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Online Business Startup Costs: How Much Should You Expect To Spend To Start A Money-Making Blog?

How much does it cost to start up a new online business?

How much should you set aside for your online business startup costs?

Can you start up for free and then wait until you’re making some money before you spend any?

Truth is… getting started from scratch can feel pretty daunting. You might have an idea which inspired you to start an online business, but you can’t help but have those doubts pop up:

  • Is my idea going to work? Will I actually make any money?
  • What happens if it doesn’t work? Will I end up wasting every dime I spent?

These doubts will often then result in this rather difficult quest to try to not only bootstrap your new business, but to even try to do it with zero startup costs.

We’re talking:

  • Free hosting (a really bad idea)
  • Free themes
  • Free plug-ins
  • Free email list hosting

It seems attractive. It probably even feels quite doable. You see all those free themes and free WordPress plug-ins and it may seem as if you could eventually be the owner of a profitable online business without any startup costs. Just build that sucker up out of thin air, right?!

It is much easier said than done.

In fact, after all these years of helping others start up online businesses, I will tell you that I’ve never seen anybody build one up that actually succeeded without any startup costs.

All Businesses Have Some Startup Costs

Go out into the real world and spot any business in your local city or town. All of them had some startup costs. Perhaps the cost of inventory, equipment, office space.

In the real world, the thought of having no startup costs wouldn’t even come up. . It shouldn’t be different just because we’re talking about an online business.

It is common knowledge that a business owner or entrepreneur takes on certain risks to put in startup capital and see their idea through. Some win and some lose.

Even something as small as a lawn mowing business requires that you buy a lawn mower. Even a service business as simple as babysitting might seem as if there’s no startup costs, but in reality you would have at least few in order to let people know you exist (aka marketing costs).

Startup costs are part of the equation here. All business have some cost to spin up from zero so that things can even happen.

Now, when we go online, things don’t change. However, the startup costs are usually much smaller. That’s the beauty of online business is that the risk-reward ratio is much, MUCH better. For much lower startup costs, you can potentially start up a business which will profit back to you many times over.

This doesn’t mean, however, than you can start it up for free.

Online Business Startup Costs Are Mostly Reusable

One thing about most physical businesses is that your risk of capital investment is much higher. Not only are the numbers bigger, but often the asset being purchased has a single use.

For instance, buying a lawn mower in order to start a lawn service business makes sense. However, that lawn mower can only be used for one thing: mowing lawns. If your business doesn’t work out, that mower can’t be used for other things. Only sold off.

If you are trying to start an online store or ecommerce business, then you have that cost of inventory. Inventory is often an upfront investment. If you have a tough time selling that inventory, then you’re stuck with it.

For the kinds of business that WE are building together, things are pretty different. Much of our initial startup costs are spent on things that can be reused for other businesses if our initial idea didn’t work out as we hoped.

The startup costs of an online business are usually lower risk because they can be reused for other ideas if your first idea doesn’t pan out.

For instance, web hosting is absolutely a startup cost for an online business. But, you can do any number of things with that web hosting account. If one business idea doesn’t work out, you can try another one with that same hosting account. It isn’t as if you’re stuck with a one-purpose asset.

Most of the startup costs in the beginning are like that. You’re often buying software. That software can be used for any kind of online business. If one doesn’t work out, you can try another one. Therefore, your capital risk is much lower.

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What Are The Baseline Startup Costs To Expect?

The initial goal is to create a minimum viable website. We don’t need all the bells and whistles. In the beginning, you may not even have your product/market fit completely figured out. So, a big part of your startup site is simply to have enough up there to do two things:

  • Generate leads by putting people onto your email list.
  • Sell a first product/service.

You don’t need to get fancy to do this. You just need enough to do it.

Generally speaking, there are 4 primary assets that I believe you will need if you are starting up a blog-based, digital business. They are:

  1. Web hosting
  2. Email list hosting
  3. Theme and/or a page builder.
  4. A way to sell things.

These things are like electricity and water for your home. You just need them. I’ll explain my thoughts and recommendations for each below.

This doesn’t cost you thousands of dollars. I think, however, that a safe number to expect for initial startup capital is about $500. For around $500, you can acquire all of the baseline tools you need to get started and have the money in your account to pay for those tools for many months while you do the work required.

If you can afford it, put aside about $1,000 for startup costs. This gives you a lot more breathing room for any other optional things that come up. Plus, it will give you the ability to test ideas much faster using paid advertising.

