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How much money do you need to start an online business

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While online business start up costs are nothing compared to the brick-and-mortar businesses, you still need to make some minimum investment to launch a web business.

When you hear people say, “start a business on a shoe-string budget”, remember this: a shoestring also costs something. And what for some people “small investment” means $1,000, for others it might mean $50 or less.

So, how much exactly do you need to have available to start an online company? Let’s review the costs.

*Please, note: I am assuming that you already have a computer and the Internet access – otherwise, you wouldn’t be reading this article :-) I am also assuming that you are starting a basic online business – not an e-commerce web site with advanced shopping cart system selling hundreds of items, which would require a bigger investment.

1. Domain Name

If you are serious about your business, you want to choose and register a domain name – www.yourdomain.com. You can purchase it for as low as $16.00 a year. Some web sites offer it for less, you just need to do some searching. Give a lot of thought to your domain name – after all, it will represent your company. I kept thinking about my domain for the longest time. I wanted something unique, memorable and with humor. That’s how my HelpingFoot.com was born.

2. Web Site Hosting

Hosting is an absolutely necessary component to any web business. Your web site has to reside on a web server, and hosting companies provide you with space on their servers for which you have to pay for. Of course you can choose a free hosting company at first (such as Geocities.com and Angelfire.com) but for reliability try to switch to a paid one. I use Pair.com and my hosting fee is just $5.95 a month. I also had to pay a one-time $28.00 set up fee.

3. Web Site Design

Now, the biggest stone in the web business set up – web design. You can choose to do it yourself by picking up a book for beginners, going through the free online tutorials, or purchasingquality training materials to learn how to set up your own web site. Or you can hire a professional designer. Because web design is a relatively simple task for any computer-literate person, just about anyone can call themselves a web designer today. That’s why fees vary greatly from $10 to $200 an hour for web design. You can probably hire a college student to do an entire web site for you for $200.

That’s it for start up costs.

Things like promotion, Search Engine submission and, copy-writing you can do yourself at first, via free methods and manual work. After you start making money with your web site, you will be able to afford automating and outsourcing many of these tasks.

Remember, you have to make a choice: you are either going to invest money or time into whatever you want to do. At first, time was the ONLY thing I could afford. But then I decided to outsource a few things (some people have more copy-writing talent than I do ;-) and invest a few bucks into my business. The key is to invest it wisely.

Pay for something only when you are absolutely sure it will bring results. Otherwise, spend more time researching and observing other Internet marketers and their strategies.

As you start making money with your online business, your purchasing power will increase. A year ago spending a $150 on an autoresponder services sounded crazy to me and impossible to afford. Now I look at it as a necessary cost of running a business and saving time following up with my customers.

Let’s summarize your online business start-up costs for your first year of operation. If you start making money the first year, your expenses might go up since you will probably be more willing to invest:

- Domain Name: $16.00
- Web Hosting: $6.00 x 12 months + $28.00 set up fee = $100.00
- Web Design: $50 (training materials) or $200 (outsource)
- Totals: $166 (do-it-yourself) or about $300 (outsource)

As you can see, you still need to spend a little money to get started. You can spend more or less money, depending on how much time you are willing to put into your business.

If $166.00 seems like a lot to you to spend in 12 months, then you might want to try a completely free web site offered by Geocities or Angelfire, as I mentioned before. Your business won’t be as effective because there will be no company domain name or a well-designed web site, but you will at least get your feet off the ground and get a feeling of what it’s like to run a web business.

Milana Nastetskaya is a full time web developer and the author of the “65 Instant Web Design Answers”. http://www.instantwebanswers.com

How much money do you need to start an online business
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