After publishing my blog income report yesterday, I got several questions with regards to my operating costs. Last year, I wrote a detailed post on how much I spend per year. After reading this post, you will realize that during the past 12 months, I was in line to spend about $67,000 to run my business. This obviously cut out the glamour surrounding my company income which is around $8,000 to $10,000 per month.
So what’s the point of working extra hours on a company that will bring about $30,000 in profit per year? It’s even worse when you calculate that I have a partner and that I have to split everything 50/50! I tried to explain my reasoning in a previous post but I don’t think that people realized how I separate my costs and why it’s not important to look at cost when you are building your side income.
#1 I don’t derive income from my side business
I do have a pretty decent day job and this is why I don’t need my online money. Instead of receiving dividends or a salary from my online business, it pays for some of my expenses. For example, my blackberry, internet and cable are supported by the company. Same for my partner.
So these expenses are essential for running my business but I would definitely spend money on a Blackberry and internet if I didn’t have a company. These are small rewards we are getting for our efforts.
Since I don’t count on my online income right now, I don’t really mind if one month I’m a little short. In fact, since we have massively increased our expenses, we only went negative during the month of July 2011. This is a great liberty as, in the end, if I make more money, I’ll just spend it on creating another project!
I think it’s a key factor in our success; we don’t really care about money at this point. That sounds a bit odd from people publishing their income report, right? In all honesty, I don’t really mind if I have a good month or a bad month. The fact that I report my income on a monthly basis increases the level of accountability I have towards my company and towards you. On top of that, it helps using an hour per month to see how things are going. To look at what went well and what requires improvement.
#2 I reinvest every single penny in my company
As I just mentioned, we have made the decision to reinvest each dollar within our company. My ultimate goal with my company is to see how big it can become. So am I going to stop buying or creating websites one day? I guess I will… but this won’t be tomorrow! We first spend money on our servers and security (I have a full article explaining everything about hosting services in a draft so send me all your questions regarding this topic and I’ll cover them!). Then, we hired some writers (for reasons described in #3). But when we decided to hire Virtual Assistants, we were going to play on a totally different level.
We now have the resources to go above and beyond our regular business. In the past 12 months, we were able to launch 2 books, several niche websites and are about to launch a few bigger sites in the upcoming months. Most of them will be related to investment topics because:
#1 this is what we like best
#2 people who are interested in investing are also interested in spending a few bucks to help them make money from their investments!
#3 Time is more valuable than anything
The main reason why I spend so much within my company is definitely because I don’t want to end-up working 25-30 hours per week on my online company while I work an additional 30 hours a week at my day job (+ transportation!). I value quality time with my wife, family and friends more than anything else. Therefore, if I can pay people to write on my sites instead of writing, I’ll do it. I want to keep my baby (TFB and The Dividend Guy Blog) but as for the rest, I’m trying to find interesting writers.
The key in finding a good writer is that you need to find someone with a specific tone. Someone that is original and that will be passionate about a specific topic. I’ve found some great writers among the blogosphere`
MD who blogs on Studenomics,
Chris, previous owner of Broker Professionals
As you can see, I’ve found my writers amongst previous or actual blog owners. They know what is required to write on a regular basis and are familiar with the blog industry. I liked them before and they bring personality to their posts and to me, this is the most important thing.
Technically, if I wanted to fire all of them, I could do it and write all the articles myself. That would be a big mistake for 3 reasons:
#1 They are amazing writers so why try to write great stuff when they do it already!
#2 I would have to take several hours away from my week to write these articles… I would still rather go play soccer with my son and watch my daughter dance ballet 😉
#3 It would prevent me from managing my empire and looking at the big picture!
What’s the True Cost of my Operations?
If you are really curious about the real cost of operation (e.g. keeping my site as is and growing within these sites instead of diversifying my empire), I am showing them right now. I am taking this info from my original post about cost of running my business but cutting down what is being used for growth and what is really required to keep my business as is.
Regardless if I’m making 30K or 300K, my accounting costs will be similar. This includes book keeping (this is why I’m so bad at keeping track of my expenses!), tax reporting and producing financial statements.
This is for writing articles on all my sites + correcting my articles so I don’t sound like a French guy 😉
Banking & Interest Fees: $6,000
We still have a pretty decent business loan and this is why we are paying so much in interest. But that’s all right since we are making more money with the site we bought than the interest being charged 😉
Hosting and domain renewals: $1,500
Here again, nothing can be cut as keeping our domains is an absolute must for our business!
Life Insurance: $1,200
This ensures that my wife will get what the company’s worth if I ever pass away. This is also the main reason why I put the value of my shares in my net worth statement; it’s because we have a potential buyer if I die : my partner will have enough cash to buy them!
This is the very basic of our company. Without cable, internet and cel, we don’t have a business!
So my true cost of operations is more like $28,700 per year and not 67K…
In fact, by dropping my cost to less than $2,400 per month, I could still run my company with 10 hours per week. The problem is that I would have to cut my 2 VAs, investment in software and promotions. My 2 VAs are a tremendous help in the creation of new websites and products. However, in order to keep my company as is I would not need them.
My main goal is to create enough “money making machines” that my VAs will take care of them while we will be making 15K… 20k… or even 25K per month! In the past 12 months, I have built the structure I need to grow my business to over 250K annually with the SAME COST. This is why I don’t care about how much it costs me to run my business today ;-).
Do you have any questions? Do you find that I’m spending too much money for nothing?
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