It Takes Money To Make Money, the Fallacy.

Last Update: October 14, 2016


\I hear this statement all the time.

“It takes money to make money.”

It is probably the most rehashed statement I hear these days in the business world and to it has always been this way. I even see people making that statement when they don’t have money.

That creates doubt and often times is self serving as another excuse why you cannot succeed.

If you don’t have a substantial budget, that is fine. If you have a budget, it can be well served to create a very successful if done right, but by no means is it required.

The reason you don’t need money. The internet.

The Cost of Building a Business Has Changed.

Prior to the Internet that it cost a significant amount of money to start a business.

Sure, you could start a lemonade stand for under $50, but that’s what you ship your kids out to do on hot summer days. No reasonable adult is going to be out there selling lemonade. But prior to the Internet, if you didn't have $10,000's to budget on a business (or more), you were out of luck.

Before the Internet, the costs of creating and owning a business were incredible. The failure rates in business were incredibly high and that is part in parcel due to the expenses associated with starting an offline business.

Some data indicates that 95% of all offline businesses fail. There are many reasons for this, but one of the main ones is that they all have an operating budget and as soon as you run out of funds to operate an offline venture, your business is doomed.

Let's have a look at the real costs of owning some of the most common types of offline businesses.

Costs of a Conventional Offline Business

The conventional costs of starting a business haven't really changed over the past 14 years, the time in which I have been navigating the online world. If anything, starting an offline business has never been higher.

Let’s look at the real costs just to start an offline business...

As you can see, the range from $60,000 for a small coffee shop kiosk to $850,000 for a gym.

And this is just to get started. Not to mention monthly expenses. Food, gas, heat, hydro, equipment, maintenance, labour, phone, employees, internet...it goes on and on.

In most circumstances, starting an offline business requires you to go into major debt, max out all of your credit cards, borrowing money from friends and family, give up ownership in a percentage of all of your business and profits.

In addition, most start-ups require folks to go get a bank loan or have access to a good deal of financing to start your offline business ventures, whether that is a restaurant, a coffee shop or a barbershop.

So if you were to say "it takes money to make money" about an offline business, you are correct. Most of the time it is "borrowed money"!

Internet Has Minimized Start-up Costs. Drastically.

The thing is, the Internet has really flattened the playing field between those that have the MONEY to create a business and those that don't. Now everyone has adequate money to start a business, regardless of your situation.

Those with little money have the same opportunity as those with lots of money. Let's have a look at the average start-up costs for an online business.

As you can see, between website design, hosting and website security, education and mentoring you can expect on average of around of just $1,500 per month to start up and run a business (monthly). There are many services out there that charge this and in most cases, you have to join 5-10 services to manage your business.


It is definitely a lot more affordable to run an online business than it is offline. But there is a MUCH more affordable way to start a business online. One that removes the argument that it takes money to make money. Want to know what that is?

Wealthy Affiliate.

The REAL start up costs for a business at Wealthy Affiliate.

The total cost of starting a business online, growing and managing your business online within Wealthy Affiliate is $49 per month (or $359 per year). That includes everything and from this you can absolutely create and grow a business to any level of success online.

With 3.4 billion people online, an online business has WAY more potential than any offline, and much more expensive business could have.

The argument that "it takes money to make money" is now a complete fallacy. There you go, I said it.

Join the Discussion
Write something…
Recent messages
gmegs Premium
Great post Kyle - and so true!

The internet and Wealthy Affiliate, gives anyone (especially us little guys) just about everything we need to build a business and viable income source - for peanuts, comparatively speaking.

Gone are the days where the only way to earn a good living was with a college degree. Not that that wouldn't be a benefit, but the bottom line falls with the dollar. ... nuff said

I feel incredibly lucky to have found this place - best money I've ever spent.

Thanks Kyle!
Reply
Kyle Premium
It sure does and it allows us to be dream/passion chasers which is pretty cool (and rewarded for it).

Formerly, you could have all the dreams in the world, say you wanted to open a clothing store, but you wouldn't have the means to do it.

Now you can create that same clothing store environment online, promote millions of products, connect with billions of people, and operate on a 24/7 basis for a 1,000th of the cost. It's powerful stuff!
Reply
TonyHamilton Premium
Awesome Stats and Figures Kyle!

