Starting an online business requires time, attention, effort, and money. Most startup entrepreneurs make the mistake of not setting up a realistic budget for this venture. Starting an online business is much cheaper than opening a physical store, but it still needs funds to operate.

To create a realistic budget, consider the following factors:

Permits, Taxes, And License Fees

Starting an online business would require you to register your business first with the appropriate government agency. This is in compliance with the law and for your business to be protected through legal means should the need arise. Remember that the State, through the courts, has the responsibility to protect the citizens including juridical entities (corporations, partnerships, sole proprietorships) but you, as the business owner, should also do your responsibility by securing a permit first.

The Cost Of Materials 

If you are a product-based startup, the raw materials, suppliers, and inventory would take the most of your budget and capital. According to this research from Shopify, small businesses spend at least 31.6% of their budget. This only goes to the raw materials and/or manufacturing alone. 

Take note that you also have to spend on the packaging and shipping costs. Returned and damaged items should also be accounted for. 

This cost will be different if you are a service-based business instead. If you are going to hire a team, take note of the minimum wage in your local area.

Website Domain 

One of the advantages of starting an online business is the lack of physical store maintenance. Instead, you would need to establish a brand authority through online means. Buying your own website domain would be your way to find and reach customers. This is where you make offers, deals, and sales. 


This is a critical factor to your business success. High sales are a result of very good digital marketing strategies. If you want an inexpensive yet an effective way to generate better sales, utilize the power of email marketing. You can never go wrong with emails nowadays! 

Virtual Assistant

Starting an online business is a tedious job. You have to make an inventory, track your sales, answer queries, handle customer complaints, deal with suppliers, account your funds, and the like. You would need someone to help you with half of these tasks for a successful day-to-day operations. Hiring a virtual assistant will make you more efficient and more focused on things that would need your attention the most. 


Protecting your business and employees (if any) from unforeseen events and risks will be a responsible move to keep the business running even with today’s challenges. With business insurance, you will be protected from losses and data damages if someone hacks your system. You can also be protected from lawsuits for possible breach of contract or licensing issues. 

Final Thoughts

Most startup entrepreneurs think that starting an online business won’t really require a huge budget because it’s just online. That’s the wrong mindset for an entrepreneur these days. There are ‘hidden’ charges that would be required by the circumstances to make the business alive and running. Ineffective budgeting can shut down businesses even before they reach a year in operations. Prepare for the costs mentioned above so you’d be able to create a realistic budget for your online venture.

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