When I started my business five or six years ago, I was really starting with pretty much nothing. I was running my business from my bedroom.
All I had was my laptop from college. I definitely didn’t have any funding to advertise the business.
But despite all that, the business did start to grow. And business wasn’t the only thing that started growing. My family did, too.
Before long, we had three little kids.
And that made building a business even more complicated.
A few years into running my business, I decided to start a YouTube channel. And while that did a lot of things for my business. It also could have added a lot of expense.
Fortunately, I was able to keep it pretty affordable using a blank wall as my backdrop and an affordable older camera that I had. But as the channel started to grow.
We wanted to take things up a notch. We wanted to improve production quality. And that definitely did make things get a lot more expensive.
Ok. So let me walk you through the numbers of how much it cost to run my business. At each of these different stages of growth.
Well, when I was first starting out, like I said, it really didn’t cost much of anything. I just had my laptop. And then one of the first things that I did invest in and start paying for was my Web site.
I had to pay for the hosting for the site every month and for the domain name that cost just about twelve dollars for the hosting each month. And then about twelve dollars for the domain name itself, but not very long into running the business.
The expenses started to add up about one year into running the business. I started hiring people here and there to help me with little projects, just things that I couldn’t do myself or were taking way too much of my time.
I still wasn’t making very much money in my business. So we didn’t have very much to spend on this. But I would sometimes spend up to about two hundred dollars per month hiring people to help me.
I also upgraded some of the software that I was using to run my business because after all, my business is an online business.
And so there were a lot of tools available that I could use to automate my business, to save me a lot of time and enable me to reach a lot more people.
One of the very first tools that I invested in it was my email marketing software that I used to this day, convert kit.
At that point, about one year into running my business, I was spending about one hundred dollars a month on different types of software. Beyond that, I also spent a little bit of money here and there upgrading my equipment and my office supplies.
I would say that on average I was spending about one hundred to one hundred and fifty dollars, but it wasn’t very consistent. Some months I wouldn’t spend anything and other months I would invest a few hundred dollars one year into running my business.
On average, I was spending between two hundred and fifty to five hundred dollars per month running my business. But here’s the thing. At that point, my business wasn’t making much money at all. Some months we would cover our expenses.
Some months we would make a slight profit. But a lot of times we were in the red. And I was using my day job to fund my business over time. My business started to grow and so did our expenses.
But let’s fast forward all the way up to last year. Last year, I’ve been running my business for four years. Our profits had increased considerably, but our expenses had as well.
At this point, I had a few different people helping me with a few different aspects of running my business.
Specifically, I had hired someone to edit my because editing takes a lot of time and I also hired an assistant to help me out with customer service.
Beyond that, I was also hiring subcontractors for help with some specific projects. On average, I was spending between one and three thousand dollars per month on hired help.
Our software costs had also increased a lot. We’ve gone from originally starting out by just paying for hosting every month for about twelve dollars to last year.
Our software is costing us about six hundred dollars per month. We were paying a lot more money for our email marketing software because our email list had grown a fair amount.
We also had started the YouTube channel and so we were paying for video editing software every month and also for different sorts of graphic design software and many other types of software to run the online business as we were increasing the production quality.
Of course, we also wanted to upgrade our equipment more quickly. So we started spending about five hundred dollars every single month on that.
We were also spending money on other types of office supplies, everything from printer paper to postage, and we were spending money on giveaways for our audience.
Last year we spent an average of two hundred and fifty dollars on these supplies.
All told, last year our expenses averaged between at twenty five hundred dollars a month and forty five hundred dollars a month. A lot more than one year into running the business. Fortunately, our profits had increased a fair amount as well.
Last year, our average monthly revenue fluctuated between five thousand dollars a month and twenty thousand dollars a month. So our profit margins had really increased.
But now let’s talk about this year. How much our expenses this year and how much is our revenue? Well, a human resources is probably where the expenses have gone up the most over this past year.
One year ago, I didn’t have much of a team. Like I said, I just had a video editor and an assistant. But now I have about half a dozen people helping me run the business and run the YouTube channel and actually produce.
All of those people save me so much time, but they also cost a lot more money. I’m spending an average of between five and ten thousand dollars per month on human resources these days
Of course, software has also gotten more expensive, both as our email assize has continued to grow, but also as we’ve added on a lot more tools to help us better run our marketing campaigns.
We’re currently spending about a thousand dollars a month on marketing software. We’re still continuing to improve our production. Quality and therefore our equipment.
At about the same rate. So we’re spending about five hundred dollars a month on upgrading equipment as well as another two to four hundred dollars a month on office supplies and prices for giveaways.
So over the past year, our expenses have gone up a lot. All the way up from that twenty five to forty five hundred dollar mark where we were at last year.
Now up to between seven and twelve thousand dollars per month. This year, the main reason why I wanted to make this about how much money it costs to run my business is because I’ve made quite a few videos about how much money my business earns.
And I always get a lot of comments from people asking me how much it costs to run the business, how high my expenses are.
And so I really wanted to show you guys the behind the scenes of exactly how much it costs, because the answer is yes, it does cost a fair amount of money to run my business at the point that we’re at right now, thousands of dollars every month.
However, our profit margins have continued to get better and better. We have at this point reached what sometimes is called economy of scale.
We’re able to use the resources that we have now to make more money than we when we were first starting out. When I was first starting my business, I wasn’t making any money yet.
The business was costing me money every single month. Now we’re spending thousands of dollars, but we’re able to impact the lives of a lot more people and earn a lot more money in the process.
This is in contrast to when I used to run a local brick and mortar business. Our expenses continued decline. With that business and our profit margins were a lot lower.
So no matter how many more clients we got in the business, our expenses were larger and larger and it meant that we could never make a much higher amount of money.
I found this really stressful and it was one of the reasons why I ended up leaving that business and choosing to start this online business instead. I’m so happy with the way that the numbers are working out with this online business.
How efficient running an online business is. I’m able to reach so many more people and impact the lives of so many more people while keeping things. I would say really quite affordable.
I know that thousands of dollars every month isn’t nothing by any means. But compared to that impact, compared to the revenue that we’re bringing in at this point, it seems to me like a really good deal.
All right. Well, that’s pretty much it for today’s video. But before you go, I wanted to try something kind of new.
Then you shared it with me on Instagram and you told me what the biggest expense in your business is right now.
What is the thing that maybe you’re spending the most money on? I am all about having an open conversation about money.
I think it shouldn’t be a taboo topic. That’s something I’ve mentioned in a lot of videos before.
So if you’re willing to share with me what your biggest expense in your business is right now, then just take a screenshot and then share that with me on Instagram.
And I will be sure to reply to everyone you reaches out to me.
All about entrepreneurship, success and personal development. And I would love to have you join me for the next one. That’s all for now. But I’ll see you guys again soon.