How Would You Spend $50,000 or $10,000 To Build an Online Business?

by tpw
11 replies
I'd love to get some feedback from the community to help others answer these common questions.

The dollar amount really does not matter...

Over the last decade, I have spoken to people on the phone, who have come to me at the end of their rope...

I have heard of people spending 5k, 10k, 20k, 50k and 100k to build their online business, then by the time they are knocking on my door, they have no money remaining, and revenue from their investment is still non-existent.

Regardless of the dollar amount, I would advise people not to spend all or most of their money building a website.

It is a myth when people say, "Build it and they will come..." It was a movie catch-phrase, before it became an Internet myth...

I would advise that once a website is built, the majority of available revenues should be reserved for marketing the site... Marketing itself should never be an afterthought, but rather it should be planned from the beginning....

Regardless of the dollar amount available, I would advise spending no more than 25% of available money to create and build the website!! In fact, with most dollar amounts available, I would advise spending far less than 25% of your available investment money to build the website.

From the get-go, one needs to build the website, then market the website. But one should always keep the majority of their investment capital in liquid cash assets.

I admit. I am a tightwad. So, regardless of the money I had available to start a new business, I would be very careful about the money I did spend to develop a new project.

For the experienced folks in the audience, what would you advise a newbie to do if they have dreams of making it big online?

What percentage of any available investment would you set aside for each part of your new business?

What percentage of your money would you set aside for:
  • Research?
  • Website design and development?
  • Marketing?
  • SEO?
  • List Building?
  • Hosting?
  • Rainy Day savings?

I suspect that this discussion could provide a lot of "food for thought" for those with money to invest, who are looking for some good advice from those of us who have been there before...

My best advice is to not use all of your budget to build your website, in fact, only use a small portion of what you have set aside to build your website.

Also, keep your spending low enough so that you will always have cash-in-reserve.

But just as important, count your marketing expenditures in reference to ROI (Return On Investment) to gain a better understanding of what expenditures provide the greatest return for your business and what investments are a money-pit.
#$10 #$50 #build #business #business startup #investment #online #online business #return on investment #spend #start business
  • Profile picture of the author MakeMoneyJames
    A decent option could be to buy an already established business.
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    • Profile picture of the author tpw
      Originally Posted by MakeMoneyJames View Post

      A decent option could be to buy an already established business.

      Good point.

      But how much should one keep for marketing and cash reserves, if they buy an existing business? Or should they worry about that?
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      Bill Platt, Oklahoma USA, PlattPublishing.com
      Publish Coloring Books for Profit (WSOTD 7-30-2015)
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      • Profile picture of the author MakeMoneyJames
        Originally Posted by tpw View Post

        Good point.

        But how much should one keep for marketing and cash reserves, if they buy an existing business? Or should they worry about that?

        Depends on the plan of execution for marketing, but definitely should have reserves for marketing. And also a plan and cash reserves for improving/monetizing the website further.
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  • Profile picture of the author eightofnine
    Building online businesses reminds a lot of my poker playing days. Sure, I could take my money and go play at the table with all the big boys, and invariably I would lose my entire bankroll. Or, I could use money management to ensure that I would always be funded for some kind of poker playing venture. Often, after a nasty downswing in luck, I would be forced to drop down to the micro limits of internet poker and rebuild. But, as long as I protected my capital, I was always in the game, and could turn a profit somehow.

    I think internet IM is the same. Sure, you could spend your entire capital building an armada of websites in a few weeks. However, if something happened to this collection of websites, then it is gonna be a long climb back up. Slow and steady wins the race in this game. Build a website or launch a small online business, scale up things that work and dump things that dont. Once you have found a winner, all you gotta do is reinvest your profits and grow baby grow. I always feel bad for people that have spent all their available capital right out of the starting gate. Sure it works for some people. However, the amount of risk they take on doing things that way is just waaaay to high for my taste :-)
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    • Profile picture of the author dadamson
      Originally Posted by eightofnine View Post

      Building online businesses reminds a lot of my poker playing days. Sure, I could take my money and go play at the table with all the big boys, and invariably I would lose my entire bankroll. Or, I could use money management to ensure that I would always be funded for some kind of poker playing venture. Often, after a nasty downswing in luck, I would be forced to drop down to the micro limits of internet poker and rebuild. But, as long as I protected my capital, I was always in the game, and could turn a profit somehow.

      I think internet IM is the same. Sure, you could spend your entire capital building an armada of websites in a few weeks. However, if something happened to this collection of websites, then it is gonna be a long climb back up. Slow and steady wins the race in this game. Build a website or launch a small online business, scale up things that work and dump things that dont. Once you have found a winner, all you gotta do is reinvest your profits and grow baby grow. I always feel bad for people that have spent all their available capital right out of the starting gate. Sure it works for some people. However, the amount of risk they take on doing things that way is just waaaay to high for my taste :-)
      Thanks for posting this eightofnine. - It really rings home for me and has given me some ideas about how to grow my business through scrapping the things that don't wont and capitalizing on things that do. Simple lesson I know!
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  • Profile picture of the author wcoulter
    With that kind of money, getting a batch of websites built and content created for them is probably going to be one of your cheapest expenses.

    It totally depends on what kind of online business you're going into. I'm going to assume we're starting from scratch.

