Have you ever dreamed about starting your own online business, only to be hit with the daunting question, “How much is this actually going to cost me?”
Future small business owners everywhere worry about the startup costs associated with launching their brand, so don’t worry if this sounds like you!
Hi, my name is AJ! After selling my business for multiple seven figures, I created Small Business Bonfire (SBB) to help aspiring entrepreneurs.
I overspent when I started my first online business because I didn’t know the money-saving tricks that I’m about to show you!
So, if you’re ready to start your own online business, keep reading because I’ll show you how to save money throughout the journey!
Key Takeaways
- Online businesses are less expensive to launch than brick-and-mortar stores.
- Online businesses must budget for various marketing costs, including email, content, and social media marketing.
- Easy online business ideas include eCommerce stores, freelance services, and thrift stores.
- Essential upfront costs for online businesses include web hosting, product development, and shipping costs.
How Much Does it Cost to Start an Online Business?
The first question you’re probably asking is, “How much does it cost to start an online business?”
The answer is that the startup costs vary depending on several factors, including the following:
- The type of business model
- Whether you’re selling products or services (or both)
- The web hosting service you need
- Marketing costs
- Whether or not you need to hire and pay employees
Still, you can start an online store for less than $500 if you’re savvy with your money.
However, if you plan to sell something technically advanced or demand a lot of inventory immediately, starting an online business can cost as much as $50,000.
Regardless of your business idea, an eCommerce business is (usually) less expensive to launch than a brick-and-mortar store!
Therefore, starting an online business is an excellent idea if you have a solid business concept but are on a tight budget.
You can implement numerous money-saving tricks to launch your brand, notify potential customers, and start earning money!
With a physical store, the upfront expenses are massive, which is a considerable risk you might not be ready or able to take.
Benefits of Starting an Online Business
Launching an online business rather than a brick-and-mortar store has several advantages.
Some of the main benefits include the following:
- Lower startup costs
- Lower overhead costs
- Better, more organized inventory management
- Easier to setup
Let’s look at each of these advantages in greater detail.
Cheaper Startup Costs
One significant advantage of launching an online store is that the startup costs are much lower than a brick-and-mortar store.
Some expenses associated with physical business locations include the following:
- Employee payroll and benefits
- Office space rent
- Utilities for the physical location (heat, A/C, electricity, water, gas)
- City/location fees
- Inventory
- Furniture (chairs, shelving, warehouse materials, etc.)
You don’t have to worry about these expenses when you start an online business!
As a result, you save A LOT of money because business startup costs are lower.
And when you don’t have several expenses initially, you can invest your money into other business areas!
For example, saving money on renting an office space allows you to pour more money into your marketing budget, ensuring more people learn about your business!
Lower Overhead
Another great benefit of starting an online business is that you don’t have to worry about overhead costs associated with a physical location.
For example, hiring additional employees or paying for office space rent is unnecessary!
Instead, you can focus on the core components of your business, such as marketing and product/service development.
Lower overhead costs give you more freedom to solidify your eCommerce business immediately!
Lastly, fewer overhead costs take a significant weight off your shoulders. Rather than stressing about affording rent, you can build a professional website that catches everybody’s attention.
Better Inventory Management
Inventory management is an essential part of running a successful business.
With an online store, you have better control over the inventory levels and can make smart decisions about when to order additional products or services.
Also, you don’t have to worry about storing physical goods in a warehouse or other storage facility.
Instead, you can use drop shipping services to deliver your items directly to customers.
Even if you don’t use drop shipping, managing a small inventory is easier with an online store.
Several eCommerce platforms automatically track your inventory as you make sales, ensuring you don’t have to physically count every item you sell.
Ease of Setup
Setting up your online store is much easier than setting up a brick-and-mortar business.
For instance, with an eCommerce store, you don’t have to worry about the following things:
- Finding the right business location
- Comparing monthly rental rates of various spaces
- Hiring employees
- Passing inspections
- Other bureaucratic processes
Further, you can launch an online store in just a few days with the right tools!
For example, Shopify is an eCommerce platform that makes creating and managing your online store easy.
Not only can you customize the design of your website, but you also get access to marketing tools, product management features, and payment gateways.
Costs of Starting an Online Business
Although starting an online store is cheaper, there are still costs associated with the process!
How much does it cost to start an online business?
Here are some expenses you must consider before launching your brand!
Business Licensing
One expense you must account for when you start a new business (whether online or physical) is business licensing.
That said, you must pay to establish your brand with the government officially.
The cost of business licensing varies depending on your location and business model!
