Well, the costs of starting a business depend on the type of business you plan to launch. This cost is known as the ‘Business Startup Costs.’
In this age of the internet, it’s true that the online business startup costs are low, but a $0 price tag is not real. Nothing is free!
Today, investors and entrepreneurs prefer to launch and invest in an online business over the traditional brick-and-mortar.
The business startup costs for an online business is far less than the brick-and-mortar business. However, not every business can be started online.
Every time an online entrepreneur looking for consulting on a new online business venture, one financing issue that they concern most is the startup costs. They want to know ‘how much does it cost?’
Knowing the exact startup costs is very crucial because your business success depends on this number. Investing too little cash, your business idea will crash and die before it even taken off. Investing too much, you are wasting precious financial resources.
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How Much Does It Cost To Start An Online Business?
Easy, you prepare a business startup cost and expense statement. This statement will offer a good idea of the capital investment needed to launch the business.
The Business Startup Cost and expense statement
The business startup costs statement is a financial road map of the business expenses and capital investment requirements. It provides an idea of ‘how much does it cost’ to launch the business.
It’s smart to identify the business startup costs before spending time and money on the new business. You always want to be prepared.
There are two types of expenses associated with every business, fixed expenses, and variable expenses.
The advantage of starting an online business is low expenses, especially fixed expenses. This, however, doesn’t mean you don’t have any expenses.
Here’s what the startup costs and expenses look like for my online business.
The Costs To Start An Online Business
Your job is to identify all the expenses associated with the new business that you want to start. Once you identify all the expenses, you then provide an estimated cost for each one.
Most online businesses, like my blog business, doesn’t need a physical location. This is a large expense that you can eliminate by going online.
However, online retail businesses do need a warehouse for inventory. If your business is related to retail, you should find out how much does it cost to rent such a location. I will not include this startup expense here.
How Much Does It Cost To Set Up A Website?
The costs of setting up a website are the most important startup expense for an online business. This cost ranging from a few hundred to thousands of dollars. It all depends on the type of online business, with the eCommerce website as the most expensive.
Below is the list of expenses to set up a business website:
Web Hosting Cost
The biggest mistake that people make is believing they can start an online business with a free website. Web hosting providers place lots of restrictions on free websites, making them unprofitable to use for business purpose. Most free websites are good for personal use.
The disadvantages of free websites are slow site speed and lots of advertisements.
Recently, a few hosting providers like SiteRubix launching a new product, eliminating all advertisements on their free website. If you don’t care about site speed, you can use SiteRubix to launch your online business.
Besides the hosting service cost, there are other costs associated with the hosting account include site security and virus protection expenses that you must pay, even with a free website. Be sure to include these costs in your business startup expenses.
When using a free website, you need to know that the online business is operated with a subdomain name. It is very difficult costly to promote the business brand under a domain name. For this reason, online businesses prefer to register for their own domain name.
To learn more about domain name in brand building, click here to read Your Domain, Your Brand.
Domain Name Cost
The domain name is your business address and your brand. A business website cannot go live without a domain name.
Yes, you can operate under a subdomain name and avoid this expense. However, it is not wise to do this. The subdomain name does not belong to you, and you cannot promote the subdomain name as a brand.
The cost for a domain name is between $4 to $20 per year. It is a small cost. It is not worth the saving using a subdomain.
Website Design Cost
This is the biggest fixed startup costs for any online business.
It’s true that you can design the website by yourself, but the times spend learning and working on the website is a business startup expense. You must include this into your cost and expense statement to know the value of your own contribution and investment in the startup.
The costs to hire website designers range between a few hundred to thousands of dollars. ECommerce websites are the most expensive to build compared to a blog site like mine.
However, today’s technology has allowed average people to design and launch their business website in less than a minute, even with eCommerce.
Shopify is a well-known eCommerce platform which you can use to start an eCommerce business with a few clicks of a mouse. The platform currently offers a free trial account which I recommend you test out Shopify before spending thousands of dollars on website design.
You can also use SiteRubix as an alternative. SiteRubix is best for non-eCommerce business. This hosting is specifically built for blog business. If you plan to launch a blog, you should get a free account with SiteRubix which currently also offers 10 Free Lessons teaching people the process of building a successful online business through the Wealthy Affiliate University.
Online Business Operation Costs
Once your online business website is lived, the real work begins.
There are operational business expenses that must be budgeted in your startup costs and expenses.
Website Maintenance Costs
You must keep your business website running smoothly to avoid losing customers for poor site experience.
The website requires a regular update and monitor for errors and problems.
Maintenance costs include monthly web hosting costs, software and site security update costs, content update costs, and site design improvement cost.
Business Processing Costs
Order processing is a business expense related to retailing or selling something online. This can be the largest cost to maintain and operate an online business.
You need to hire customer service reps, order processing team, and pay shipping costs.
These business startup costs are considered as variable expenses. As your online business grows, operating expenses and costs also increase.
There, you have a sample of a business startup costs statement. It’s a list of all expenses and costs to launch an online business.
Remember, these startup costs are just an estimate. The actual costs can be higher or lower as you begin the process of starting the business.
You can learn more about the process of starting an online business by joining this Online Entrepreneur Community to network with other online business owners.
If you are ready to turn your business idea into a reality, I invite you to join the leader in online business training by following the link below to discover your financial success.
The business startup costs statement is prepared to answer the business question, ‘how much does it cost?’