So how much do you spend on your online business each year?

This is an interesting article by pro-blogger, Jon Loomer Digital, that sets out his business expenses.

During the past two weeks, I wrote about the rise of my blog from obscurity to one of Social Media Examiner’s Top 10 Social Media Blogs of in 17 months. Part 1 focused on the obstacles overcome for such a rise while Part 2 focused on the key turning points along the way.

Now I want to talk about what I spent on my business to get here.

I wrote a Facebook status update a couple of weeks ago asking what people guessed I invested in this business. One guess was at $50,000. Another was $5,000. Everything else was somewhere in between (and a few funny references to Austin Powers).

What I actually spent: A shade over $2,500.

Let me be clear why I’m doing this. It’s not to suggest that you should spend close to nothing on your business. Instead, I wish I would have invested more, and I’ll map out at the bottom what I plan on doing this year.

The reason I’m giving you this information is to remove the excuses. I did this after losing my job. I had to provide for a family of five. My wife did not provide an income. We had a grand total of $10,000 in the bank from the start.

You do not need to spend a fortune to build a successful business online. When you can invest more you should, but you can succeed by spending a small amount of money strategically in the beginning.

Expenses by Month

When I started this website and my online business, I was extremely frugal. Too frugal. I was scared to take any risks. And really, I never completely overcame that.

But as you can see from this chart, I did get more comfortable investing in my business later in the year. I strategically pulled back in December because it was clear that business — which relied heavily on website traffic — was simply going to be more difficult to come by during the holidays.

Expenses by Type

First, let’s take a look at a chart which breaks down where I spent my money…

As you can see, the greatest expense was on ads, email marketing and accessories. Let’s take a closer look at each category…

PPC Ads: $750. Not surprisingly, the bulk of this was in Facebook ads. I spent about a combined $30 on Twitter and Google AdWords. So, no, you don’t need to spend a bunch of money on ads to rank high on Google (we’ll get to my traffic at the bottom)!

Accessories: $485. This might as well have been a “miscellaneous” category. It includes items like a new printer, ink cartridges, a new iPhone and business cards. I didn’t get a new computer to start my business (though that will be an investment next year).

Email Marketing: $470. I didn’t start an email list until late January. AWeber
has a sliding scale based on number of subscribers, so the cost was $19 per month at its lowest point and is currently $69. That price will go up again when I hit 10,000 subscribers — an added expense I’ll embrace!

Software: $331. I didn’t pay for much, but most of what I paid for ended up being a very wise investment. Expenses included the Genesis Framework WordPress theme, Screenflow for video, Premise for landing pages and Gravity Forms for contact forms.

Domains: $215. During the course of the year, I spent money on domains I did and didn’t need. Some I haven’t renewed, but others were a necessary investment.

Hosting: $145. Some people spend as little as $6 on hosting. This is fine to a point. Then you need to invest in site speed and uptime. That’s what I did, and I now host on an Amazon Cloud Server.

Meetings: $131. This is silly. It’s basically the amount of money I spent at coffee shops during the year.

Business Registration: $50. I registered as Jon Loomer Digital, LLC. That costs a whopping 50 bones.

Service Exchanges

Now, it’s important to point out that I didn’t necessarily do everything else myself. But I never made a tight budget my excuse for something I couldn’t do on my own.

I exchanged services for the creation of my logo and professional photos. Those are two things that were undoubtedly critical to my rise last year.

Website Traffic

I’m all for transparency, but I don’t find it appropriate to share my revenues. Just know that I have had one main client for a year now. That client was my main source of revenue until the middle of the year. Then AdSense and affiliates started kicking in as traffic took off. Then I created my own products beginning in October. And then I attracted website sponsors, who have now replaced all AdSense spots on this site.

Here’s a graphical look at my traffic. I decided to include everything from Day 1 through January to reflect where this site truly has come from.

As I’ve documented before, my January traffic was a bit misleading. About 50,000 of those views came in five days for a viral piece of content that wouldn’t lead to any business (it was about a Facebook hoax). I didn’t begin shifting to Facebook marketing until the tail end of February.

I also noted a drop in investment in December, and that is reflected in a slight dip in traffic. But as you can see, things picked right back up in January, nearly matching the high set in September. February would reach those same levels if it weren’t for a short month.

The main point here, however, is that it’s relevant traffic. I’m no longer chasing traffic by writing posts about Facebook privacy and hoaxes. I have a very specific niche in Facebook marketing that is leading to One-on-One Coaching, Facebook Page Strategic Reviews, Sponsors and project retainers.

Future Investment

If I had to do it all over again, I would have invested more. And I’m already doing much more spending next year.

I keep two Facebook ads regularly running: A Page Like ad and a Domain Sponsored Story. I do this because so much of my revenue is directly related to website traffic.

I also have begun investing more in Twitter ads, paying to promote tweets that share my popular content. I spend less here than on Facebook, but I’ve already spent more in this year than I did last on Twitter ads.

Other investments include podcast hosting, webinar hosting, product development, design expenses, mobile expenses, hardware (a new computer), outsourcing and more. This year, I look to re-invest close to 7% of revenues into my business.

I hope you found this review of my expenses helpful!