Using services like Legal Zoom makes the business registration process simple and affordable!
Web Design & Development
Web design and development are crucial elements of any online business.
You need a website to showcase your products or services and accept customer payments.
Also, your website must be user-friendly, easy to understand, have an enticing copy, and be accessible on desktops and mobile devices.
The cost of web design and development depends on the project’s complexity, but you should plan to pay at least $500 for a basic website.
Web Hosting
Another one of the upfront costs you must be aware of is the cost of web hosting.
You need a web host when you “rent” space on the internet.
Here are some examples and costs of popular web hosting platforms:
- WordPress: Starts at $11 monthly
- Wix: Starts at $14 monthly
- Squarespace: Starts at $12 monthly
- Weebly: $0
Web hosting costs vary based on your plan and payment schedule (whether you pay monthly or annually).
eCommerce Platforms
If you’re building an eCommerce store, you must consider the cost of the platform.
Platforms like Shopify and BigCommerce offer features such as:
- Custom product pages
- Checkout forms
- Inventory management tools
- Website Analytics
You can try Shopify’s platform for free to see if you like the interface!
An eCommerce platform makes listing, selling, and tracking products easier!
Payment Processing
Several eCommerce businesses forget to factor payment processing software into their upfront costs.
You must have a secure and trustworthy payment processing platform that allows customers to pay for things on your site.
Sometimes, this type of software is free to install but takes a specific percentage of your sales.
While this might be a bummer, remember that having a secure payment system is a must-have!
Inventory
If you plan to sell physical products, like an online clothing store, you must purchase inventory upfront.
The cost of your inventory depends on the type and quantity of items you purchase.
Before investing in inventory, make sure that you research wholesale suppliers who offer competitive pricing!
Dropshipping
Dropshipping is a great way to start an online business without worrying about inventory costs.
Dropshipping allows you to partner with distributors who ship products directly to customers on your behalf.
Generally, this type of service has a monthly fee (plus the cost of goods sold).
Dropshipping is an excellent strategy if you need more money or space for a lot of inventory.
Pay Per Click
Pay-per-click (PPC) advertising is a form of online marketing where advertisers pay a fee each time an online user clicks their ad.
Essentially, it’s a way of buying visits to your site rather than attempting to earn those visits organically.
Google AdWords is one of the most popular PPC platforms.
Your ads appear on the Google search results page, and Google charges you when a visitor clicks on your ad.
This advertising strategy can have the following benefits:
- Help drive traffic to your website
- Increase sales
- Improve your website’s visibility in search engines
However, the cost of PPC advertising varies widely depending on the competitiveness of your keywords and the number of clicks your ad receives.
Also, it can be challenging to find competitive keywords that allow your business to stand out.
While there usually is some trial and error involved in PPC ads, they’re an excellent way to generate revenue and make your business look legit.
SEO
Search engine optimization (SEO) makes your website more visible in search engine results.
Basically, SEO helps you improve organic rankings on Google and other search engines.
As a result, you get more visitors to your website from people searching for products or services related to yours.
You don’t have to pay anything upfront for SEO services, but it requires an investment of time and energy to implement strategies like:
- Keyword research
- Content optimization
- Link building
If you need more expertise or resources for SEO, you can hire a professional to help with the process.
The cost of SEO services will depend on the company and the scope of work involved in your project.
Social Media Marketing
If you want to promote your eCommerce store to the right audience, utilizing social media marketing is essential.
Social media marketing allows you to showcase your products to hundreds or thousands of people on popular platforms like:
- Instagram:
- TikTok
- Snapchat
- YouTube
Typically, social media outlets charge you daily based on the number of people you want to see your ads.
For instance, if you want 100 people to see your business on Facebook, the outlet could charge $5-$7 daily until you hit your specified budget.
Content Marketing
Content marketing is another cost-effective way to build an online presence and reach new customers.
Content marketing involves creating content such as:
- Blog posts
- Videos
- Infographics
- Webinars
Further, content marketing creates things intended to deliver valuable information to potential buyers.
This type of marketing aims to establish your brand as a credible source of information related to the product or service you’re offering.
The cost of content marketing varies depending on the type and quality of content created and the number of viewers your content reaches.
Email Marketing
Email marketing costs are another expense to consider as you launch your own eCommerce business.
Email marketing helps inform your customers about the following things:
- New product drops
- Information about your company
- Order status updates
Also, email marketing is an excellent way to learn about your target audience and discover the marketing techniques they resonate most with.
Typically, web hosts offer an email marketing package you can seamlessly add to your email.
How to Save Money When Starting an Online Business Tips
If the cost to start your own business is causing you to panic, don’t worry!
