When I quit my job to start my own business last February, I knew it wasn’t going to be easy. I anticipated roadblocks and expected to face twists and turns along the way.
One thing I hadn’t quite considered? How expensive it actually is to run a business.
After all, my business is run almost entirely online. I often joke that all I really need to do my job is my trusty MacBook.
That’s definitely not the case. Running a small business does come with a cost — often a significant one.
However, as “they” say, “You have to spend money to make money.” Put more strategically, you need to invest money in yourself and your business to set yourself up for future success.
You know transparency is kind of my thing, so today, I want to give you a real look at how much money I spent this year to run Jessica Lawlor & Company.
Thanks to my meticulous reporting in FreshBooks, an invaluable tool I invested in this year, it was super easy to pull a report of my 2016 expenses, broken down by category. For each category, see how much I spent, how I spent the money and if it was worth the cost or not.
Ready for a look inside my 2016 expenses? This is exactly how much it cost me to run my online business for one year.
Marketing Materials
- Logo design: $200
- Business cards: $100
- Personal branding checklist: $100
- Blog graphics: $100
Total spent: $500
How I spent the money
Starting my business almost from scratch, it was super important I invested some money in developing marketing materials to promote my services.
First things first, I worked with a designer on business cards. At the same time, I had the designer design my personal branding checklist (as part of Personal Branding Bootcamp). Midway through the year, I hired a different designer to create a few Pinterest-friendly blog graphics for me. Toward the end of the year, when I announced my company name, I hired the same business card designer to develop the JL&Co logo.
Was it worth it?
100 percent.
I love my company logo, I hand out business cards fairly frequently, and not having to think about creating my own blog graphics every time I publish a post saves me a serious amount of time. I also love my re-designed Personal Branding Checklist (Want a copy? Subscribe to my email list and I’ll send you one!) and it looks *much* more professional than the first version I created myself a few years back.
Team JL&Co
- Team member: $1,333 (Note: this expense will be much higher next year. My team member only came on board toward the end of 2016.)
Total spent: $1,333
How I spent the money
In the fall, I brought on my first team member. She works between 8-10 hours a week for me on all kinds of projects ranging from client work like scheduling social media posts and laying out newsletters to helping me with my personal brand like revamping my services page and helping me organize my big 2017 project.
Was it worth it?
Hell yes. My team member works at an advertising agency by day, so she actually has more experience than me in what it means to “run an agency.” She brings so much expertise to the JL&Co brand that I *don’t* have, allowing me to go after clients I normally wouldn’t because I don’t have the skill set. She’s also seriously expanded my bandwidth, freeing up my time to focus my efforts on landing new clients.
Website/Email Hosting
- Website hosting: $195
- Email hosting: $45
Total spent: $240
How I spent the money
Pretty cut and dry here. It costs money to keep a website up and running, and I also chose to make a small investment to have a professional business email address, rather than a gmail.com address.
Was it worth it?
It’s definitely two necessary expenses; I need a website to market myself and I need a professional email address to communicate with clients and prospective clients.
Professional Development (Education and Networking)
- One Woman Shop membership: $120
- Solo PR Pro membership: $179
- Philadelphia Public Relations Association membership: $175
Total spent: $474
How I spent the money
The three groups above are membership-based, meaning I pay an annual fee to be part of the group. It’s important for me to stay connected with those in my industry, to network with likeminded folks and to take advantage of the many opportunities that come with being a member of these groups.
Was it worth it?
Yes. As a solo business owner, it’s nice to have a network to lean on, since I don’t have coworkers I can chat with all day long.
In particular, these three groups are great because they cover different areas of my business: PPRA is local to Philadelphia, so I stay connected with the PR industry in my backyard. One Woman Shop is made up of other female biz owners, so they are a great support system. Solo PR Pro is an online group of other communications professionals who run their own businesses.
Solo PR Pro has been the most valuable resource to me since starting my business; it’s worth it to pay the membership fee just to get access to the private and robust Facebook group, not to mention the host of other resources and benefits the group offers.
In the future, this is an area I might be able to cut some expenses (Do I really need to be a member of all three organizations?), but I’ll always be a part of at least one group.
Accounting/Business Set-Up
- Business coaching: $400
- LLC filing: $432
- Accountant fees: $800
- FreshBooks: $227
Total spent: $1,859
How I spent the money
After six months in business, I knew I wanted to become an LLC, which costs money. Throughout the year, I also hired experts to help me manage my accounting/business set-up. I use FreshBooks to invoice clients, track my expenses and keep my finances organized.
