Written by: Victoria Parham, Career Strategist, Trainer, Talk Radio Host, Army Wife, and Veteran
The most appealing aspect of starting a virtual business is the minimal start-up costs. Question: Do you currently possess the following:
- Desktop or Laptop computer? Yes or No
- Printer (inkjet or laser / color or black & white)? Yes or No
- A personal cell phone with voice mail? Yes or No
- Internet Access (dialup or high-speed)? Yes or No
- A personal email account (free or paid)? Yes or No
- Productivity software (Microsoft Office, Microsoft Works Suite, WordPerfect)? Yes or No
- Microsoft Outlook Express? Yes or No
- A space to setup your office? Yes or No
- Pens/Pencils/Writing Paper and Computer Paper? Yes or No
- A money making hobby or marketable talent/skill? Yes or No
If you answered yes to the majority of these questions, chances are, you have about 85% of what you need in terms of skill sets, equipment and basic office supplies to get started in your new virtual business, and, you possibly saved yourself about $1900.00 or more in your computer hardware and software start-up costs (costs which would have been spent on learning a new skill set through a technical or community college are not included).
Let’s spend the next few moments covering a few additional COSTS associated with getting your virtual business up and running.
Costs for starting a (sole-proprietorship) virtual business offering services and products:
1. Business License – There is no standard across the board flat fee for all states, the cost for a business license differs from state to state, city to city, and county to county; so you MUST contact your local city, county or state agency to find out what this cost is as it pertains to your particular business. About 99.9% of you will operate your virtual business from home. You will need to disclose that you will be operating your business from home for zoning ordinance purposes.
IMPORTANT for those operating a virtual business from military base housing: Some city governments will tell you that they do not require you to have a business license if your business is physically located on the military base. The explanation given is because they (city government) do not have jurisdiction over the affairs of the military base. So, if you are told this by the city agency, request the explanation in writing for your records.
In my research and experience, the cost for a business license has ranged from $25 – $250. Business Licenses typically have to be renewed annually, again this varies, check your local laws.
To get started with purchasing your business license, go to: http://www.sba.gov and enter search keyword – business license
2. Internet Domain Name Purchase and Hosting Services – This is also known as your website address (example: http://www.abccompany.com), and is a must have if you intend to be a virtual business owner. According to Network Solutions – www.networksolutions.net, (a popular domain name seller and website hosting company): you could choose one of their starter hosting packages with a one year contract of $9.96 per month (must be paid upfront annually) and you must decide how many years you would like to rent your domain name for, (I chose 3 years). Let’s add up the numbers:
$9.96/per month for hosting x 12 months = $119.52, plus $49.98 flat rate for 3 year domain name rental = $169.50 (this is how much it will cost you in the first year to get your website up and running.) Included in this package is a software program with templates that will walk you through the process of building your new virtual business website. (Note: The hosting fee is paid every year, while the domain name rental fee is renewed every 3 years.)
3. Supplies – even though you may have a few pens, pencils, computer paper, and writing pads lying around the house, here are some additional supplies that you may need to include as part of your startup costs: stapler, staples, file cabinet, paper clips, folders, additional ink cartridges, and business card stock. Do you have to buy everything new? No. A visit to the thrift store could save you a bundle on some items. You may be able to get some of these items for free from relatives or friends. If you choose to buy it all new, you can look at spending between $75 – $175 or more depending on your requirements.
4. Online payment system – you will need a way to invoice and receive payments from your clients. The cheapest and most cost effective way to do so when you are just starting a new business is using an online third party merchant provider. There are hundreds available online, however the most popular one is: Paypal, because it is free to establish an account, you have the option to establish a personal or business account; payments are accepted from 45 countries. Also, there is no ongoing monthly service fee, this alone helps to keep the monthly expenses low. Visit http://www.paypal.com to learn more.
5. Products – if you intend to offer products to your clients, you may need to obtain an initial supply of product inventory. For an accurate start-up cost, simply find out how much it will cost you to purchase an initial supply of the product(s). A work around for this would be to Drop Ship your orders directly to your clients without ever having to worry about inventory. To learn more about drop shipping, go to your favorite search engine and do a global search on drop shipping vendors.
Ok, so now here we are:
Business License: $25.00
Domain Name Rental & Website Hosting Services: $169.50
Total Startup Cost: $269.50
What about advertising costs? This is a great question, a virtual business does not advertise in the same way a traditional fortune 1000 or 500 company advertises.
Why? You don’t have the advertising budgets like they do.
So how do you get the word out about your new virtual business?
There are so many ways but for the sake of time, I’ll share with you two and it will only cost you, time, the price for a box of computer paper, and perforated business card stock.
Here are the two ways:
1. Physically get out into the local community to:
- Pass out fliers, information brochures, and business cards;
- Attend local business functions and group meetings, to network and connect with other business owners like yourself in the local community
- Share your business card with people who will truly benefit from your services or products
- Write a press release and submit it to your local newspaper(s) announcing the launch of your new virtual business
- Meet with a local newspaper reporter, share with them the unique way you work virtually, be passionate and share the benefits of working this way and how clients benefit as well.
- Volunteer to speak at events which could possibly bring in business for you (this will also begin to establish you as a subject matter expert in your local community)
- BE ACTIVE in your local community, this is where the growth of your business begins.Â The more people see you and hear about what you do, the more they will remember you and share what you do with others.
2. Get online and join a few selected listservs and email groups to begin networking and learning from your industry colleagues. These listservs and email groups ultimately become your online support network as your business begins to grow.
You also want to find potential clients on the web who could benefit from the services and products you offer. For example, if your goal is to work with attorneys. Locate some attorneys online, if they have an email list or newsletter subscription that you can join, join.
By joining, you will get to learn about that attorney, how he/she communicates and interacts with members. You may also find that the attorney is not sending his/her newsletter out on time each month, this is a prime opportunity for you to introduce yourself and to share that you design newsletters and send them out for your clients monthly. And, that you are just a click away, should they require your services.
(Note: do not over pitch and do not push yourself or your services onto the prospective client.) Allow them time to digest what you’ve shared and follow up with them in email in about two weeks.
You can also do the following to get the word out about your business and to establish yourself in the online community:
- Write an article and submit it to industry publications or submit it as free online content
- Register your website in all the major search engines
- Answer questions posted on message boards, email lists, and listservs
- Pitch story ideas to media outlets
- Learn from established industry colleagues, seek their guidance, ask questions and be open to receive their advice and recommendations.
As you can see, figuring out the true cost of starting your online virtual business is not as difficult or expensive as you may have thought. The key to keeping your start-up costs low is evaluating what you currently have on-hand and only purchasing what you absolutely need.
About the author:
Victoria M. Parham is a (retired) army wife, veteran, talk radio host, and Career Strategist. Propelling people to reach their greatest career potential.