Building a Profitable Business Online ...

Starting a Service Based Online Businesses: A Case Study

Just over a six weeks ago, I asked a question in the Clicknewz Elite Members forum.

The question was, “If these were  your likes, talents and skills what service business would you start?”

Now I’m no stranger to setting up a service business website. I’ve done it following specific business model instructions on two different occasions to test products out. I knew going in I wasn’t really interested in serving the market, I just wanted the experience of setting up the sites.

I’m re-purposing those sites over the next year into something which is more in line with affiliate marketing.

That’s the beauty of building online income streams.  You get to decide if what you’re doing works for you. You also have final permission in whether and how you wish to change it so it continues to work for you.

There is no job or boss offering this kind of flexibility, even if we love the work we’re doing on that job or for that boss.

Setting Up a Services Business from Scratch

I’ll be using two, resources specifically, to guide me in the right direction.

The first is the SBA – The U.s. Small Business Association. Their resources help with the high level understanding of running & managing a home based service business. Something I’m very new to doing.

I started here and then go to the Small Business Assessment Tool.

The tool gives me this result, “Your answers indicate there is room to grow before you consider starting a business.”

The suggestions are that I do the following:

Step 1 & 2 – Complete free online courses, “Small Business Primer: Strategies for Success” and “The Beginning: Developing A Successful Business Plan.”

Step 3 suggests creating a list of questions and gives me info on how to submit them to a SCORE counselor.

Step 4 suggests I visit with a business mentor to discuss my business. I’ll be doing that using my second resource.

The second resource is Clicknewz.com Elite Members Forum. Because I am comfortable there and it feels safe enough to discuss the specifics of what I’m doing. It’s a great private place to ask questions and get answers from people who are starting, managing and running all types of business models right now.

It’s also a great place to offer assistance and make new acquaintances, who hopefully become good friends.

I’m certain other resources will be referenced but those are the two I’m starting with.

Can Success be Guaranteed?

There is no guarantee about how any of this is going to turn out. That’s a risk. I know my skills are there. I know my desire to do the work is there. Now it’s a matter of doing it.

Back to SBA, I complete the registration and click continue. I get an error page. I may not be using them as a resource after all.

I do a search since I have the title of the course. I find it and get started. Here is the link http://app1.sba.gov/training/na_primer/. I’m given some questions to answer in the self paced presentation.

The target is [redacted for now].

I detail who I believe it is, based on the questions and explore why my services are competitive.

[Details redacted for now.]

I believe there are enough people who are willing to pay for this service, but the reality remains to be seen. The market definitely exists.

I’m not certain about my competitive advantage, yet I’m certain I can find one.

I have a budget of $500 of which a portion has already been spent on domain names and starting the business registration. Although if I’d really thought about it, I could have skipped that initially and just been a sole proprietor.

My time budget is about 8 hours a day doled out in pockets. As long as time covers the gap in start-up costs and beginning stages, I’m golden.

What-iffing Leads to Better Questions

One what-if question shows up immediately.

What if I can’t deliver? I explore that question with more questions such as:

What exactly am I delivering?
How long will delivery take?
What happens if we miss milestones?
How is what I’m delivering delivered?
Where do I find the target audience?
Am I able/capable of speaking with them with authority/confidence?

Now I’m back to watching the presentation and other questions are popping up.

What is the profitable cost of delivery?
What criteria do I use to price the offers?
What does an income statement, cash flow statement and balance sheet look like?
How do I create them for my business?
What are my projected start-up costs?
What is my expected ROI (return on investment) for the first year?
What is the projected income statement, balance sheet and monthly cash flow for the next 12 months?
What is my business structure and how does it impact tax preparation?
How much of my earnings will I reinvest?

I’m already aware of the business structure I’ll be using, although some parts aren’t yet complete.

Every city/county/state/providence/country has their own requirements for business structure, licensing and taxation. It’s a good idea to make some calls to find out what they are in  your area.

Gotta Look at the Numbers Even if They Are P.O.T.A (Pulled Outta Thin Air)

Now we’re talking numbers and this is where the SBA presentation doesn’t take into account the low cost start-up of an online business.

