How can I treat my website as a real business?

November 29, 2007 8:40 AM

My website is starting to turn into an actual business. How do I go about treating it like one?

I've been running this toy website for about 5 years now. In the last year it's grown exponentially, and we've published a book and became a youtube partner. I've got people who do work for me, and we go out and cover events.. Basically, it feels like a business, but I want to start acting like a business. Where do I start? Do I incorporate? How do I get investors interested in something like this that is experiencing growth but not on a scale like a large company?

Keep in mind I am more of an idea guy, and know nothing about running a business, business plans, or anything like that. But I have seen the writing on the wall, and I could very well do this for a living if i had the proper capital to get some ideas off the ground.

Are there any case studies about websites that took off and became a full fledged business?

posted by quibx to work & money (12 comments total)

Well, there are a hell of a lot of books out there, but sometimes it is easier to have some structure. Look at classes at your local community college.

You'll need some sort of business plan to get any funding (a small business loan might be your best bet) How are your bookeeping & accounting? Can you break out your current spending into broad categories? Do you have a good handle on your cashflow? Describing the current state of the business is going to be a foundation for your business plan. Then you show how investment will be spent, and what the returns will be.
posted by Good Brain at 8:58 AM on November 29, 2007

I should have asked too: How much funding do you think you'll need, and over what sort of time frame?
posted by Good Brain at 9:01 AM on November 29, 2007

Are you sure you want investors? Realize this means relinquishing some control over the company.
posted by rhizome at 9:30 AM on November 29, 2007

The very first thing, if you haven't already -- before you get investors involved -- is to form an LLC, a 'limited liability corporation.' This 'limits your liability;' basically, if anything bad happens, this means that you're not personally held liable. It's an essential first step.
posted by koeselitz at 9:42 AM on November 29, 2007

Also, taking it to the next step beyond that -- forming an inc. -- involves a lot of hassle, and generally isn't worth it. It means having board meetings and public transparency. It's only worthwhile, usually, if you're headed for being publicly traded, and you're not yet, it sounds like. So LLC is probably the best way to go.
posted by koeselitz at 9:44 AM on November 29, 2007

There's some reading you'll find useful in the ycombinator library. Though it is geared to "startups", so the situation may be a little different to yours, but there is concise and informative stuff about developing a web business, how and when to get funding, dealing with investors, etc.
posted by MetaMonkey at 9:51 AM on November 29, 2007

By the way, since you're in MA, you should go here to learn about filing as an LLC. It costs $500 annually, and there's plenty of info about how to go about it there.
posted by koeselitz at 9:54 AM on November 29, 2007

Find a local accounting firm that does financial advising and has some CPAs on staff. They'll be able to let you know how many laws you're currently (inadvertently) breaking and how to stop doing that. They'll also be able to help create a structure for your company that is beneficial to you.

Assuming you're not in a big city, expect to pay $100-150/hr, and for the process to take a decent bit of time. If the costs concern you, just be up front about it. Many of these people have somewhat negotiable fees, and all will provide reasonable estimates of what their total bills to start-up, and to continue operations will be.
posted by Tacos Are Pretty Great at 10:18 AM on November 29, 2007

I wouldnt jump into incorporating or setting up a corporate structure until you have a decent business plan down and have gotten more than a few people to look at it. If you cant prove future profitability and how this will come about, you really wont be able to find any investors. Although, there's no shortage of lawyers and financial consultants who will happily take your money for their services with no cares in the world if you should really be expanding your business.
posted by damn dirty ape at 10:34 AM on November 29, 2007

The E-myth?
(book on small business issues; I've heard it recommended, and Google books will let you taste it)
posted by niloticus at 1:39 PM on November 29, 2007

mathowie has a blog about this, called fortuito.us.
posted by barnone at 2:27 PM on November 29, 2007

Seconding rhizome - be very careful about hanging on to your control of the company.

If your site is profitable enough to invest in, it's also too profitable to leave in the control of the idea guy. Make sure it doesn't slip away from you.
posted by McBearclaw at 3:58 PM on December 2, 2007