Budgets for Web Businesses

July 18, 2012 10:18 AM

Business plan filter: Help me create a budget for my website business.

I'm starting a web business with a partner, a dual website and magazine for a niche audience. Both of us are well-versed in journalism and the web, but have no real business experience.

After checking out our business plan, we've been told we need to include a complete budget. I'm familiar with personal budgets, but how does a business budget differ? Are there resources we should know about to construct one? Or is there software to help with this kind of thing?

Really any advice would be great. Thanks!

posted by vecchio to work & money (5 answers total)

Web hosting, advertising, content acquisition, public relations, printing, distribution, legal fees, business licenses, rent if you have an office, sales expenses, marketing, etc. If you can't make a list of the main costs associated with running a magazine and website you are probably a little ahead of yourselves in trying to launch something. I would take a step back and read any of 1000 books that are out there on starting a small business. Your local chamber of commerce probably offers fairly regular seminars in how to start a business. That would be another good resource.
posted by COD at 10:35 AM on July 18, 2012 [3 favorites]

The SBA have a decent guide to writing business plans. This is the section on Financial Management.

Some keys things that you will likely want to think about...

- What costs are fixed, and what variable? (And how could you change that?)
- What kind of volume do you need to break even? To make acceptable profit?
- What does the cashflow pattern look like? How deep do you go into debt before you start making it back? How long before your initial investment is paid back?
- How sensitive is all of this to your assumptions? (E.g. If traffic is half or double what you guess, how does that change things?)
posted by philipy at 10:38 AM on July 18, 2012 [2 favorites]

These are great, thanks. For the record, we've been told that because the overhead for web businesses is lower than regular businesses, it's better to get the site up and running and figure out the business nitty-gritty as you go. Would you recommend otherwise?
posted by vecchio at 12:09 PM on July 18, 2012

These are great, thanks. For the record, we've been told that because the overhead for web businesses is lower than regular businesses, it's better to get the site up and running and figure out the business nitty-gritty as you go. Would you recommend otherwise?

Yes.
Though I am not an entrepreneur, the only successful business owners I know went in with a clear plan, adjusted continually, and could tell you about the details of their business in and out.
posted by vivid postcard at 1:56 PM on July 18, 2012

we've been told that because the overhead for web businesses is lower than regular businesses, it's better to get the site up and running and figure out the business nitty-gritty as you go

Whether the "overhead" is low for *your* proposed web business is something that you should figure out. Also you mentioned a magazine, and if you mean a printed one, that is likely a whole different thing.

It's not that you should necessarily spend months figuring this stuff out, but it may save you a lot of grief down the line if you have given it some thought and done your homework.

Also what you learn from the exercise may cause you to rethink your plans for the better. e.g. To aim to start bigger or smaller, go faster or slower, or tweak the target market you want to go after.

The process of thinking through these things is as useful as the end result.
posted by philipy at 8:13 AM on July 20, 2012