August was my best month ever but I just realised that sharing my earnings each month is really only half the story. Every business has expenses as well as revenue and this online earning gig is no different. True, expenses can be kept as low as $10 per year for a domain name and around $10 a month for hosting but over the past few years I’ve started to see the benefit in investing back into my business. Like any business, if I don’t invest some of my earnings back into it, it won’t grow.
So, with that in mind, I feel like my earnings reports need to be accompanied by expenses and I plan to do that in the future. Here’s a look at my expenses for August:
- Domain Renewals – $55 - Mostly a bunch of domains I’m not using but don’t want to let go just yet.
- Ebook – $30 - I bought an ebook from Sitepoint about designing WordPress themes, tried and promptly gave up.
- Software – $147 – My freebie copy of BB Edit, a text editor I’ve been using (because I’m still stuck in the past and hand code all of my sites), finally expired so I shelled out for the real deal.
- Plugins for a Forum – $86 – I bought some add-ons to a forum I’m going to use on my new Africa website.
- E-Junkie Ebook Distribution – $5 – It costs $5 a month to keep my international volunteering ebook going out. Bargain!
- Advertising – $120 – Some advertising to help my living in New York City site.
All up I spent $443 in August on web-related things. Obviously I have hosting fees and each domain name costs me $10 divided by 12 each month but, as I report my earnings on a monthly basis (as in I put the whole amount down as earnings for each month rather than dividing ad deals by the number of months they’re for, etc), I figure I’ll do the same for my expenses. So if I pay my yearly hosting bill in September, I’ll just report the whole amount. Probably not sound accounting, but I sucked at accounting in uni, so screw it.
I’m going to invest heavily this month on link building, first just buying articles and submitting them myself to article marketing sites (which I’ve already done a lot of) and later I’ll outsource the actual submission process which should be a learning experience. I’m also going to join some link building website things (I don’t actually even really know what they are yet) that come with hefty monthly fees as an experiment. More on this once i get it all going.
I’ve got no problems paying taxes and I’m not into finding loopholes or tax havens, but it makes more sense to pump money back into my business than it does to give it straight to the tax man. Things like outsourcing article writing and link building, investing in software, products and membership sites that will help the business, paying graphic designers to create things that would have taken me ages to do and stuff like that are all things that will improve my business and also bring down my tax bill at the end of they year. It means less money in my pocket now but if I don’t spend that money, a portion of it will just go to the tax man at the end of the year and do nothing to strengthen my websites.
That’s all! I hope you’ve found this interesting. I really wanted to let people know, especially those who are starting out, that you might find that you’ll need to spend money to make money. I’ve invested thousands back into my business over the years. Once you start earning, it’s much easier to invest but it might also be necessary to spend a bit to get the ball rolling as more and more competition pops up.
Thanks for sharing, your right, earnings are only half the story. Luckily as digital nomad you don’t have any overhead like an office.
I’m AMAZED you have time to hand-code everything and even think about creating WordPress themes!!
I’ve just started (3 days!) to experiment with Headway, one of the new breed of hyper-configurable WordPress themes (the other is Frugal) and have been really impressed so far, even for a non-coding muppet like myself. Worth a look – WordPress seems to be moving forward incredibly quickly as a platform.
Nice post Kirsty – great to see “behind the scenes”
I was thinking about getting that same Sitepoint book on WordPress Themes. Why did you give up on it? Was the book bad? Steps unclear?
Since I began treating the blogs like a business, I’ve loosened the purse strings and spent more money on the sites buying premium themes, better hosting, etc.
There’s been a direct correlation with the amount of money I’ve made, but lately, I’ve been earning much more than I’m spending. I can see myself spending a lot at the end of the year to try and balance earnings/expenses out.
Kudos for sharing your expenses too. I keep much better track of my income than expenses. Maybe I’ll follow your lead going forward!
Thanks for sharing. I am one of those just starting out as I am about to build a series of sites. Its nice to see where some of the money is going. I have no problem investing back into the sites since I now see this as a business and I will treat it like so. I do have a budget right now so I am tying to decide where the money will help the most.
I am about to spend £400 attending a conference on affiliate marketing in the UK – money well spent, 40% of which would have gone to the tax man anyway to provide support to the workshy.
@nick True! And as a travel writer, of sorts, there are some travel-related things I can claim on my expenses.
@christian Don’t be too amazing. My hand coded sites are all copies of each other with the content changed. Once you get a design you like, there’s less coding and more just filling content into the spaces.
@greg The book is good, I just have so many other things to do that I can never justify the time spent on it – which for me is a lot. My brain doesn’t work that way and it takes me ages to work things out. Plus I have no intention on being a WP theme designer, I just want to tweak the current one I’m working on and I discovered a help forum for the theme I’m using.
@dave Plus it’s a lot easier to spend money that just goes in and out of your Paypal account that you never actually hold in your hand (or proper bank account). For me, at least.
@eric I think that’s the right strategy! If you want to make a living from this, you need to treat it like a business which means investment. I think there’s too much competition these days to be able to get away with what us people who got into this in the early 2000′s did.
@portvila I just bought a ticket to a travel blogger’s conference in Vancouver for next June. If I go, I’m guessing I can claim the flight? Plus the cost of the ticket. At least I can according to a blog I read awhile ago. Who knows, but if I can, the conference suddenly becomes even more valuable than I thought it would be.
A really interesting post Kirsty, its funny because I just asked another internet marketing friend about their monthly outgoings, then I stumbled across your post.
I completely agree that online business growth comes from investment. I am still mainly investing my time as my business is fairly young, although I do invest a small amount of my steadily growing earnings each month.