My recommendation would be to simply take whatever amount of money you decide on for your project and stick it into a separate bank account. Just park it aside and earmark it for the purposes of building your online business. I have found that when you get that initial “spending” out of the way by transferring it that it helps alleviate the backoff when it comes time to spend it.

If $500 as a minimum for startup costs just seems too high for you, then I encourage you to seriously look at your own motives and your level of seriousness about what you’re doing. Simply put, you are intending to build a money-making asset. It is unreasonable to expect to do that without spending any money upfront.

This is practically physics. Just look up the Law of Conservation of Energy. It says that energy cannot be created or destroyed. In terms of business, I would actually argue that this isn’t true. Businesses actually create new wealth all the time. This is how economies grow. It requires both time and money to do it, coupled with the human entrepreneurial spirit to turn it into something more. But, the idea that you can do it out of nothing? No.

Now, let’s look at what you actually need to get going, here.

1 – Web Hosting

Obviously, any business requires a place to operate. In the real-world, that’s an office or storefront. Online, we’re talking about your website. And that website requires web hosting to even exist.

I have 2 companies that I recommend: Cloudways or Siteground.

Cloudways will give you more horsepower for your money. The cheapest option will run you $10/month, although I would recommend their “Premium” starter level servers which will run either $12/mo or $13/mo depending on your provider. Cloudways is what I am using personally. You can read my Cloudways review here.

When it comes to Siteground, their cheapest Startup Plan will serve just fine. You can lock it in for only $4.99/month if you pre-pay upfront. I believe it may be about a 2-year upfront pre-payment. After your initial pre-paid period is over, it will run $14.99/month.

Cloudways doesn’t play games with intro level pricing that suddenly pops up when it renews. With Cloudways, you just start paying monthly. And, as you can see, Cloudways ends up being cheaper than Siteground in the long run.

You also get more for your money with Cloudways. The cheapest Siteground plan will only permit 1 site, yet the cheapest Cloudways account can handle multiple sites. The only limiter on Cloudways is the amount of horsepower you need, but that’s something you can deal with as your business grows.

So, Cloudways will run you about $120 for the first year, but then stay that way. Plus, you can get started for just $10 since you don’t have to prepay for a year. With Siteground, you’ll pay roughly $60 for the first year, but then you’ll be renewed at about $180 after that.

2 – Email List Solution

Your absolute most important asset as you build up is going to be your email list. You HAVE to host it with a service which is dedicated to good (and legal) email marketing practices.

Among the blogger crowd, I’ve seen a lot of interest in the free email list accounts offered by Mailchimp. While this is better than nothing, I do not recommend them. It is really only suitable for basic newsletters. If you want to do any of the real stuff (like building real email marketing campaigns), then you would be forced to upgrade to a paid Mailchimp account. Once you get into paying for a solution, you can do better than Mailchimp.

I used to recommend companies such as Aweber and ConvertKit. To be clear, both are still greaty companies. In fact, I’ve seen some of the best support from ConvertKit ever. That said…

These days, I recommend you build your list on a platform you own and control yourself.

The solution I most recommend is FluentCRM. FluentCRM is a WordPress plugin which means you are hosting your email list “in house”.

FluentCRM offers some of the most powerful marketing automation on WordPress. When I first reviewed FluentCRM, it was powerful but still lacked some things I needed. But, my review update shows it is more than ready. It is more powerful than Aweber and much more comparable to ConvertKit itself (or even something more powerful). Yet, it is WAY more affordable.

FluentCRM is just a great solution. Plus, because it is so integrated into WordPress, you will never have an integration problem. It just works beautifully.

To actually send your email, you will connect FluentCRM to an external email service. Amazon SES is the most powerful and it costs next to nothing to use. Other options include ElasticEmail, Mailgun, Sendgrid and numerous others. Basically, you will keep your list and all the “plumbing” that goes with it… and you will only use an outside service to send the email.

By going with FluentCRM, you will have all the capability you’ll ever need for significantly less money than paying for a monthly service. FluentCRM will run you $129/year for a single site. That rate does not change as your list gets bigger. Your bill to send email will depend on how much email you sent, but the cheapest options are AmazonSES and ElasticEmail. ElasticEmail, for instance, charge $0.10 per 1000 emails you send. 100K emails… $10.

3 – Theme And Page Designer

The last core component you will need is a theme. A theme basically refers to the overall design of your site on WordPress. It is a set of files you install to WordPress and it will make your site look a certain way.

