Anyone seriously looking to become a home based business owner should ask lots of questions in order to make a well-informed decision. A good place to begin is by doing several informational interviews with successful business owners in the same kind of business. Most people are more than happy to share their experience with others, and some will even recount the lessons they learned the hard way so that you can avoid costly pitfalls.
Following are a few questions that I often hear about start-up costs. It would be a good idea for you to ask these of other people as well, but here are a few of my own responses:
Q: I’d like to get into Internet Marketing, but I don’t have any money to invest. Can I still do it?
A: Depends on what you mean by “get into it.” If you are serious about becoming a successful business owner, then the short answer is “no.” It takes some money to start any business. The good news is that home based Internet marketing businesses require a lot less cash investment than traditional “brick and mortar” businesses, franchises, or even cottage industries that depend on expensive materials, production equipment, licenses and inspections, product shipping and/or inventory storage. All of that makes a home based Internet business accessible to almost anyone by comparison.
It also depends on what you will be marketing and whether you already have, or need to purchase the products and/or services in order to fulfill customer orders promptly and professionally. This will vary from company to company, so be sure you fully understand what is required of you, up front.
Q: So what kinds of costs are involved?
A: There are different kinds of expenses-capital expenses (one-time or infrequent) and operating expenses (those that recur monthly or even more often). You might compare the two to buying a truck for a business (capital expense) and buying gas, oil, insurance, and maintenance to keep it running (operating expenses).
Capital expenses for Internet Marketers include the cost of things like your computer, printer, phone, etc., and other home office set-up needs. You might find that you, like many people, do most of your work out of a wi-fi café and “out-of-pocket” with your cell-phone, pda, and so forth. Easy, then, to keep these costs reasonable-especially if you already have the equipment and gadgets. But since these tools are the lifeblood of any Internet Marketer, they need to be up-to-date and reliable. You may also need to put some money out to get your business branded (your visual look, logo, etc). If you don’t have these things in place, you won’t be able to compete in the vast online universe. That will affect your profits, and hence your success. You might have people in your personal network who could help you with this, and that could save you money.
Operating expenses in this industry will primarily be related to these things:
o The actual marketing of the product, service, or opportunity in which you are dealing: that is, online advertising. There are lots of ways to market online, and the costs will range from free (yes-there is some) to…well, not free. The cost of paid advertising, and pay-per-click (most effective) usually depends on your volume, and may become more economical once you have a good reputation and add value to the ad vendor’s bottom line.
o You’ll need broadband Internet connectivity, phone service with voice mail and unlimited long distance, a merchant account (so you can take payments online), etc..
o Remember to budget for training (there is always a learning curve to scale) and ongoing professional development. If you don’t invest in becoming an expert, those who do will quickly soak up the profits that could have been yours. *Finally, don’t forget to budget for general office supplies, transportation costs, and other “everyday” items that you might not currently be spending money on in your life.
Q: How about fees to “buy into” an Internet Marketing business?
A: These will vary, but yes-you can expect that in most cases there will be some kind of application and/or start-up fee. Beware the exceptions because the costs will only be more hidden. Here are some tips to make sure you don’t get burned:
o Anything you pay while you are still gathering information about a company or opportunity should come with a written money back guarantee. o Check to see what period of time the guarantee covers-24 hours? (not so much) 30 days? (much better)-and use that time to learn all you can. o Avoid any company that does NOT provide such a guarantee up front. o With a guarantee in hand you should be able to pay the “start-here” fee confidently-you will have little to lose and perhaps much to gain.
Q: How much should I be willing to pay up front?
A: As with the previous questions, this one also depends-mostly on you this time.
o An application or start-up fee should be modest-affordable for you-and the compensation plan presented to you should thoroughly explain what you would need to do to see both a return on your initial investment and future profits.
o If you absolutely do not have the amount of money requested just to open the door, then the chances are good that this opportunity is out of your reach at this time.
o If you really, really like what you see and still don’t have the cash or credit available to get started, then do whatever it takes (legally and ethically, of course) to turn this situation around and find the money. Serious entrepreneurs think and act in these ways all the time: this could be a good test for you as to whether you have what it takes to be a successful entrepreneur. It’s not everyone’s cup of tea.
Q: Okay. So let’s say I find the money, get started and then find that there are MORE things to spend money on than I could see at the outset: Have I been scammed?
A: Not necessarily! In fact, probably not. You are now just far enough into it to begin learning what the top-tier producers do to succeed. This would be a good moment to take stock again:
o Are you willing and able to do whatever it takes to succeed, or is this all a little too hot to handle for you? If the latter, then it might be time for you to request your refund and step away from home based Internet Marketing. If, on the other hand, you are still highly motivated to succeed by taking on these challenges, then you would do well to press on. The returns can make it all worthwhile.
Remember that you are in business now and that you will have to spend money to make money. Don’t let anyone tell you otherwise. Here are a few good rules of thumb to follow on your way to Internet marketing success:
o On average, you should not spend more than 10-20% of your anticipated commission on the marketing needed to make that commission. For instance, if your compensation plan pays a $100 commission on the product or service you are marketing, then you should not spend more than $10-$20 to make that sale.
o Make your first goal to pay yourself back for your start-up costs.
o Once you have recouped your initial investment, continue putting 80-100% of your profits back into your marketing in order to build your business.
Q: ARE YOU KIDDING? I need to make money, not keep putting it down a hole.
A: Exactly! Drastic as this sounds, it is the only way to ensure that you will survive and thrive in the face of the competition. Consider these things:
o Once you have built a steady and profit-generating business, expect to put no less than 10-15% of your revenue back into marketing on a continual basis.
o The number one reason people fail in any kind of business venture is the failure to manage and reinvest profits in order to grow their businesses. If you take your first profits and buy that big screen TV with your name on it, chances are you will start to FEEL “scammed” because you won’t see the kind of traffic and response to your marketing that more experienced Internet marketers are having. So get your priorities straight and tough it out.
o The best home based Internet Marketing opportunities offer professional guidance and direction about how to start up on a limited budget and be responsible with your money.
o If the company you are connecting up with can’t show you a range of effective marketing options that fit your budget while you are still getting started, then keep on walking.
In business, it takes money to make money-there is no way around that. If you can easily accept that basic truth, then simply keep your wits about you while you are gathering information, and resist the temptation to react (positively or negatively) ONLY on the basis of reading other people’s testimonials about getting rich.
Internet Marketing has been identified as one of the few fairly recession-proof industries out there today. That doesn’t mean, however, that anyone can “get rich quick” with no effort, or simply become a millionaire without investing (and reinvesting) time, know-how, and a percentage of profit. In fact, only about 3% of those who enter this industry have what it takes to hit multiple six and seven figure incomes. Those who build wealth through Internet Marketing (and quite honestly the profits can be life-changing), regularly spend money to make money. They take their businesses and their reputations as successful entrepreneurs seriously. If you are prepared to do the same, you too may have the bright and prosperous future of your dreams with a home based Internet marketing business. Here’s to your success!