In order to grow faster I now plan on going back to full time employment in 2011. I plan on spending about $500 per month on things like getting articles written, building backlinks and all of the other things that I currently do manually (and inefficiently). The fact that I will have a full time income means that as monthly earnings grow then can all be pumped back in to the business until I reach my goal of $2000 p/m net profit. At that point I will go back to working solely on my web business.
I think its a good model for growth, although the next year will be very busy as I will have to not only work a full time job, but also do an hour or so on my business every evening. It will all be worth it in the end as I will have a good monthly income stream requiring just a couple of hours per day effort on my part (I hope).
It’s nice to see someone declaring the expenses as well as the income.
You make an interesting remark in your last comment RE: claiming on expenses.
By setting yourself up with an accountant and going all out on a business plan you could set yourself up to saving a lot of money on expenses in your home country (as could anyone).
I’ve been wondering recently whether I should declare taxable income in my home country (UK) or get around it by banking abroad and constantly moving. It’s time consuming to work out and something I feel investing into an account will pay itself off in doing so.
Glad you posted the other half of the story. I will be interested to read about your joining link building websites.
Kirsty – Thanks for the “behind-the-scenes” look at expenses. I’ve been looking into travel writing and trying to find out how to legally deduct travel expenses. It’s not easy, but it can be done if the IRS requirements are met. Avoiding audits (and surviving them) is job #1. Here’s hoping September will be your best month yet!
it is really cool, This month i hit my 3 times income of last month. all XEO SITE which zero cost. i can find way to automaticly get 1000 backlink. it is work for me.
It is good to know how much on average your site costs to maintain as well as educational things you may purchase to help in the growth of your site. Good stuff to know.
Thanks for showing us the other side of things Kirsty. I completely agree with your strategy about investing money back into your sites as a tax write-off. I try to invest enough into my sites each year so that the net income is not too high. That way, as you mentioned, it sets up the sites for long term growth.
Your expenses are still quite low. So it will be interesting to see how much you increase that after a good month. Link building is definitely a smart place to invest. Keep us updated on how that whole process goes.
@10minutetravel I’d love for someone to write up a ‘how to guide’ for what can be claimed when you’re travel writer/travel blogger type. I claim certain things but I’m not sure if I could claim more. The internet-related stuff is easy, the travel stuff isn’t quite as straightforward. I think my earnings have been low enough to stay off the radar, though.
@laptop While I had a great month last month, I made the mistake of clearing my Paypal account out to my bank account. So now I have lots I want to spend on but no easy way to do it. For some reason taking money of my creditcard seems wrong! It’s way easier to spend from a Paypal account, I think.
I’ve always loved that you show what you’ve made with your sites and adding the list of expenses is a great addition. I’ve been working online for years (I guess I’m one of the lucky ones that got a head start) but hearing honest details from other people doing this is a great help, and not only for the newbies.
I’d love to hear more details about what you’ve tried for advertising, what works for you and what doesn’t, perhaps even what went right and wrong in both cases.
Kirsty, you are certainly right on the fact that the earnings do not tell the whole picture, one thing that I also think people should look at is an Econ term called “Opportunity cost”, that’s often something most people don’t look at. That is looking at what else they could be spending their efforts on for that same given resource and time. Speaking of time, I believe for the amount of time you spend on your actual websites, your return on that time is really good!
Till then,
Jean
Really great earning. Thanks for sharing with all. I wish you a huge success ahead.
At the beginning, people are often afraid to invest money in their “online adventure” or they simply don’t have the money at this stage or they didn’t acquire the business mentality of re-investing money…
However, I think in order to grow and to move on faster it’s absolutely crucial to re-invest a part (or even a big part) of ones profits.
I remember, I got started with free traffic only methods. I was just scared and uncomfortable to invest even $50 in my online activities. And as a result, things moved forward very slowly.
Once I started playing around with pay per click (using a $5 daily budget) using buyer keywords only, I had this big revelation: I spent $5 a day and I made between $7 and $12 a day on various campaigns (I also have to mention that things were easier back then). So, then I started thinking: Wow, what if I would spend $1000 a day….?
@Kirsty: as long as you pay off your credit card balance right away, there is no problem with putting website or marketing expenses on credit. As your expenses build up, it could start to be a lot of money. So you might as well be earning cash back or air miles on those purchases. You just have to be sure that you don’t get carried away and invest in your sites so much that you cannot clear the balance that month. Just don’t get too reliant on paypal as it does not give you any added benefits. It’s not like they’re going to pay you interest on your balance or give you any kinds of reward points. So clearing your paypal balance to your bank account is actually probably the best move.
You really hit it Kirsty. Blogging or making money online is a real business. So we must invest for it. If we do it in the right way and direction, then business will grow.
Kristy,
Thanks so much for being so open and sharing your income and expenses every month. It’s one thing to say you live off a website, it’s another to open up and share with people what that means in detail. I appreciate the openness and insight. I saw one of the things you spend money on is Graphic Design and wanted to let you know that I am trying to shift from a office job to work from home and have a design degree and almost ten years experience and would love to do some work for you if you need some more work done in the future. I currently live in South Korea teaching English, but am planning to strike out on the road in 2011 and do some volunteering along the way, so maybe my wife and I could meet up with you at some point even if we are unable to work together. Have a great week. hope to talk to you soon and maybe meet up or work together one day in the future.
I’ve heard and practiced the discipline of only taking 40% of the profits of your website’s revenues and plugging the other 60% back into the further development and promotion of the site. As you pointed out, in the beginning this is no different than any other start up business where you would be well served to reinvest in your endeavor.
I was thinking about getting that same Sitepoint book on WordPress Themes.