Web Business Profit & ExpensesLet’s talk money!

I get a lot of questions about which tools and services I use to run my online business. Some of these are free and some cost money. In this post we are going to focus on the latter.

Before I breakdown the last 30 days expenses for you I think it’s helpful to look at people’s attitudes to spending money and investing in their business.

In my experience, there are 3 main types of people I have spoken to:

1. People who are just starting out and are extremely reluctant to spend anything whatsoever.

2. People who are very reluctant to invest in essentials like an email marketing service (e.g., Aweber) but ironically have spent thousands on training products which have resulted in zero income (because they are “biz-op junkies” and/or don’t see things through).

3. People who understand that sensible investment is required for any business. And the costs involved in starting an online business are tiny in relation to virtually any other type of business you can think of.

I’d encourage you to have a think about which category YOU fall into (more on that later).

But let’s move on and take a look at my itemised expenses for the last 30 days…

  • Total Expenses: $1,052.78 (=£650.62)

Now if you are starting out this might sounds like a lot but remember that these are expenses which are (mostly) necessary to generate the different streams of income I have.

To give you some context on this my revenue over the same 30 day period was $14,238.71 (=£8,799.52).

So “operating profit” (i.e., profit before business tax of course!) was $13,185.93 or roughly £8,148.90.

And the operating profit margin was 92.6% ($13,185.93 divided by $14,238.71).

This is why I LOVE running a web-business and why I chose it over another kind of business model!

There are VERY few other business models with such high profit margins. To give you a comparison, check out the average operating margins by industry in this article. The average for the biggest 500 listed companies in the US (the S&P 500) is 18.1% – whereas mine is over 5 times that!

Is This “Typical”?

Typical Profits For Online BusinessFirstly, in terms of profit margins obviously you have to account for the fact that I work from home (part of my lifestyle I want and very important to me). But clearly, if I had an office then my profit margins would be significantly lower. But they’d still be very high compared to other industries.

Also, while my expenses are relatively stable my revenue does fluctuate from month-to-month.

For example, in July my revenue was over 2.5x higher than it was during the 30 day period we’ve looked at here.

But next month I expect it will be lower (unless I win the lottery ;-)) because I’m currently focusing on a lot of research into new projects which I know won’t pay off for a few months.

But overall, since I earned my first $1 online at the back end of 2010 the average profit trend is upwards and I am continuing to work to make sure I can do everything I can to make this continue. Why wouldn’t I?

Also, this is just me! I’m not disclosing these figures to show off. After all, many people earn a great deal more from the internet than I do. Instead I’m just sharing this with you in the hope that you can make better decisions about the required expenses and investment that you need to move forward in your own operation.

What Do You Need To Get Started?

Enough about me and my situation. If you are starting out from scratch what are the expenses that you absolutely need and can’t live without?

Here are the essentials you need to start a web-business:

(Note: Remember that that vast majority of money that is made online comes from lists so don’t even think about not having the last one!)

If you don’t know what you are doing or what roadmap to follow, invest in some quality training too. If you can’t afford that then don’t buy it. Instead save up some money and in the meantime search for free information (you can start by read all of my blog posts here on Gain Higher Ground).

A Last Word…

I hope you can see that:

1. Some expenses are necessary and are investments in your future.

2. You need the mindset of investing and putting in effort first for results later (different mindset to having a J.O.B).

3. If you want a flexible lifestyle and residual monthly income then you need to get yourself the “Type 3” attitude that we talked about at the top of this article.

If you enjoyed this please help me to spread the word by emailing this article to your contacts – I’d really appreciate that. Also, please let me know your feedback and comments below… Cheers – Rob. 🙂