Why You Should Spend More On Your Online Business
I’ve only got a little time this evening, so I won’t go into a deep subject. What I am going to talk about is an elephant in the room for online business.
Online business is cheap when compared to brick and mortar businesses. Overheads are low and margins are high. However, some people – too many people – equate this to “online business doesn’t cost anything.”
If you believe you can create an online business by bootstrapping and spending £0, then you’re thinking about business in the wrong way. That’s what I’ll briefly discuss today.
I’m going to use the example of developer licenses for online stuff because that’s easy. You can apply this line of thinking to any business expense though.
Example: Why You Should Get Developer Licenses for Everything
When it comes to buying stuff for online businesses, you tend to have a few options:
- Monthly subscriptions
- One-time fees for all products
- Free versions of everything
- Single item purchases
Let’s take a WordPress theme for instance. You can pay for a single theme, which usually costs around $50. Sometimes you have to pay monthly for continued access, like with Thrive Themes. (I don’t usually recommend paying monthly, but Thrive Themes is worth it because you get a lot of tools in the package.) Often, theme developers will have developer editions of their products for web designers and commercial companies for big one-time fees.
As an example, StudioPress have a developer package for their themes which is $500 as a one-time fee. (It’s also $99 a year thereafter, but if you wait for one of their sales, you can avoid this.)
…Or you can go with a free theme and have a terrible looking site. (Actually, there are some decent ones, but you do get what you pay for, generally.)
Almost universally, I recommend you get developer licenses for everything. If you’re building a website for the purposes of making money, then you’re a professional – or you will be one. You should act like one.
It works out cheaper in the end. Also, the overall costs turn into an investment pretty quickly as you scale up.
Example: Niche Websites
A lot of people, as an example, want to get into building niche websites. They think that this is a great, cheap way to start in online business. It is.
Technically though, if a new person starts a niche website with a free theme and free tools and plugins and does nothing else, they aren’t on the same playing field as I am.
When I start a niche site now, I have a premium theme, a ton of premium plugins and all sorts of other gadgets, gizmos and trickery to add to my site.
The actual cost of doing this for me is £0, because I’ve already paid for usage to all of my software on unlimited websites, but I get the equivalent of having spent a few hundred pounds on my site before I’ve written a single word.
When you take into account that I don’t pay for individual web hosting either, it’s very cheap to start a new professional-looking website that works better than the majority of new websites out there.
Another Reason: Support Improves
A sad fact in business is that the more you pay, the better the service you get.
When you’re a business that spends $50 as a one-time fee, you’re going to get limited support. $50 pays for a couple of hours’ worth of support at most, and you’ll be treated as such. It’s not economical for a company to do otherwise.
This changes massively when you invest in developer editions and premium plans, because the margins are there for the company you’re buying from to support you better, and more importantly, the risk is higher.
If I buy a developer license and run fifty websites on that license, that’s not one unhappy customer but potentially fifty-one unhappy customers.
Companies can’t afford that bad reputation.
Luckily most companies are perfectly happy to help you when it comes to big ticket items.
(Should you run a company with a premium product, I recommend you budget quite a lot on support. Don’t outsource it to a Virtual Assistant in the Philippines. It’s not worth it.)
Spending More Means It’s Much Easier To Scale Everything
If you buy a single license for something – or you try and bootstrap past a certain point, everything becomes more difficult when you later want to scale.
I bootstrapped online stuff for years, and all it did was take years off the time it will take me to reach the bigger goals I set for myself.
Online business is cheap compared to brick and mortar businesses. I’ve spent a lot of money this year on buying software, hardware and other products/services and investments for my business, and it’s still less than some of my clients spend on rent alone in their brick and mortar businesses.
While the costs are low, you don’t want to try and do everything for as little as possible. If you want to keep costs low, buy a few great things and either forget the rest or work out how to get around them.
Internet business doesn’t require a whole lot of things to work. You need a web host, domain name, website (this can be a WordPress install (free) with a decent theme (cheap)) and not a lot else – social media and SEO and the like can be done for free – your only costs are time and effort.
But when you do spend, spend wisely. For $300 you can get a whole range of useful stuff for your business, or you can get six $50 e-courses on getting rich that are a complete waste of money.
This is a topic that I’ve not really talked about in depth due to time-constraints. It all comes back to a central point though, and that’s that you’ve got to treat your online business like a business.
That means think of expenditure as a necessary evil (not an unnecessary one) but also an investment designed to make your business run more efficiently.
Big expenses seem daunting at first because you’ve got a lot of money going out in one go, but over time those expenses seem really small in comparison to the increased cashflow you get from them.
If I told you to spend $500 now in order to make $100 extra a year for the rest of your life, what would you do?
Hopefully, you’d wince as the $500 left your bank account and then sleep soundly that night, before enjoying the added cashflow for many years to come.
The above analogy is exactly what spending money on your business should be like.