AP 0021: What Do You Need to Spend Money on to Build a Successful Online Business?

AskPat 21 Episode Transcript

Pat Flynn: Hey, hey. What's up? This is Pat Flynn, and welcome to Episode 21 of AskPat. I am here five days a week to help answer your online business questions, and today we have a question from Mike from Sydney, Australia.

But before we get to that, I want to mention a company that I use, still use, and I've been extremely happy with. This is a hosting company that I recommend if you're getting started today. That is Bluehost. And you can go to AskPat.com/Bluehost, which is my affiliate link, to learn more about that. [Full Disclosure: As an affiliate, I receive compensation if you purchase through this link.]

But before you do that, let's listen to Mike's question because Bluehost actually has to do with the answer. So here's a question from Mike.

Mike: Good morning, Pat. Mike King here, mate, just from Sydney, Australia. Sitting here in Piermont having a coffee and reading your newsletter this morning. I've got a question I want to ask you. Every month, I love your monthly income report and your expenses. I notice that you do outlay a lot of expenses, which is a good investment. Do you have a checklist, exactly, of the expenses, the best optimization, the best services to use, the best hosting? Have you got a dedicated server or at least . . . If you got, like, a checklist of all of those expenses that you need in place to have the ultimate services package, so you've got the foundation there for a great website. I'd love to see what you say about that, and I'm sure a lot of other people would too. Thank you very much, and thanks for the inspiration. Carry on. See you, buddy.

Pat Flynn: Mike, thank you so much for your question, and I think it's really cool you're from Australia, because I love Australia. I was there in August of 2008. Fell in love with it. I fell in love with Sydney, with Brisbane, with Mackay. I was actually in Mackay, which was awesome. And Melbourne, Melbourne was really cool. But I'm actually headed there in 2014. So I will share more information about that and the details about that trip later on.

But for now, I want to answer your question, Mike, so anyways, sorry about that. But I think it's really cool that you mentioned my expense report, because a lot of people know that I produce a monthly income report, and they are interested in how much money I make. And a lot of people don't ask questions or investigate my expense report, so I'm really appreciative of this question Mike. And as far as a checklist and a list of things that you should have, it's going to be hard to give you a list of things that you should have because your business is going to be different from mine, which is going to be different from another person's. And I think over time, you'll start to discover what your expenses might be.

Now I will say that I've been doing this for six years, and over time I've learned what I should be spending my money on. And I spent money before where I shouldn't have, and I'm learning to spend money now where I should have started spending money earlier. For instance, now that I've been doing this for six years and I have all these projects, I'm starting to build a little bit of a team. So that's a new expense that I have that I didn't have in the beginning, because one, I couldn't afford it, and two, I just was doing a lot of things on my own.

Now I will say that when I first started out, my expense report looked like this. Here's a list of my expense report for the first year and a half. The first item was hosting, and that was done through Bluehost, and that was done for $3.95 a month. And that's it. That was all my expenses for the first year and a half, because I had built a site using Bluehost, and a one-click WordPress install. I installed a theme on top of it, just straight off WordPress, and I started writing blog content. This was a site that you can find right now at GreenExamAcademy.com. That site started, first year and a half, at $3.95 a month. That's it. And over that time, I had built an audience, and then I started to sell them an ebook study guide, and then I turned that into an audio guide, and that's when I started to spend a little bit more money on my business. So for a while, I was just providing content for free, and I was only paying $3.95.

And then when I started to introduce products to sell, that's when I had to pay for services to do such things. For example, e-junkie.com, which cost at that time $5 a month and I think it's still the same, to be able to automatically deliver via email the ebook that I was selling on that site. I also had some Paypal fees and things like that for all the customers. And that was it. Then when I sort of went into my audio book, I spent $1400. That was the most money I had ever spent in my life at that time. It was more than rent. $1400 to have somebody on Elance.com read my book and record it in a really professional manner, high quality recording, so that I could sell that on my site at GreenExamAcademy.com. And that did really well, and that was a very very great learning experience for me to learn that. You know, sometimes it takes you investing back in your business, taking some of the money you earn or some of your money even before you earn it, and investing that so you can earn more later.

Now, like I said, I've been doing this for a while, and I've learned that I need to be spending more money on building my team and using higher quality products and dedicated servers and things like that. Now if I could go back into time, however, beyond just using hosting and that's it, if I could go back into time and tell myself, “Hey, you should buy this other stuff too. Like you should really do this.” It would only be one other thing, and it would be for an email service provider. There's a lot of them out there. I use AWeber right now, but there's also MailChimp, there's iContact, there's ConstantContact, Infusionsoft has it's own built-in email service. I mean, whatever it may be. Again, I use AWeber. It's really important to start collecting your email addresses from your customers, from your readers, just build that subscriber base right away.

