don't need one to get started. You should wait on choosing one until you've created your business foundation (your brand and customer journey) so that you know exactly what you need the platform to do.
- I chose Kajabi, an all-in-one solution, for my website, landing pages, sales pages, email, digital product hosting, membership, newsletter, courses, and automations. It costs about $140 each month.
- There are other options with fewer integrated features that cost less like ShowIt, Squarespace, and Wordpress.
- Email platform - If you decide not to use an all-in-one solution, you'll need an email provider like MailChimp or Convertkit. Both popular and MailChimp has a decent free option. Here's an article that compares the two.
- Landing page -If you decide not to use an all-in-one solution you also need landing pages. MailChimp and Convertkit both offer them. There are other free and paid options as well. (Carrd is another landing page tool that people like. It's currently free)
- Graphics Program - Canva is a user-friendly graphic design platform that allows those of us who aren't graphic designers to create stunning visual content with ease. They have a free option. I pay $13 a month to have access to their templates and other Pro features. Here are a few of my favorite things about Canva:
- Easy to use: Even those of us with no design experience, can quickly and easily create professional-looking graphics, presentations, and marketing materials.
- Collaborative: You can collaborate on designs in real-time, streamlining the creative process and ensuring consistency across projects.
- Templates: Canva offers thousands of customizable templates that are great time savers for a wide range of design needs, from social media posts and banners to presentations and flyers.
- Huge library: You have millions of images, videos, fonts, icons, illustrations, and other design elements to choose from to create beautiful content.
- Cross-platform compatibility: Canva is available on both desktop and mobile devices, making it easy to design on-the-go or switch between devices seamlessly.
- Integration with other tools: Streamline your workflow by integrating Canva with different platforms and tools, such as social media scheduling apps and marketing platforms
- Cloud-based storage: Canva stores all your designs in the cloud, making it easy to access, edit, and share your work from anywhere and at any time.
- Business License and Bank Account - If you're not making money yet and you're just starting at the brainstorming and creating stage, in most places you don't need a business license until you're ready to make money. It'll take you a few weeks to get to that point.
So, I'd wait until you're ready to launch before getting a business license and bank account. If you'd like to learn about this aspect of business, I'd highly recommend the book Money-Smart Solopreneur, by Laura D. Adams
In total, you could start an online business for under $100.
It's great if you can start with the free version of any program, but check to see when you have to start paying and what the capabilities are before you commit. If you don't love that software or website, it'll take a lot of time to move your assets from one platform to another. Try out the free versions, but don't spend too much time on platforms until you need them. Then, ask around for the best options.
I enjoy technology and I'm not afraid to try to figure something out. But, I'm not at all a techy person. If that's helpful to you, I'm happy to give you my recommendations about the tools I have used.
How Much Does it Cost to Run an Online Business?
I now pay about $300 a month for the tools I use to run my business. So, I don't need many sales to cover the cost of my business.
Here’s how that breaks down:
- I use Kajabi to run almost everything. It's an all-in-one platform where I create my website, email, newsletter, sales pages, landing pages, automation, products, coaching, and more.
- I have a quiz that I use to help new contacts decide what kind of online business they'd like. The quiz is hosted on Interact, which is a paid service that does the decision logic of the quiz and then connects people to my email list, without me having to be actively involved in that process. I created it once and automated it, and now it works seamlessly.
- I use Canva to create all my graphics. You can do a lot on Canva for free, but I pay about $13 because I use all the Pro features.
- I use Google Drive and Notion to stay organized. Both are free. Google Drive is where I store everything I create. Notion is a productivity tool. I use it for planning, content creation, note-taking, and bookmarking. It’s one of my favorite tools because it’s so customizable. Most of my courses include Notion templates, so you'll get to see the power of this awesome tool.
- I used to love my stock photo site because the photos were diverse and authentic. But it recently shut down and I’ve yet to find one like it. 😭 So, now I use Canva for my stock photo and video needs.
- Yearly, I pay $50 for my business license in Virginia and $12 for my website name (my URL).
- And I do have a separate bank account for my business (which I strongly recommend). Mine is free.
- I use both an organic growth approach and I run ads.
- Organic growth includes things that take time like:
- Writing and creating videos for social media, YouTube, etc.
- Optimizing for search engines when you create your content for your blog, YouTube, and Pinterest so it will be found when people search for what you do.
- Borrowing other people's audiences when you are a guest on a podcast or YouTube channel, writing guest posts on other people's blogs, publishing unique content for Medium, and getting PR from publications.
- The alternative to organic growth is paying for ads. It's not a must-do, but it'll help you grow faster. I recommend waiting to do any ads until your product is up and running and all of your marketing is working well. Ad costs vary based on my goals when I'm running them. But, generally, you can pay $150-$1000 a month or more.
- Organic growth includes things that take time like:
That’s what works well for me right now. As my business grows and changes, I’m sure these costs will too. But, unlike other business models, it generally doesn’t cost more to earn more with an online business (ads are the exception - you can pay more to show your ads to more people).
With this business model, your business costs are covered by just a few customers each month. That's pretty amazing.
What Do You Need to Start an Online Business
You can start with free or low-cost tools and upgrade as you go. Make sure to save a copy of everything you create, because some tools don't allow you to export content. I save everything I create in Google Drive.
Many software programs have free trials. Pro tip: Don't waste your free trial trying to see if you like a tool. Watch demo videos instead. Save your free trial for when you're ready to implement what you've created.
Don't get side-tracked and waste time trying tools before you know what you need. You can be confident that a wide selection of tools exists to implement the strategy you choose. Focus on your strategy, plan, foundation, and offer at the start of your business.
What you need:
- A computer or laptop
- Internet connection
- An online business strategy that works for you (meaning: How are you going to make money in a way that lets you prioritize your family and your life?)
- A plan to implement your strategy consistently
What you don’t need:
- To “hustle and grind” or “slay all day” to get started. You shouldn't feel overwhelmed. All you need is one hour a day if you have a plan and you leverage modern conveniences.
- A certification or degree, unless it's required in your profession.
- More training in your area of expertise before you start (that’s fear talking… you can do this!)
- All the books or courses you can find (yes, I sell courses and a business accelerator and I’d love for you to buy them. But, I also want you to know that you can do this with or without me. Support is amazing, but so are you. You just need a strategy that works for you and a plan to implement it.)
So, there you have it – a comprehensive overview of the costs associated with starting and running an online business. As you can see, it's possible to get your online venture up and running with a modest budget, and the ongoing costs can often be covered by just a handful of customers each month.
Keep in mind that every business is unique, and your specific needs and preferences might lead to different expenses. By starting small and being mindful of where you invest your resources, you can grow your business at a budget and pace that works for you. Happy entrepreneuring!
How I can help:
- Ready to embark your exciting entrepreneurial journey?
Start by taking my free quiz to discover the Best Online Business Type for You. - Kickstart your online business with confidence:
Join my Start an Online Business 5-Day Challenge. During this transformative experience, you'll develop your niche, handpick your ideal customers, and conduct market research to create a blueprint for your online digital product business. By the end of the challenge, you'll have invaluable insights and a robust database to guide you as you lay the foundation for your thriving online empire. - Want to keep reading first? Here are some other helpful posts:
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Erin Gibbens
Online Business & Marketing Strategist
I was an overworked, busy mom 🤹♀️ who wanted more time with my kids when they were little. It took years of trial and error to find the right business model for the flexibility I wanted, but I didn't give up. If you want to start an online business and prioritize your life much faster, you're in the right place. I'll show you exactly how to do it without all the trial and error. NO HUSTLE needed.
