How much does it cost to run your online business? (%)

Banned 13 years ago

Originally Posted by Chris The Traffic Blogger

I did the math and between server costs, outsourced content and adwords I spent roughly 7% of my monthly earnings running my business.

Mine's also approaching 7% (not for outsourced content or AdWords, in my case, but for outsourced off-page SEO on which I'm unwilling to spend my own time).

Originally Posted by Chris The Traffic Blogger

If it is above 10%, why? What are your thoughts on the matter?

For over a year and half, mine was (a tiny bit) over 10%, perhaps partly because I outsourced more SEO than I actually needed. It's reducing, now, and I'm expecting that after another year, that percentage will really be very small indeed. Partly because writing articles for syndication means that other people, effectively, are doing some of my off-page SEO for me (and better quality SEO than I can outsource, too, bringing me context-relevant, higher-PR backlinks and streams of traffic already targeted by others).

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freemen14

13 years ago

Mine is closer to 25% right now as basically I am an SMS seller. I buy SMS credits at about .02 cents and sell to the clients i find at .10. Plus I have some regular business costs that all of us have like supplies, lease, etc.

having said this I'm kind of a online/offline hybrid.

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Alexa Smith

Banned 13 years ago

Originally Posted by pennystockpromo

If you're making $3 or $4 for every $1 you spend, that's a fantastic ROI.

It depends how you value your own time, doesn't it? If you're working 40 hours per week, spending $50 and earning $150/$200, most people in the Western world wouldn't be able to survive on that.

If you can achieve that ROI with something that's scalable without the input of (much) extra time, that's another matter.

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freemen14

13 years ago

Originally Posted by Alexa Smith

It depends how you value your own time, doesn't it? If you're working 40 hours per week, spending $50 and earning $150/$200, most people in the Western world wouldn't be able to survive on that.

If you can achieve that ROI with something that's scalable without the input of (much) extra time, that's another matter.

Agreed.

We often talk about how as an IM we should treat this as a "real" business.

having said that most business owners in the western world will take 50-75% profits on their ROI anyday. The key, as you mentioned, is finding a way to scale up in order to pay for the time.

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Dave Rodman Banned 13 years ago

Mine is probably somewhere in the neighborhood of 15%. But that doesn't tell you much. If I started doing the work myself and trimming back, I could get it down to only essential costs (Servers, domains, etc)

And ROI doesn't take into account revenue growth. You might be getting a higher ROI, but your competitor might be growing revenues at 3x what you are.
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Istvan Horvath

13 years ago

Originally Posted by Alexa Smith

Originally Posted by pennystockpromo

If you're making $3 or $4 for every $1 you spend, that's a fantastic ROI.

It depends how you value your own time, doesn't it? If you're working 40 hours per week, spending $50 and earning $150/$200,

Sorry, but you introduced here something that was NOT there in the initial equation: time.

Nobody was talking about our own time spent in/on business.

It was purely about the ROI: you spend X amount of $ and you get Y amount of $, where X is Z% of Y.

What does that have to do with the time...?

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Alexa Smith

Banned 13 years ago

Originally Posted by Istvan Horvath

Nobody was talking about our own time spent in/on business.

It was purely about the ROI: you spend X amount of $ and you get Y amount of $, where X is Z% of Y.

What does that have to do with the time...?

Nothing at all, in itself.

I was disputing the assumptive statement "If you're making $3 or $4 for every $1 you spend, that's a fantastic ROI", because there are clearly circumstances under which that wouldn't be true at all: its benefits rest on an assumption of scalability.

In one sense, "time" is involved with it, arguably: many people don't really distinguish in their own minds between "creating a business" and "creating a job for themselves". It could be argued that "your own hourly rate" is actually relevant to whether you're even making a profit in the first place.

I'm just making the point that spending 10% of your turnover on business expenses before paying yourself is a dramatically different proposition from spending 10% of your turnover after paying yourself.

However, I do take your point, too, and apologise if I was dragging the thread off-course.

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PaulMark

13 years ago

Varies by market. But our most recent was running 17% overhead. Basically turning $1 into $5.

A friend is spending $50,000 a month and turning it into $75K a month for a profit of $25K, he's not crying about the %.

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Craig McPherson

13 years ago

Originally Posted by Chris The Traffic Blogger

I spent roughly 7% of my monthly earnings running my business.

Nearly 40% of mine went back into outsourcing content, backlinking and other tasks.

I reckon by mid this year I can start keeping the majority.

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LawrenceTam

13 years ago

I'm running near 40%. why. I outsource everything. My goal was not to be the man running the business but the man owning the business.

My goal is to reduce this with efficiency but for the time being I have too many things launching so need to automate, automate, automate

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mr2monster

13 years ago

I spend about 45%.....

A lot of that is voluntary spending on things like marketing/advertising/sales people/outsourcing/etc. I'm trying to GROW, so I'm investing much more than I would if I were comfortable where I'm at.

For the longest time, I spent 100% because I wanted to parlay that revenue into company growth... it was very hard..