These days, themes are more like design frameworks. The really good ones are made so that you can ultimately design your site however you want using the same software. This is quite different than the old days when picking a theme meant liking the design as it was.

The beauty of WordPress today is that the tools are there for you to be able to design your own site mostly without knowing how to code or do fancy web design stuff.

There is also one other component besides your theme that you need to consider: landing pages.

You’re building an online business website here. Any business site is going to have pages that are designed to get the user to do something – usually buy something or opt into a mailing list.

Now, you can make these pages with your theme. However, some people prefer to have an additional tool in their arsenal called a page builder. A page builder is basically a tool for designing pages visually and some people find them easier and more convenient. A page builder will not replace your theme, but instead gives you an additional tool to easily create these landing pages. Often you can do far more than just landing pages with these builders.

I used to strongly recommend the Thrive Suite membership for people just getting started. to be clear, it is still a strong toolset and will give you access to an entire suite of tools that could come in handy for you moving forward. It really is a lot of bang for your buck.

These days, however, my preferences have shifted. Here are my recommendations for getting started:

  • Kadence Theme. You can install the free Kadence theme and the free Kadence Blocks plugin This will enable you to get started designing your blog’s theme for free. For additional capability (and I definitely recommend it), upgrade both to the PRO version.
  • Elementor Pro. This is your optional page builder. Actually, you can design your entire theme with it as well (using the Hello Theme as a starter). Elementor can do it all and supports tons of integrations and will be a better fit for you down the road.

Both Kadence and Elementor are available for free, however both have Pro versions that are very much worth the money. Kadence Essential Bundle will run $129/year and Elementor Pro will run $59/year. Total price, then, is $218/year.

To be clear, since Thrive Suite is $299/year and you get more tools in your arsenal, it is arguably a better deal. However, Thrive Themes tool are such where they only work best with their own tools. If you want to have an “all Thrive” site, you’re good to go. If you want more flexibility down the road as things grow, I’d recommend Kadence and/or Elementor for better flexibility.

4 – Shopping Cart To Sell Things

To prove out the product/market fit for any new online business, you have two things to achieve:

  • Be able to convert visitors into email subscribers.
  • Find something they want to buy.

So, as early as possible, you need to sell something. You need to make an offer. To do that, you’ll need a way to sell on your website.

In my opinion, WooCommerce is the best platform. The good news is that it is completely free and won’t cost you anything to use.

WooCommerce is the most popular ecommerce plugin fro WordPress. It powers literally millions of stores. It is also highly flexible since it can be used to build entire ecommerce stores with large product lines… all the way to a small business only selling one or two things. The fact that it is so expandable and the fact that it is so well-supported through a vast army of add-on plugins means that WooCommerce is a great way to go.

WooCommerce also happens to integrate beautifully into FluentCRM, allowing you to view order histories inside the CRM. As you get into growing your business, you will appreciate how well things work together.

Even though WooCommerce is free, many of the add-ons are not. This can make WooCommerce seem expensive. However, realize that all of those add-on plugins are using the GPL software license. This means what you’re paying for is the support, not the plugin. If you don’t intend to ever call on them to support, there is nothing wrong with using a GPL Club or some kind to grab the WooCommerce extensions you need.

Yes, there are certainly other options. You can go with third-party shopping carts like ThriveCart. You can use a dedicated membership site plugin (I don’t really recommend that). You can even use a simpler method by using a forms plugin like Fluent Forms or to build payment forms without using any shopping cart at all.

WooCommerce will enable whatever you throw at it. It works well. And it is also free, which works to our advantage when it comes to boostrapping a startup.

Summary Of Costs For The Ideal Starting Package

So, if you choose to use my top recommendations for a new startup, they would be:

  • Cloudways web hosting. $12/mo, or $144 for a year.
  • FluentCRM for your email list. $129 for a year.
  • Kadence Theme & Kadence Blocks (pro versions). $129 for a year.
  • Elementor Pro (optional). $59 for a year.
  • WooCommerce. Free.

When you combine everything here, you’re looking at $461 for the year (at the prices in effect at the time of writing). So, as you can see, that’s why I rounded it out to about $500.

For these initial funds, you’re going to have what you need (and then some) to build the platform for your new online business.

Sure, there are other options out there. Good ones, too. But, you can always make changes if you want down the road.