    Here's what I would do assuming we're working with 50K:

    1. Allocate 10% for startup costs (business registration, hosting, any utilities/software/etc., websites built, content/product created, copywriting --largest expense in this area if you're not doing it yourself, whatever is involved with getting your business off the ground and existent).

    I'd do this a cheap as possible...I can do alot of this stuff myself so I'd likely have remaining money is this line item. The trade-off being it takes more time.

    2. Allocate 40% marketing/traffic generation/advertising. This is easily going to be your biggest and most time consuming area. As mentioned previously, you can't just build a site and expect it to magically start generating income.

    The reason I allocate so much to this area is because you're going to have to do A LOT of testing, tweaking, etc. to start generating income. Until you get it right, you could have a lot of costs involved and you might nail it from the get go...but that's not the likely scenario.

    If you're smart about it...you can make this money last quite awhile. As someone mentioned before, slow and steady wins the race.

    3. Allocate 50% for fail-safe funding. If you're trying to get started this is going to come in handy and you can use this as a fall back for other expenses.
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  • Profile picture of the author Andyhenry
    I don't think there's a set answer to this type of question.

    There's a MASSIVE factor missing.

    The person involved.

    We all know that having a product isn't what matters.

    You can have 1000 websites but if you don't know what to do with them to make money consistently then they'll just be an administrative nightmare and cost you more in time than they're worth.

    A lot of people seem to think that once you get a website and start promoting it - that's it, you're in the money.

    In reality, unless you are building a brand and engaging with your audience, your revenue is tenuous and can disappear in an instant.

    Who the person is, what niche they're in, why they're in that niche and how aware they are of what's required will all make a huge difference to the results.

    You can give one person a car review website that makes $10k a month and within a few months they'll have killed it. You can give another person a domain name and a camcorder and in a few months they'll have built an income.

    There are way too many factors to have a standard answer.

    You need to be passionate about your niche and know what your audience want and how to reach them - then you can build a business in many ways. If those things are missing them $10k won't touch the sides of the hole you're be digging for yourself.

    Andy
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    nothing to see here.

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  • Profile picture of the author kolbywhite28
    The first thing I'd do is put aside $15k for entertainment expenses. Very important.
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  • Profile picture of the author Willie Crawford
    That is a tough question Bill but I'd plan on investing at least 25%
    back into marketing.

    When I look at the biggest mistakes that I made over the years,
    they weren't the models so much as the partnerships

    I believe that partnering with others provide tremendous upside
    leverage, but the wrong partners spells death to the project.

    Willie
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    Yes, It's Crazy!

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  • Profile picture of the author Fraggler
    I'm a pretty low risk type of bloke so I would spend a decent amount of time on the research and planning stage to try and prevent things going wrong. I also know not everything works out as planned so I would want several options available in case something doesn't work out. This planning doesn't cost money directly but if I had no other income source then I would need to budget living expenses while I get things started.

    It also depends on where I was coming from. If I had an brick & mortar business that I wanted to take online then my options would naturally be based around that and not coming up with a brand new opportunity.

    If I was starting from scratch then my focus would be on coming up with several simple ideas (let's say 3) that created a postive return relatively quickly that I could then expand on. These ideas would be as simple as a site with a goal of selling one product or service. I'd create a few of these initial ideas (paying experts to create the content) and wait and see how each one goes. I wouldn't spend big on any of these ideas until they started to show potential and began paying for themselves.

    Since I have the budget my initial traffic would come from paying these experts to create entertaining content to assist in article marketing. My goal would be to get direct traffic from these articles while boosting the SEO strengths of the website. (I enjoy SEO and authority sites can deliver a lot of traffic fast).

    Once I've found that idea then I would keep expanding it - small steps at a time with multiple tests in each step. Each step needs to create a +ROI before moving forward. The end goal is to create some form of passive income into the sales funnel.

    After I found a market with a proven sales funnel and room for growth and diversification I would then start spending the money more heavily on marketing. The site is already making money now so I can really have some fun with the promotion.

    I'd split that marketing up with paid advertising leading to a direct return while the rest would go towards getting the crowds to spread the word for me. Because I took small steps before spending all the money on advertising I will have a good idea of what each lead is worth to my business. I can freely spend on marketing by keeping a close eye on how much each conversion costs.

    The social media traffic will come from investing in video creation and other cool stuff that will help turn the business from just a website into a known brand within the niche. Once again the goal of the social media will be to create another source of traffic while strengthening the position in the search engine for even more traffic.

    I find it hard to put a percentage on each stage but I really do like breaking things down into manageable steps while never putting a large chunk of my bank at risk. At the end of the day I would have at least 1 idea with half a dozen different stages to a sales funnel all creating a +ROI. I would have traffic coming from authority sites; search engines; social media; video; and paid advertising.
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    • Profile picture of the author donmarvin
      I completely disagree with the advice given to spend as little as possible on the website. If this is an online business then you need to spend quite a big chunk of change on the website and its content.

      You focus on spending time and money on marketing, so people come to your website... for what? To see a shabby, empty site? You need original content and lots of it. Getting visitors to your site is just the beginning. You need to keep them engaged. Marketing is not going to do this, your site is.

      For an online business, it's all about the site.
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