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What's It Cost to Start an Online Business?
by Bob McElwain

It's all a function of that extremely precious commodity
called time. When the alternator in your car quits, you can fix
it yourself or turn to a mechanic. Working the Web is no
different in this regard. Doing it yourself saves bucks, but may
not be cost-effective. And it can be a serious mistake if you
lack required skills.

If you want your site to become a significant source of
income, judicious use of time is mandatory. No one person can do
it all. And what you need but don't have time to do, will cost.

Going Into Business

If you are starting a new business, you must file a DBA
(Doing Business As statement) or the equivalent in the county in
which you will work. After filing, it needs to be published,
then you need to open a bank account. Costs vary, but the
minimum is about $50. Also consider any state or local licenses

If you need an accountant, costs go up. Turn to an attorney,
and they may skyrocket. But you may need to consider these
options because of the products or services you will market, just
as in an offline business. You may need to consider liability
insurance. Incorporation may provide even more protection.

HTML vs Web Page Editors

You must understand the basics of HTML, the language in which
web pages are written. There is a time cost here. But at some
point, most will find it more effective to turn to a web page
editor to save time. Costs range from about $50 to $200.

Building Your Site

Hiring someone to put a site together can cost thousands of
dollars. More important, you may find making changes later
brings significant added cost. It is best to build your own
pages, for then you have total control.

But the template used throughout the site is so critical to
success, consider hiring an artist to get it right. Not the
site, just the basic page template. Once the site is
established, it can be very cost-effective to hire out the
creation of new pages and updating. A good page template with
original art work can run anywhere from $200 on up, but $500
should cover even special needs.

Free vs Paid Hosting Services

There is only one option. You must have your own domain name
($35/year from Internet Solutions) and a good hosting service. I
use both Pair.Com and JumpLine.Com. While there are other fine
services available, these two offer attractive entry level
pricing. $5.95/month will buy ample resources at Pair.Com
provided you do not need cgi initially. If you do, JumpLine.Com
at $14.95/month may be the better choice. In both cases, you can
save a bit by paying a year in advance.

If you know how to build your own forms, do so. Many,
however, will prefer a shopping cart service. Americart is very
good, and is available through Pair.Com at $15/month, but anyone
can use it at $21/month. JumpLine.Com offers a shopping cart
service as part of their package at $24.95/month. However, it is
limited. If you can live with the format available, JumpLine may
be the best choice.

Note forms or shopping carts only take the orders. You will
need a merchant account to deal with credit cards. Set up fees
run from about $300 on up. If you need online processing, add a
similar amount.

Opening An Office

While getting started, you will likely keep your present job,
and it may make sense to work from your home. Even so, you still
need an "office," including stationery, invoices, business cards,
and possibly brochures to be handed out wherever you happen to
be. Costs here are the same as in an offline business, and will
be a function of your needs.

Don't overlook software. If you want to do some of the
graphics for your site, Paint Shop Pro at $99 is a good value.
For your accounting, Quicken is good. For mail list handling and
personalized mailing, including emailing, Easy Mail Plus at $50
is an excellent choice.

Then there are other things, such as supplies. Printers chew
up enormous gobs of paper. For competitive prices on
consumables, try Office Depot. Call 800-463-3768 for a free

A Phone Is A Must

An email address is not enough. You need a phone and someone
to answer it. Even if you expect to receive few calls, this is a
must. People often call just to see if you're for real. If
there's no phone, you've lost a sale. Some argue that voice mail
is a reasonable alternative, but it will not help if you can not
get back quickly. If you have a spouse who can answer, go for
it. If not, find someone in your area who can take calls as your
secretary. If you provide up-to-date information about your
business, your "secretary" can often save you the need for a
later reply. Further, there is simply no less expensive way to
appear to be working the business full time.

Where We're At

The above is not the whole of it. For example, there has
been no mention of search engines, yet good positioning can make
a big difference. Again, if you know how to optimize pages and
can do so easily, it is worth your time to do so. If not, hire
it out. Writing skills are important. If yours aren't so hot,
factor in some cost for editing, or even creating both page
content and the advertising message behind all. Good service is
available at $25-$50/hour.

You must add up these costs relative to your particular
needs. But it is unlikely you can start a serious online
business for less than $500 to $1000, even if you do all the work

Time Cost Analysis

Starting any business means commitments in time you can not
expect to recover except over the long run. So good cost
analysis is difficult initially. Even so, put a dollar value on
your time, perhaps as low as $5/hour, to help you make good
decisions about how you will use your time. Even at $5/hour, it
will be clear that some things should be hired out.

Building web pages with HTML when you could be generating
leads may not be the best use of time. Reading a book or two
about how to work the Web can be very helpful, but sometimes it's
more cost effective to buy the information needed.

Working harder is often the only option available. But when
possible, work smarter, which often means hiring services. In
the end you'll have more fun and rake in greater profits sooner.

Bob McElwain
Web marketing and consulting since 1993
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