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…
- Aweber: $69
- GotoWebinar: $79
- Hosting Reseller Account: $12.61
- Dedicated Server: $114.53
- Akismet (Antispam WordPress Plugin): $5
- Domain WhoIsGuard For Niche Site: $2.88
- Mobile Marketing For Dummies Book: $18.89
- GainHigherGroundMembership.Com Domain Renewal: $9.10
- Taxi + Train To Live Event: $62
- Train To (Another) Live Event: $42.75
- Wifi Access On Train: $6
- Skype Recharge: $17.25
- Accounting Services: $252
- Amazon S3: $132.77
- Training Products (For My Education): $229
- 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”?
Firstly, 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:
- Domain Registration $10/year
- Hosting $10/month or less (Blatant Plug: It’s free with GHG Membership!)
- Aweber $20/month ($1 first month)
(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. 🙂
Wow, this is an eye opener. Thanks for sharing this. It is so true. 50 bucks a month on any business cost is peanuts compared to anything else. Keep it coming.
Great to see you here on the blog and glad you found this useful 🙂
Will do my best to keep it up!
Cheers – Rob.
While I do not operate on anything like the scale that Rob does, nevertheless his points on monthly expenses are well made and correct.
Few unless they are full time will need to spend $1050 per month on expenses until they get well underway. For many in the early days $100 per month will cover their hosting, autoresponder and the ocassional incidental expenses.
As usual Rob is woth paying attention to.
Thanks very much for your thoughts. You make some excellent points…
I totally agree that $100/month is more than enough when you are starting out. Even less really if the budget is tighter. As you get more results and money coming in the naturally the purse strings loosen a little – it’s easy at this point to get overconfident and let expenses run wild. But provided we stay sensible then it’s not that hard to run a relatively tight ship.
Cheers – Rob.
Fantastic Rob this must be a first, I’ve never seen anyone do their expenses.
It just goes to show that if you want to run a real business costs will incur but checkout the profit, that really makes internet marketing worth every penny you invest.
I agree that in internet marketing it really can be difficult for many to let go of their money for the purpose of running their business because they feel they are just throwing it away.
And yet many as you say can find themselves paying out alot for courses in the hope that they will find a secret to making money. It’s the instant gratefication thing. I think we have all been there at some point.
Treat your online business as if it were an offline business and then see how you behave. You’ll find you will sober up with the dreaming and head towards being more realistic, this will keep you in good stead. Investment for return is what its all about.
Thanks for your comments, much appreciated and glad you like this.
You have some great points there. I would say it is very important to invest but obviously some investment can go wrong so it’s well worth sleeping on the ideas you have before you take the plunge. Also, I think you are probably right after the gratification. It’s a hard situation to understand -searching for this big “secret” that doesn’t really exist! The secret is time, effort and the right roadmap. Simples!
That’s also the first time I have seen anyone detailing their expenses/revenue like that. You are very radical compared to most other internet marketers when it comes to “openess”
There is an American based service available where you can get hosting for four domains + unlimited training + autoresponder + training + a blog editor – all for $9.97 per month.
So I think do it’s possible to start a business very cheaply on the iinternet (as you say – minimal costs compared to bricks and mortar)
I don’t think it’s that people are reluctant to invest – I think it all comes down to an “employee” mentality. Most folks are so used to their employers paying for all that’s needed for them to earn a living that they find it hard to see it from the perspective of being an employer/business owner themselves.
It’s quite a big “mindshift” before you get that – it took me ages but eventually I realised that spending on business tools/marketing etc can pay for itself in the long term.
I have no worked for myself for over 16 years and I can’t imagine being “employed” again.
There have been rough patches for certain and I am going through one at the moment due to health issues and loss of clients – hence my renewed interest in other income opportunities.
I must congratulate you on being one of the few internet marketers on-line that I feel are really worth listening to – and this is all down to your incredible frankness about your business and what is truly involved in running an internet business.
More power to you…..
Appreciate that Kevin and thanks very much for taking the time to contribute so much to this topic. 🙂
Very good point on the mindset shift required from employee to business owner. It took me probably a year to full do it so I’m definitely not a natural. And you don’t have to be, you just have to be aware of it and want to make that switch.
Cheers – Rob.
interesting post and thanks for sharing this information.I see you have no expense down for advertising.Do you not use paid advertising -and what are your views on paid ads like facebook or solo? Also what have you found to be the most productive ways to promote your business?…thanks again,
Thanks a lot for your comment, great to see you here.
Yes, I do purchase paid advertising. Solo Ads are probably my favourite along with paid forum listings (e.g., the Warrior Forum) but I have dabbled in PPC too (not with great success though – yet!). There are also other costs I have incurred too depending upon the time period you look at: Software (e.g., OptimizePress, Membergate, Wishlist Member), I purchased a new PC desktop early in the year, outsourcing (fiverr.com & oDesk), image credits on BigStock.Com (like the one at the top of this post), and so on. There are also many free tools I use as well of course.
So it does vary but this gives an approximate picture I hope 🙂
Cheers – Rob.
Rob – you the man! When we first me a couple of years ago I don’t believe you had made anything online? (correct me if I’m wrong?) And now here you are lording the internet!
I’ve got a few questions for you:-
1) You work like a trojan …. what motivates you?