There are several ways to create a professional eCommerce site without dipping too much into your personal savings.
Here are five tips for launching your online business on a budget!
Tip 1: Start Small
A common mistake I see new eCommerce businesses make is going big and spending money unnecessarily.
Remember, you can always grow and develop your platform.
Starting small and having the bare minimum needed to run a professional business is okay.
Also, doing this will save you a lot of money.
For example, purchasing tens of thousands of dollars in inventory might only be the way to go if your business has a following.
Instead, having a small amount of inventory on hand and purchasing more as cash flow increases would be better!
Tip 2: Don’t Go Too Fancy with Your Website
It’s essential to make your website look professional and user-friendly.
That doesn’t mean you have to go crazy with design elements or use every single feature available on your web hosting platform.
For example, avoid using a plugin that costs $50 per month when a free but equally effective one can do the job.
Also, hiring a professional web developer may not be a good idea if you’re on a tight budget.
Several web hosting providers have simplified the website creation process, allowing novices to build a professional-looking site in a day!
Tip 3: Start with Free Tools
Every business owner should research free tools to help promote and launch their online business.
There are free tools for anything and everything necessary to launch your brand.
For instance, Surfer SEO, a top-rated SEO service, has a free plan to help you optimize your website without spending a penny.
Further, many social media platforms offer deals on marketing services, which is excellent to take advantage of!
Depending on the web host provider you choose, looking for the free tools and services they offer is critical.
Take advantage of all the free resources you can access to expand your business and spend money on other areas!
Tip 4: Focus on Free Marketing Channels
Most business owners are so focused on paid advertising that they forget about the numerous free marketing channels.
For instance, blogging is an excellent way to generate organic traffic to your website without spending anything upfront.
Social media platforms like Twitter and Instagram offer limited-time deals for businesses that want to make their profile stand out from competitors.
Further, you can create promotions and giveaways on your website or social media profiles to attract new customers.
In the end, there are many free marketing channels you can take advantage of to save money while running your business!
Tip 5: Partner with Other Companies
Partnering with other companies is an excellent way to get the word out about your business without spending too much money.
For example, if you own a clothing store, contact influencers in that field and offer them free items for promotion.
You can also partner with charities and nonprofits to promote your products and services.
This type of marketing can be a win-win for both parties.
You get valuable exposure while they can raise money or awareness for their cause!
What is the Easiest Online Business to Start?
There are several online business ideas that you can start in a matter of months!
Still, regardless of the model you choose, understand that running any kind of business demands considerable time, energy, attention, and money.
Also, it may take some time for your company’s revenue to get to the level you want!
One of the most popular and easiest online businesses to start is an eCommerce store.
Especially with the increased access to wholesalers, new business owners can set up an online store and start selling products in no time!
Also, utilizing free marketing techniques like social media is an excellent way to get your brand’s name in front of more people.
Some additional easy ideas for an online business include the following business models:
- Social media marketing
- Freelance services (writing, graphic design, coding, researching, editing, web design, e-book writing, etc.)
- Translation services
- Writing a blog
- Software and app development
- Business coaching
- Consulting
- Online fitness trainer
- Tutoring
- SEO Consulting
- Selling homemade goods and one-of-a-kind products
As you can see, there are numerous ways to launch an online business!
Before jumping into things prematurely, it’s best to strategize and think about your skills and abilities.
Additionally, doing market research before launching your online business is wise so you can get an idea of price points, the competition, etc.
Can You Start an Online Business with No Money?
How much does it cost to start an online business? Can you do it for free?
While you can undoubtedly keep several costs associated with launching an online business low, it will never be 100% free.
Simply deciding to start an online business will cost you time before you even spend a penny.
Even renting space on the internet will cost you something.
Now, there are free web hosting services. However, your domain name won’t look as professional if you use these.
Therefore, it’s best to bite the bullet and spend a little money on web hosting, especially if you want your company to look professional.
So, is it possible to start an online business with absolutely no upfront costs? No.
Time is money, and launching any type of business demands you to invest your time and energy.
Closing Thoughts on Starting an Online Business
Starting an online business is an excellent idea, especially if you have special skills or products that other people will love!
When launching an online business, it’s essential to consider the upfront expenses like web hosting, product development, marketing, and shipping costs.
Overall, online businesses are much cheaper to start compared to a brick-and-mortar store because you don’t have to deal with rent, utilities, and hiring employees.
What type of online business do you want to start? Let us know in the comments section below!
And good luck starting your own company! It takes hard work and dedication, but it’s worth it!