That was a huge mistake, and I made that mistake twice. First on GreenExamAcademy.com, even when I started selling my ebook. I had sold thousands of copies, and then when I came out with my audiobook, I didn't have those emails from those customers to then upsell the audio book. Or I didn't have a list of readers, or people who are using the free content on the site, to then sell the ebook or the audiobook to. Huge mistake. I missed out on tens of thousands of dollars as a result of that. I made the same mistake when I started SmartPassiveIncome.com. I waited a year and a half, a year and a half, before I started collecting email addresses. Now, I'm not using that email list to directly sell stuff like I did on the other site, but I'm using it to build a relationship with my audience. And I missed out on huge opportunities to do that. Just something I want to point out.

So when you're first starting out, I really feel like the only thing you need is hosting and an email service provider, and that's it. And as you start to grow, you're going to start to add more things over time. You may have to upgrade from shared hosting to a VPS or virtual private server or to a dedicated server, like what I'm on now. For dedicated servers and things like that and virtual private servers, I'm using Linode.com. It's a little bit more complicated, but I have a guy, right? I pay a guy to help me with helping my site stay up to speed and all that web dev stuff. Now a user-friendly sort of version of that would be WP Engine. If you're running a WordPress site and you need sort of higher quality hosting services, WP Engine, I've talked to the guys from there, they're great. So that's good for hosting. Again, email service provider. There's a bunch of them out there. I use AWeber. And then over time, you're going to start to add new expenses to your business based on how your business is running. You might have to start to introduce legal fees or, obviously, once you start trademarking things or you incorporate, which should be done earlier than later, and there's another AskPat coming in the near future in the pipeline about incorporating and turning your business into an LLC or an S-Corp or that sort of thing, so that's going to be an expense as well. But that's just the one-time expense.

So again, it's hard to sort of give you a list and a breakdown of the things that you should have. I mean, minimum, you should have what you need to deliver the content that you need to deliver to help your audience. Now after you start with a blog, for example, then you might want to invest in some equipment to start podcasting or doing videos. If you're interested in podcasting and equipment and how to get that all up and running, head on over to PodcastingTutorial.com. That's my free tutorial with all the list of equipment and expenses you need. I'm trying to think of how much it might actually cost to go from nothing to having a podcast. If you don't have a blog yet, you'll have to pay for hosting, but as far as the equipment and getting everything up and running, it would cost less than $150 to get a podcast up and running. And a podcast has done so much for me and my business, and it could do so much for you. $150 for great equipment using microphones that cost $50, like the Audio-Technica ATR2100, one of the best, most economical microphones on the lot. $50. That's it. And that's going to produce high quality sound for you to be able to deliver amazing content to your audience with your voice.

Again, if you're expanding and you're sort of using other content mediums to produce content, again, your list of expenses is going to change over time. You might have to hire people to help you. You might need to hire developers to create software for you. Whatever the case may be, just know that it's going to take a little bit of investment into your own business to make you more money down the road. But it's not about the money. Remember, it's always about being able to provide something for your audience, to be able to help them out. Because the more you can help them, the more rewards will come your way. So think of what you can do, what money you can spend, to better help your audience. That's why I spent money on podcasting. That's why I'm spending money in my new home now to put a video studio up, things like that.

So I want to end this episode by saying thank you to Mike, and also remind you that my affiliate link for Bluehost is AskPat.com/Bluehost. And of course, as always, Mike, you're going to get a t-shirt as a result of having your question featured here on AskPat. If you have a question, the listener, for AskPat, and you'd like to potentially get featured here on the show and also get a t-shirt, head on over to AskPat.com.

And lastly I want to end you with a quote from Carl Sandburg. He said, “Time is the coin of your life. It is the only coin you have, and only you can determine how it will be spent. Be careful lest you let other people spend it for you.”

So I leave you with that quote because we're talking about expenses and money and things like that, things you need to spend to grow your business, to make more money down the road. But really, this is all about your time as well. Money, you can always make back later. Time, once that time is gone, you're never going to get it back. So use your time wisely. Sometimes it might take a little bit of expense to help you save time, so you can use that time for other things that you know you should be spending that time on.

So thanks again, Mike. I appreciate your question. Thank you for listening. I appreciate you guys listening in the next episode.