I know that finances are a touchy subject. People are uncomfortable sharing information about income, but I am constantly second-guessing how much to spend for advertising and development. I started the website almost a year ago and, of course, with my optimism believed that I would have it paid off by now. I've learned so much in the past year. Throw in advertising expenses and promotional materials and inventory costs, and I am no better off than I was a year ago. In fact, I owe more. I never realized that having your own business is such a gamble! Every decision is a risk. I would feel so much better (I hope not worse) if some of you shared your experience in this topic.
I have always heard that if you are profitable within your first 3 years that is considered really good. We are in business for ourselves, people always assume that you are "raking it in". Not so, it is very expensive to be self employed.
It is no different that a household budget, it seems like there is always something needing attention (more advertising, more equipment, upgrades etc...).
Jen -- what you're going through is completely normal. Seriously. In my previous life I invested in small start-up companies and it takes a while to get profitable. I think the key is stay really focused on your expenses and to make sure that you're spending money on doing things that bring in business at a good return on investment and that you have, in your mind, a steady-state business model that is profitable.
So for example, I think if you're going to spend $100 bringing in 10 customers, then your goal has to be that they each spend at least $10 -- which would mean that you break even -- or hopefully more -- which would mean that you're profitable.
But even with metrics like that, it's tough at the beginning -- every business requires upfront investment. And I can totally relate at how stressful that is -- you're investing with the goal of making money later, but until you get there, it's very uncertain.
What do you do if you have spent every last penny on just getting the website built and now you just can't afford to go forward? I feel like I am really stuck here and I know I need to spend more money to make money, but it just isn't possible. What then??
This is hard for me to admit in public. I don't believe in credit cards. I don't have a balance on my personal card. However, I thought that if I paid for my website and my business expenses on the credit card that would be paid off my now. Instead, the balance is twice as large as it started out. That is scary to me. So I wouldn't say that what I've done is a solution. That is a hard one, mamalolo. PLEASE post here if you find any possible solutions.
There is no universal answer to this question, but the no cost/low cost tactic I always recommend is networking for referrals. Networking for referrals is a very targeted tactic and it gives you a leg up into what you are trying to achieve: customers (biz growth) while keeping your investments low. With some businesses, this tactic works miracles.
All the best and good luck with everything!