By Guest Author Jason Markum
Every business, I don’t care what business it is, has marketing costs. Many people think that starting an online business is great because there are less marketing costs. After all, they think, I can do search engine optimization for free, I can use twitter for free, building an email list can be done with low cost or free services, and on and on.
If this is how you think, you’re dead wrong and here’s why.
ALL marketing has costs. The trick is, there are two types of costs.
Cost 1 is money. This one’s easy to explain. If you spend money on it, it has cost you money. I’m thinking about things like advertising (banner advertising, email advertising, Google adwords advertising, whatever), I’m thinking about direct marketing mail campaigns, I’m talking about anything that takes money out of your pocket.
Cost 2 is time. TIME IS MONEY. Yes, if you do all the search engine optimization for your web site, it might not cost you any money, but you’ll have spent tens, dozens, maybe even hundreds of hours manually doing the work.
Even if you use software to automate these things, (and assuming somehow that you got the software for free) you still have to take the time to find the correct software to use, time to learn how to use it, and time to start it up and monitor the results.
Most new business owners don’t factor in the cost of their time, but it’s a very real cost. A friend of mine recently set up his first web site business and spent nearly three months of 12 to 15 hour days working on things like search engine optimization, article marketing, email list building.
His web site is now successfully profitable, and pulling in several thousand dollars a month in income. That’s great, don’t get me wrong. But if you add up all the hours he worked to get there, he would have made more money working minimum wage at Mc Donalds. Really (I did the math).
Sure, there’s something to be said about being your own boss, and I’m sure my friend would rather have spent all the time building his site rather than working in fast food, even if the fast food gig mathematically would have paid more based on hours worked, but still…you really have to think about this.
Why? Because eventually you’ll bring your business to a level where it makes more sense to hire people to do those manual marketing tasks that you used to do yourself (or outsource it to a company to do for you). When that time comes you will need to calculate how long it took you to do those tasks, versus how much income they produced, versus how much it would cost to outsource, versus how much you could make spending your time in other ways.
In economics this is called “Opportunity Cost” and it means basically, the cost of the next best thing. In this example, my friend made (let’s say) $3,000 with his web site after putting in 3 months of work. If he had worked fast food for the same amount of time and same amount of hours (which admittedly is more hours than a normal fast food worker works in a day) then he would have made (lets say) $4,000.
That means the opportunity cost of that $3,000 web site is $4,000.
So in economic terms, my friend lost $1,000. In accounting terms, he made $3,000. But you should focus on economic terms because they mirror reality better.
The point is, get in the habit of putting a value on your time. Because whether you pay for a thing with money or with your time, all marketing has costs and you can’t expect to be successful until you account for ALL the costs of running your business.
ABOUT THE AUTHOR: Jason has been writing articles online for nearly 14 years. When he’s not talking about Internet marketing, he runs a dinnerware web site where he finds and reviews porcelain dinnerware sets for his readers.