Was it worth it?
Definitely. Running a business is NOT easy, especially when it comes to the often confusing financial/legal aspects of being out on your own.
If your car broke down, wouldn’t you hire a mechanic? If you had a toothache, wouldn’t you go to the dentist? The same thinking applies here. I know very little about accounting and the law, so instead of setting myself up for trouble down the road, it was worth it to spend the money to do things right upfront.
FreshBooks has been worth every penny I spent on it.
I use Freshbooks daily to send out invoices, check to see if I’ve been paid (you can even see if a client has viewed your invoice, so they can’t tell you they haven’t seen it!), track my expenses and more. I highly recommend this tool to any business owner, no matter how large or small. I know there are other features of FreshBooks I haven’t taken advantage of yet, but look forward to exploring this year.
Health Insurance
- Health insurance: $2,070
Total spent: $2,070
How I spent the money
This is pretty self-explanatory. This $2,000 went toward my health/dental insurance. I went through Obamacare and my monthly price fluctuated throughout the year as my income changed. I now pay around $250/month for healthcare.
Was it worth it?
Yes, obviously. One of my major concerns in quitting my job was how I’d get healthcare. It’s not a fun expense to pay each month, but it’s definitely necessary.
Meals/Entertainment
- Food/Drinks: $408
- Gifts: $118
Total spent: $526
How I spent the money
I actually didn’t spent as much money on business dining as I thought I would. In looking at my records, I only went out for coffee, food or drinks 17 times (for business purposes) throughout the year.
This stems from the fact that most of my clients are remote, so we don’t often meet in person.
I also bought my team member a Christmas gift at the end of the year. I also anticipate purchasing client gifts in the future, so that will be another expense to consider.
Was it worth it?
Definitely. In-person time spent with clients, team members and business connections is super important. This is an area I’d love to challenge myself to do even more of next year! Don’t get me wrong, I don’t *want* to spend more money, but I know the importance of being face to face with my connections to grow relationships.
Supplies
- New MacBook Pro: $2,170
- Wireless phone charger: $34
Total spent: $2,204
How I spent the money
Two “supply” purchases this year. A brand new MacBook Pro (I got my old one in 2011) and a wireless phone charger for my constantly dying phone.
Was it worth it?
YES, YES, a thousand times over, YES. I don’t know why I put off buying a new laptop for so long. My old laptop ran so slow, I’d find myself waiting for something to load and mindlessly scrolling through Instagram, then coming back to my laptop and not even remembering what I was working on. My productivity skyrocketed when I brought my new MacBook home. Never again will I hold off so long on purchasing something that will help me work smarter.
Travel
- Hotel stay for speaking engagement: $145
- Taxis/parking: $73
Total spent: $218
How I spent the money
When I spoke at the FPRA Conference in August, the conference covered most of my expenses, but I paid for one night in the hotel. Similarly, I also spent money on cabs and parking for meetings and events in the city.
Was it worth it?
Yep! The conference was an amazing experience. I’m grateful they covered most of my other expenses.
In terms of parking, I was surprised by how low this figure was, because I feel like I traveled to the city more than I thought.
I don’t travel *too* much for work, but I’d love to change that this year!
In total, in 2016, I spent $9,424 on my business.
Pretty eye-opening, huh?
Running an online business *does* come with a cost.
Of course, my costs are relatively low compared to say, someone who owns a storefront and pays rent, but still, running any kind of business, online or not, requires you to spend money.
As I move into year two, I look forward to seeing how my expenses grow and change as my business grows.
One quick thing to note: these figures do not include my quarterly tax payments. My accountant is still working on my 2016 taxes, but we anticipate I’m going to owe nearly $5,000 thanks to underpaying quarterly taxes in 2016 and paying my first quarterly taxes of 2017 in April. In 2017, I’ll likely pay around $3,500/quarter toward taxes. A pretty big chunk of change.
Have any questions about my business expenses? Happy to answer them in the comments below!
*Please note that some of the links above are affiliate links. This means, if you click or make a purchase, I will receive a commission (at NO extra cost to you). Don’t worry; I will ALWAYS disclose when that is the case and I will only do this for products or services I personally use and truly believe in!
Photo via Pixabay
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