But It Takes A Lot Of Money To Start An Online Business, Right?

Money to start online business

This is the fourth post, in a four part series, designed to help you overcome several common online business success obstacles. Parts 1, 2, 3, 4


Ah, the green stuff we devote a large part of our waking hours to obtaining, that disappears from our grasp all too quickly. While our first two obstacles Vision and Time can be improved relatively easily, money can be more difficult to manage.


In reality there are only two ways to amass more money.
1. Spend Less
2. Earn More

Spend Less
The first approach to spending less, is knowing how much you spend monthly.

Many people I’ve encountered in life say they are not planners, or can’t deal with money. Unfortunately, this is a basic necessity in life. If you’re unhappy with your present situation , or complain of “never having any money”, this has to be attended to.

Even for those (like myself), who are not money hungry and don’t need to always “buy stuff”, using money to become 100% debt free and build a cash cushion of at least 6 – 12 months is crucial for peace of mind in life.

The first step here is to track what you are spending. I use Mint.com for automatic tracking. Mint is a free service that can read information from your bank account or other accounts you choose like a credit card, car payment, mortgage, etc. This service automatically categorizes and graphs out your spending habits. You can establish budgets in a category and get text/email message alerts if you go over. Once a week I make sure transactions are categorized correctly.

This exercise is often very eye opening as to where your money is going. Nights at the bar, or excess “shopping” can really add up.

The goal here is to get real with where your money really goes, and pick one or two areas to cut back. Even cutting $100 across the board from different categories is $1200 at the end of a year, which is more than many people have saved. It’s all a matter of what’s important to you…..what’s really important to you.

You have to be really merciless with yourself. If you just can’t “live without”, a TV subscription or eating out frequently, then that is more important to you than saving money and changing your life. No hard feelings, just the cold truth. Everyone chooses how to spend their time and some come to a tipping point sooner than later.

Outside influences may question your sudden change in spending habits. It’s best to be truthful in your response, but unwavering in your determination. People don’t like change. Ironically, life is nothing but change. The sooner you accept this, the better. Few people are able to break free of tradition or the “way we’ve always done it” mentality. Thus they live fairly unfulfilled lives, taking hopes, dreams and aspirations to the grave.

While the tone of these last couple paragraphs may seem a bit morbid, I’m a firm believer in reminding myself that time is limited and for every day I fail to take action, is another day wasted towards a fulfilling life. I always ask myself, how I’d view a particular action, or lack of action on my deathbed. Will I regret not taking a chance, or will I have some relief that at least I tried to reach out and grab what I wanted. Nobody can do this for you, except yourself.

Ok, rant over…back to our talk about money.

Using Mint is one way to track your spending and plan how to save based on your current habits.

I’ll share personally some of the things I’ve done to lower spending. While these work for me as a single guy in his late 30’s, those with a wife, kids and pets to consider may need to tweak.

  • Cut off the TV subscription (instead I use Netflix).
  • Get fresh food from farmers markets and ethnic stores.
  • Never aimlessly shop at a mall, order most stuff online after research.
  • Cook meals at home most days and avoid vending machines and eating out too often.
  • Downsized clothing, and only buy something if really necessary.
  • Downsized and sold many possessions and live modestly in a 1 bedroom apartment.
  • Considering moving cities to live a “car-free” lifestyle.
  • Digitized media where possible. For example, threw out DVD cases and turned my media tower into a notebook sized case.
  • Bought a Kindle, and converted books to e-book format, freeing up more living space, formerly used for storage
  • Converted CD’s to .mp3 and gave away the whole lot to friends.

Earn More
Now that we’ve approached a few ways to save money, the other side of the coin is making more money to fund your emergency backup account or business venture.

Some of the ways to make more money are a bit self-explanatory, such as:

  • Hold a garage sale for your excess stuff
  • Get a second job
  • Increase your hourly freelance rate
  • Ask for a raise
  • Do occasional odd jobs

Spend Less + Earn More = A Winning Combination.

The bottom line here, is that money can be managed positively, and used in small chunks towards your business venture. Ideally, you start something that is low risk to get a feel for how your vision, time and money strategies all work together. Once you get into a flow and can effectively balance your full time job, family and side project effectively you are on the right track.

Understanding your risk potential is really crucial.  A good question to ask is whether you want to first clean up your finances and start saving before starting a business.  Starting a business has a way of consuming your extra money, or even borrowing more on a whim. It’s a matter of what level of risk is right for you.

It’s a tough road. It’s taken me over 7 years of full time work and side projects to come to these realizations and implement them in daily life.

I think the hardest lesson I’ve learned is to schedule time for fun.

While sacrifice is a necessary part of building a business, personal time shouldn’t be overlooked for a healthy life/work balance.

I remember when starting my online shop, I was consumed all the time. During the week I would get up early to work on it (like 5:30am), use time from my lunch hour at my job when possible, then come home and work some more. Come the weekend, I’d look forward to “catching up”.

It’s very easy to waste time in a half work/half browsing the web situation. It really wasn’t until I implemented time tracking that I realized I was essentially using my web business as my hobby and lifestyle business, instead of putting a higher value on my time and becoming a bit less emotionally driven so to speak.

In the beginning, there is a period of time you need to totally immerse yourself, however it shouldn’t take years (as in my case). As you learn a task, document how you did it with images, text and video, and decide if it can be outsourced.

Ideally, you should run your initial plan and ideas by a seasoned business coach, to help ensure you’re pointed in the right direction.

It’s now time to bring this four part series to a close.

If you take nothing else from these words, remember that really analyzing how you craft your time, money and vision has a huge effect on the things you are, and the things you want to become.

Sometimes we just need an outside view or kick in the pants to realize the things blocking our success. If you’re not having the success in online business you’ve hoped, try implementing some of these tactics – you may be surprised!

This is the fourth post, in a four part series, designed to help you overcome several common online business success obstacles. Parts 1, 2, 3, 4

Recommended Reading
A short guide to consumer disobedience
Fighting financial pressure from friends

How would doing one or two of these actions affect your outlook and subsequent savings?

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