2) When you attack a project that is overwhelmingly large to most people, what is your mindset?
3) What time do you get up in the morning?
Number three is a little off piste – I’m doing a little investigation to see if there’s any correlation between early risers and success!
Thanks for your comment and great to hear from you 🙂
1. 50% Lifestyle (i.e., working at home, flexibility in time/location etc) + 50% Money. Overall though, I enjoy it and that’s crucial I believe. I still think hours wise I work less that many people with full time jobs. But when I work I try to WORK and not just surf watching videos and doing social media trying to kid myself I’m working.
2. Break it down and “chunk it” >>> https://www.gainhigherground.com/how-to-use-chunking-to-massively-boost-your-productivity/
3. This morning at 6.20am but other times 8am. Sometimes, I don’t start until 9-10am. No regular start time for your survey I’m afraid.
Hope to catch up on Skype soon Paul?
Cheers – Rob.
Thanks for this, the expenses side is particularly useful! I have been putting off eg getting the mailer although i know i need to – after reading this article, i must bite the bullet… Mind you, there are other mailers that can be a bit cheaper, or even free, if you are really struggling but it’s important to read the small print (I use them for work) and make sure you get your data/contacts out when you want to. And re your latest reply, PPC is a tricky area to master!
Your blog has inspired me, again! Just need to keep reading to stay that way 😉
Thanks for your input 🙂 Yes, there are cheaper ways but honestly, it is a business and a quality email service is crucial really and for $20/month Aweber is well worth it I think.
Thanks for providing those details – much appreciated!
I agree entirely with the “Type Three” attitude. I have been more than happy to find the $10 per year domain registration, $20 per month AWeber charges and have free hosting from GHG. Clearly there is no comparison with starting an offline business!
Well said Peter, that’s definitely the “Type 3” attitude!
Cheers – Rob.
I too would love to hear how you organize your day Rob. What works for you, what doesn’t? How do you stay focused? What does a typical work day look like for you?
It would be great to see what someone who is doing this successfully does on a typical day.
Great post btw… it helps with perspective.
Thanks for the suggestion – will definitely look at doing a post like that (if I can make it interesting enough!).
I am currently doing your internet income funnels programme. It is a very steep learning curve for me as I am a total newbie to the internet, however I have to say that you have shown great patience for my painfully slow progress ( still on video 3 ) but I am so determined to get there and finish. I think my take on this blog regarding expenses is that when you are starting out on something completely new, you dont have any confidence initially that you can ‘do it’ certainly in my case and the costs are seen as a bit scary as you don’t know if you are going to fail and be able to complete…! But, as you take each day at a time or each video at a time you can look back, see how far you have indeed progressed and then look forward to believing that you will finish and succeed and make great money. The expenses involved in running an on-line business is nothing really and I have run a retail/ beauty salon business where costs were very high. I think one has to have self belief that you can do this, the rewards will come and the monthly bits and pieces are essential investments into your self and a new life of freedom. Yippee!!! Rosemary
Several excellent point Rosemary, thanks for your contribution and keep up the good work! Cheers – Rob.
Very good of you to share that. The sort of thing I hoped and suspected was true.
But nothing like the actual evidence to spur us on.
Great Simon – anything that provides motivation is a good thing, glad this helped!
Cheers – Rob.
Thanks for the reality check! So many IM ‘gurus’ want people to believe that success can be achieved overnight with the minimum of outlay. This is why so many people start an IM business but then drop out (95% – scary!). If only we were more upfront from the very beginning, and spelt it out like it really is. I really admire the progress you’ve made, but I certainly realise the effort you’ve put in to get there. Well done Rob!
p.s. second affiliate sale – whoop, whoop!
Thanks your your thoughts and I think you’re right that that is one of the big reasons people drop out.
Well done on your affiliate sales too – that’s fantastic. Remember it all start with 1 visitor, 1 subscriber and 1 sale. You’ve surpassed that now so keep on trucking and looking after your subscribers the best you can 🙂
Cheers – Rob.
Could you breakdown your revenues for us for that 30 day period?
Also, your accounting costs seem very high? Have you heard of Crunch, who specialise in freelance, online and contractors? I pay just £59/month and have a dedicated accountant/tax expert and account manage at the end of a phone and they take care of all my HRMC, end of year and accounts…genius online software too!
You should check them out here [my aff link] – http://www.crunch.co.uk/crunch-products/?a_aid=rcm
Thanks for your comment.
Maybe I can do a post with revenue breakdown in the future but the point here is really about expenses and making wise investments in them. Thanks for the suggestion though and also on the account service 🙂
I am another newbie!
I was introduced to your site Rob via Internet Income Detective. I have got their pack and studying it.
Have just seen your intro video and signed up for your freebies. I like what you say and how you present yourself. At this stage I remain open and receptive of ideas, methodology, tools etc to focus my mind into the ‘niche’. I agree with your comment about ‘info overload’ – goes with the expression ‘paralysis by analysis’.
Thanks Rob – for now
Best – Mike (York UK)
Welcome along to Gain Higher Ground – it’s great to see you here on the blog 🙂
I hope you enjoy the content – there’s loads here and even more detailed content inside the members area
You’re absolutely right about analysis paralysis – it affects us all but being aware is the first step to breaking it.
All the best,