While I appreciate the cost estimator worksheet http://app1.sba.gov/training/na_primer/elements/html/numbers.html, most of the fields are not exactly pertinent to my online service business model. At least I don’t think they are.

There are a few I might want to consider adding as cash flow begins. The other issues not shown on the estimator worksheet which are needed include, technology, technology service provider fees (web hosting, content management software, monitoring & security (CMS) fees, customer relationship management (CRM) fees, domain renewals,  independent contractor payments.

The ones I’ll definitely be including in start-up costs are telephone/mobile/internet fees, insurance, taxes (I’ll have to consider this one sooner than many of the others), advertising & promotion, training, licensing renewal fees and my own salary of course.

I like to eat and wear clothes and feed my dogs and things like that.

I’m feeling like omg omg omg omg so much to do.

I have a rough estimate in my head of how much my fixed costs + monthly projections are going to equal.

What I do next is to calculate them and get them on paper and out of my head.

Fixtures – $0
Furniture – $0
Technology (hardware) – $0
Technology (software) – $0
Technology (provider fees)
– Web hosting – $240 yearly
– content management system $0
– monitoring $7 monthly
– security $ 7 monthly
– customer relationship management $49 quarterly
– domain renewals $12 yearly
Independent Contractor payments – $500
Telephone – $45 monthly
Mobile – $49 monthly
Internet – $45
Insurance – $?? yearly, quarterly, monthly
Taxes – 32% $?? yearly, quarterly
Advertising/Promotion – $??
Training – $???
License Renewal – $??? dependent on # of employees as per county code
My salary – $3,887 monthly

I haven’t calculated the total yet. The numbers listed are what I currently pay for the services I have.

Also, that salary isn’t what I’m currently earning. It’s what I want and need to earn to get my financial life on a better track.

That’s one of the reasons I want a service based business, so I better own and control my time and income.

I can better estimate my start-up costs with some more information about what certain numbers look like.

Information about finding the capital is provided here. I won’t be using any of them. My only option is cash flow through leveraging the internet business model.

There are six words – assets, liabilities, equity, income, expenses and profits discussed in this next section. Planning, controlling and executing these elements and their analyzing. I’m not sure how those relate to online business. I’ll learn as I go.

The next section on the SBA site answers the question I had about what all those spreadsheets were. As I’m reading it my brain goes Charlie Brown teacher whaaamp whaaamp whaaamp whaaamp whaaamp but I know those words are important.

Okay. I took a quick break and guess what?

I’ll be adding a third resource because I just won Kelly McCausey’s Gold Key Coaching Program, omg squeee.

Kelly McCausey’s new book “Solopreneurs are Smarter” will ship soon. (Yes that’s an affiliate link.) And you have an opportunity to win her Gold Key Coaching Program for yourself, simply by purchasing an advanced copy of her book. When you purchase, you are entered in a random drawing every Friday until the book ships.

Read more about Kelly and get her book., “Solopreneurs are Smarter”

Well that was one heck of a break (pun intended).

I do finally finish the SBA presentation and it definitely brought up some good questions. I’m glad there are other available resources I can turn to though.

I’m satisfied with my start on getting a mental and financial foundation for a service based online business.

=========================================================================
I’m thinking about making future posts in the case study private. Would you rather sign up to receive the weekly? twice monthly? (yeah I have no idea right now) updates regarding the whats, whys and wheretofores of getting a service business up, running and profitable?

Or do you think I need to keep them public? Share in the comments. I’d also love to hear:

  • suggestions/ideas you wished you’d followed or followed through on when you started your service based business.
  • questions you’re pondering because you think you might be interested in starting a service based online business.
  • challenges you faced or are currently facing running a service based online business.

2 Responses to Starting a Service Based Online Businesses: A Case Study

  1. Hi, Minna:

    Just answered your question on my blog regarding guest posting. Have a look and thanks again for visiting me there. Appreciate it.

    You have a great blog in Theory and Profit – love the domain name!!!

    Cheers,
    Missy