So, you’re considering starting an online business. If you’re like many other budding entrepreneurs, you’re on a budget. You’re willing to spend money on the right things so that you can see success quickly, but you also don’t want to spend more money than necessary. Sound familiar?
Today, I’ll take you through the 5 areas where I believe your startup money will be best spent. You’ll see how only $60/month can cover your basic online business startup costs. Depending on your type of business it may not cover everything, but at least you’ll know what’s truly essential and what isn’t. Ready to dive in?
Great, let’s get started!
Some of the links in this post are affiliate links. If you make a purchase after clicking on one of my links I may make a small commission at no added cost to you. I only post affiliate links for products that I have personally used and recommend.
Essential Online Business Startup Costs
1. Domain Name (about $10/year)
It’s time to have some fun! Thinking up domain names is probably one of the most fun parts of starting a new online business (just don’t do it too loudly at crowded coffee shops). And, for most online businesses, buying a domain name is probably your first expense.
The registrar that I use and recommend is NameSilo. If you’re like me, you’ll get stars in your eyes and end of buying lots of domain names. NameSilo’s easy-to-navigate interface will make managing those domain names a cinch.
Caution: Have you found a company that offers a free domain name with their hosting plan? Although the expense of buying a domain can be bypassed by using a web host that provides a free domain name with the purchase of a hosting package, I highly recommend purchasing those two services from two different companies. This way, if you ever decide to change web hosts, you won’t risk losing your domain name in the transfer (either accidentally or due to your web host’s shady business practices).
2. Web Host ($4—$15/month)
After you purchase your domain name, the next thing you’ll have to buy is a web hosting package. Your web host is in charge of hosting all of the files that comprise your website. So, it’s important to sign up with a host that provides good uptime (99% or more), a decent amount of storage space, and reliable, fast service. I use and recommend Siteground.
Caution: It may seem enticing to go with a no-cost, hosted platform such as Wix, Weebly, and Blogger—especially in the early stages of your business, when you aren’t making any money yet—but my recommendation for most entrepreneurs is to go with a paid web host and a self-hosted WordPress installation. There are several reasons why I recommend this, but the main reason is that a self-hosted WordPress installation will give you the widest range of functionality and the most freedom to do what you want with your site. Siteground is a paid web host and will allow you install any WordPress theme or plugin that you desire.
3. Email Marketing Service (starts at $0—$30/month)
Whether your new business is writing e-books, photography, copy editing, web design, or any of the other thousands of potential business opportunities online, the one thing that everyone should be doing is collecting email address.
Why? Email is a direct line of communication to your raving fans. Think about it. If someone opts in to your email list, either via a form on your website or because they signed up to receive a lead magnet, it’s because they liked what you had to say and want to hear more. In effect, your email list becomes a list of people who are the most likely to buy from you in the future. So, when you finally release your first product, you’ll get a much higher conversion rate from your email list than you will from your Facebook fans, Twitter followers, or even paid ads. For online-based businesses, your email list is as good as gold.
Related Reading: Why You Should Start Building a List of Email Addresses
Email service companies, unlike web hosts, are actually pretty easy to transfer to and from if your email list needs are basic. Therefore, for businesses that are starting from scratch (and on a budget), I recommend going with a free service such as MailChimp or MailerLite until you start generating some revenue. After business starts picking up, you can switch to a fancier, paid service such as ActiveCampaign. With paid services, you’ll get features like segmenting, automation, and split testing.
Which email services is best? Well, it really depends on your needs. Personally, my #1 pick is ActiveCampaign because I like to map out my automation visually. Drip has similar functionality, and ConvertKit is also a popular option, but I prefer ActiveCampaign because of my own pickiness with interfaces.
4. Lead Capture Tool (starts at around $19/month)
If you’re new to online business, you might be thinking, “What’s a ‘lead capture tool’?”
Well, in the marketing world, “leads” are potential customers. They’re people who have shown a little bit of interest in the product that you are selling and might be willing to buy from you later on. What does this translate to in the online business world?
So, a “lead capture tool” is a way to gather the email addresses of people who have shown an interest in your website, product, or service. It can be as simple as a little box in the sidebar of your blog prompting visitors to sign up for your newsletter, or it can be a full page offering readers a free downloadable “lead magnet” in exchange for their email address. Or anything in between such as popup boxes and header opt-in forms. Basically, in order to collect email addresses, you’ll need to display some kind of form for your visitors to input their information. This is done with a lead capture tool.
The lead capture tool that I use and recommend is Thrive Leads, which is a feature that is offered as part of the Thrive Themes membership. Thrive Leads offers simple, easy-to-use, high-converting page templates and pop-up boxes. Not only do they offer a great product, but they also offer really excellent tutorials to help you get started as well as stellar customer service.