Thank you for putting it all into prospective my Friend and I so agree that it doesn't take money to make money, It takes a lot of effort doing the proper things.

I am working towards being more productive with my most valuable resource, My time.

Thank you Kyle for always sharing and caring,

Tony
Reply
Kyle Premium
The only ways you can create more time is (a) being more efficient (b) hiring help to scale (c) working longer hours.

Sometimes all 3 are the solution, but these are ways you can maximize the growth of your business.
Reply
TonyHamilton Premium
Wonderful Kyle, Thank you for the advice my Friend.
Reply
MoneyMagnet3 Premium
Great article Kyle! I agree. The internet has leveled the playing field when it comes to owning your own business. The biggest investment is time.

And you don't need to have a bunch of time either, as long as you're consistent with it. I think resources like WA are absolutely amazing at helping people start their own business.

Thanks for making this affordable for everyone.
Reply
Kyle Premium
For sure, but time is going to be a huge investment in any business that you want to start. Whether that is a coffee shop or an online business.

I would have to say the time vs. value tradeoff is remarkably better within the online world than the offline and your business is far more scalable through things like outsourcing (which can be done with a click of the button) versus having to hire folks, fire folks and training people (within the offline world).
Reply
MoneyMagnet3 Premium
Totally agree!
Reply
ThomasTay Premium
This is great idea to consider ... outsourcing instead of hiring people and firing them when business no good or worrying what to train them and spending times to guide them. I am experiencing these bad things indeed.
Reply
BeauAndNik Premium
Great post Kyle. The only thing I would say that has been left out of the costs to build a business with WA is a domain and time.

if you are building out your own business then having a subdomain is not the best approach because you can't sell a siterubix subdomain i believe.

Time is a metric commonly over looked and it needs to be factored into your overall costs. This is what a lot of affiliate marketers forget.

What is your hourly rate? how many hours have you dedicated to building your websites? When you look at the hours and put a figure on it, you will find that the majority of affiliate sites are in a negative ROI.

We can't dismiss this time metric. What is the whole purpose of creating an online business? Financial freedom. To allow you to buy back your time.
Reply
Kyle Premium
Yes, both very good points. $14 per year is less than $1 per month, it is not an absolutely requirement so I didn't add it but they are most definitely a good idea to have.

Time is a metric associated with all business and if you know anyone in the restaurant business versus the online business world, you will know that your time goes a lot further and leads to much more scalability within the online space.
Reply
Swangirl Premium
Thanks Kyle,
I see so many people that still think you need to buy traffic. What is the short answer to that? Can we truly do fine with social media driven traffic, organic traffic, backlinks etc? Or do you need to buy some sort of traffic ultimately? I have not bought anything outside of the WA membership and domain and I don't intend to. I prefer organic search traffic and social media etc.

Jessica
Reply
Kyle Premium
You don't have to buy traffic. The people that are saying this are likely "selling" you something that requires you to buy traffic. This is common place within the many schemes out there, that have absolutely flooded things like Facebook.

PPC through Google Adwords, BingAds.com and Facebook can come down the road, but in the infancy of your business it should not be the first focus (and many people never resort to PPC as you can get in essence, unlimited traffic through SEO).
Reply
Swangirl Premium
Thanks for the clarification and assurance! That is what I thought.
Reply
BeauAndNik Premium
Bought traffic can be scaled. measured. it also means you no longer have to rely on the volatile nature of SEO / organic.

You don't need to buy traffic. If you want to scale fast you do. If you want to diversify your traffic sources you do.

Dont put all your eggs in one basket.
Reply
Kyle Premium
Faster scalability is the key benefit of PPC. You are also in full control, in particular when you are using PPC platforms where you are either targeting specific keywords are hyper relevant demographics.

PPC is where my foundation was built and I didn't get into SEO until several years after I had already mastered the PPC side of things. In hindsight, I do recommend gaining an understanding of your niche and building out content before you step inside the PPC world, in particular if you are on a limited budget.

Once you have a budget and some seed money, PPC is a natural way to scale your business.
Reply
Top