Other Startup Costs To Consider (For Later)

The tools I recommended above will get you to a point of minimum viable product with your website. You’ll be able to build a nice looking site that builds your email list. You can even sell things on it for free using WooCommerce, so you will truly have a fully functional website.

As time goes on, however, there may be other requirements. Plus, software doesn’t make a business. There are other things to take into consideration.

In terms of software:

  • An online course platform. If you intend to sell online courses, you’ll need a setup for that. LearnDash is popular, although TutorLMS offers a very nice free version which may be all that you ever need.
  • Membership. I personally don’t recommend standard membership site plugins. I would personally recommend WP Fusion instead. Combine that with FluentCRM (which I’ve already recommended) and WooCommerce (which is free) and you will have one of the smoothest operating membership sites ever. I can’t recommend it enough.

Software isn’t everything, either. You may need to consider putting some money into paid advertising in order to kick off your business. Paid ads is not a requirement and you can grow your business through word of mouth and “sweat equity”. But, paid ads can be a good way to jumpstart things.

Just In Time Purchases (And Avoiding Shiny Objects)

I know it can be pretty tempting to buy other things. When you get into this world of online business, there are a ton of different services, tools and courses that all promise to be the best thing ever.

All too often, however, I see people confuse the act of buying a new tool or a new online course with the actual work that it takes to build that online business. Unfortunately, I’ve seen way too many people who spent a lot of money on tools they never end up using.

Please don’t do that.

Buying a new tool for your online business should never be confused with actually DOING something that grows your business.

If you’re going to be efficient in the use of your initial startup capital, then you have to have the discipline to not go on a shopping spree. The way that you do this is to ask this question about every potential purchase:

Does this purchase solve an immediate problem for me?

In other words, do you know where you will apply it? Do you know the outcome you intend to get with it? If so, and it makes sense for your budget, then go ahead and buy it. Don’t buy it until you need it… hence the idea of “just in time” purchases.

But, don’t be a collector of tools. Don’t be a collector of online courses.

Never confuse the act of purchasing something with actual forward movement in your business. The initial 3 investments I mention above are the only 3 core ones that I think you need to have to get started.

Don’t Get Into Debt

One final word, but I strongly recommend that you avoid getting into debt to start your online business. Don’t buy things on the hope that it will pay off later.

Many people look to build an online business precisely to help them alleviate debt, so why acquire new debt to build it?

So, I recommend that you set aside actual cash to fund your initial investments. While you may conduct the actual purchase with a credit card, be sure to pay off the balance (at least for that new charge) on your next statement so that there’s no new debt associated with your business.

Need An Action Plan To Start From Scratch?

This 28-page free report is designed to serve as a guide for how best to spend your available time to start an online business from zero. No “secret tactics”. Just an orderly, logical progression.

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How To Get Your Site Built

Using the recommendations in this article, you can go acquire the tools, set things up and build your site. Depending on your level of tech skills, it doesn’t take particularly long to do it. There’s also lots of Youtube videos out there to show you how.

I’m well aware, though, that many will find it overwhelming. It can definitely also take awhile to get it all set up when you don’t know how to do it. The “tech stuff” is just a necessary evil in starting up an online business. But, your time is best spent actually working on the business stuff, not sitting there researching software and trying to put it to use and build a working site.

One of the things I do via technical services is build sites like this for my clients. In fact, I do it every day. The other thing is that I have licenses to all of the software I’ve mentioned in this article (and much more, of course) which means my clients wouldn’t need to go out and research and buy everything separately.

When you have me set you up with a Startup site, I will:

  • Get you set up on Cloudways.
  • Set up WordPress with Kadence Theme And Elementor Pro and put the basic design in place for you.
  • Set up FluentCRM and hook it up with an apprioriate email service.
  • Set up WooCommerce and get it ready to process orders.
  • Put the pages in place with working opt-in forms

You will have a fully functioning site which is able to generate leads and make sales. Generally speaking, I can have this ready to go for you within a few days.

All you would need is:

  • Your business idea and generally what you want to do.
  • The content
  • A logo (although I could probably help you with this, too, if needed)

This site has a lot of the training to help with the content and the overall strategy. But, you need the platform with which to do anything. That’s your website. And we can have that ready to roll in a few days for you.

UPDATE 3/30/2023: Originally written in 2019. Rewrote several sections of the article to update the best selection of tools for a startup based on new information and new testing. Also an updated video to reflect all the changes. Re-published since changes were so substantial.

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