Note: Some email marketing services, such as ConvertKit, come with opt-in forms that you can embed in your website, eliminating the need for a separate lead capture tool. But the forms provided by email marketing services are typically not as feature-rich as dedicated lead capture tools. It’s well worth it to subscribe to a membership such as Thrive Themes in order to get features like A/B testing and better pre-designed templates.
5. Social Media Management Tool ($10/month and up)
These days, social media can make a huge impact on your business. Social media can help you get the word out about your service or product, attract prospective leads, and ultimately influence the popularity of your site or service.
The downside to promoting your business on social media is the amount of time it takes to constantly post on Facebook, Twitter, Instagram, or Pinterest. In fact, on most platforms, you’ll see the highest engagement with your audience if you post multiple times a day. Who has time for that?
So, the last tool that I highly recommend investing some money in is a social media management tool, such as Hootsuite or Buffer. With these kinds of tools, you can sit down once a week for a few hours and schedule your posts for the entire rest of the week—no more having your face glued to your phone everywhere you go! I’d still recommend responding to comments and messages as they come in, but at least you won’t have to worry about creating new posts every single day.
Note: I used to recommend not just social media automation tools, but social media recycling tools. As of 2018, recycling tools such as Meet Edgar and Board Booster (for Pinterest) have fallen out of favor due to algorithm changes. In fact, Board Booster has shut down completely. Meet Edgar is still a useful tool, but they’ve had to adjust their features to accommodate the ever-changing world of social media.
Other Tools, Resources, and Services That You May Need (Depending on Your Business)
So as not to overlook anything, I just wanted to mention these other products and services that you might need to get your online business up and running. Everyone’s needs are different, so make sure you choose what’s right for you.
- Designer/programmer/website theme
- E-commerce tool/services
- Membership site tool
- Bookkeeper/bookkeeping software
- Business cards
- Professional headshots
Save Money by Omitting These Business Start Up Costs
Finally, there are a few things that you definitely do not need to start a successful business.
Logo – As exciting as it is to have a new logo developed for your new business, this is one item that you really don’t need to spend money on until after your online business has started making a profit. Since everything online is digital, it’s easy to switch out your plain, just-getting-off-the-ground logo with a new, professionally-designed one after you’ve started making money. Related reading: How to Create a Simple Logo in Less than Five Minutes
Letterhead – Does anyone use paper anymore? Although it might be tempting to have letterhead emblazoned with your logo ready and waiting to be used in your desk drawer, the reality is most of online business is done, well, online.
Swag – Take it from someone who has wasted money on this kind of stuff before. Do not go crazy having pens, t-shirts, and tote bags printed with your logo—especially if you don’t have customers to give them to. Trust me, it won’t be worth it.
Stock photos – Stock photos are useful for giving a brand or website a specific design or feel. Even though individual stock photos are fairly inexpensive, costs can really add up. If you’re looking to save a few pennies, consider cost-free, royalty-free, attribution-free stock photo sites such as Pixabay, Pexels, and Stocksnap. Looking for free feminine stock photos? Check out IvoryMix.
Camera – Unless your business is centered around photography, chances are, your business will be able to get away with using whatever basic camera you already have. For example, a lot of my acquaintances have used the cameras on their old iPhones to record marketing videos.
Graphics software – For design professionals, there really is no substitute for the standard design software: Adobe Photoshop, Illustrator, InDesign, and Premiere. But if you’re just getting your business of the ground, do you really need all of these tools? Probably not.
Not only are free alternatives easier on your wallet, but some of them are also easier to use. So, for the majority of budding entrepreneurs, right off the bat I would recommend the free version of Canva. Canva is useful for creating social media graphics, quick and dirty logos, and downloadable content upgrades.
Need more than that? If you’re looking for more featureful (and free!) alternatives for each of Adobe’s software programs, here’s what I can suggest:
Alrighty, now that we’ve gone through the essential (and non-essential) online business startup costs, I hope you’re feeling better prepared to dive in and start building your new business!
And one last thing: if your business startup costs are starting to get out of hand, jump on the problem immediately. Don’t want until the bills start piling up. Hunt around for lower-cost alternatives or look for services that can address a combination of your needs at a lower price point. For example, if you need a drag-and-drop page builder, a modal box tool, and a WordPress theme, then Thrive Themes might be the perfect solution for you. There are lots of all-in-one tools that offer lots of different functionality, so look in to OptimizePress, ClickFunnels, Kajabi, and Rainmaker.