How to Start an Online Business for $100

Starting your own business doesn't have to mean spending thousands of dollars on setup costs before you ever open your doors.

Today's economy isn't doing anyone any favors, and if you're one of the unfortunate folks to have been served a layoff notice, you might be facing a long haul when it comes to searching for another job. Is now the right moment to put your long-lingering business idea into practice? While times may be tight for many larger enterprises, in many cases smaller, more nimble companies are better able to withstand market uncertainty and weather downturns.

The best way to stick it to The Man? Start working for yourself by founding your own company. Working for yourself has some serious and obvious advantages over job hunting. Not only do you determine your own hours and decide where you set up your office, but you keep all the profits, too.
Starting your own business doesn't have to mean spending thousands of dollars on setup costs before you ever open your doors. Don't get suckered into spending loads of money on services that you don't need or that have far cheaper alternatives. Seriously: With $100, you can obtain everything you require to start just about any business online, with only minimal need to get up from your desk. Here's how to do it.

Find an affordable Web host
 
The Web site for your new business has to reside somewhere. How do you pick a Web host that won't leave you high and dry?
 
Most hosting plans for small companies offer similar features: basically unlimited storage space, support for common databases and publishing systems, and anywhere from a few gigabytes to 2 terabytes of data transfer per month. Expect to pay between $5 and $15 a month for the service, with a one- or two-year upfront contract.

How to pick one from the dozens out there? Look for reviews from recent users, with a particular focus on how quickly the host resolves problems and how often the service goes down. If you expect sudden, big influxes of traffic due to promotions or Digg-like flooding, you'll want to ensure that the host can handle it. Ask about these issues if the company doesn't have written policies.
If your business is blog-centric, you can get started for free with a hosted service such as one from WordPress. You can always move to your own Web host later when you outgrow it or are ready for more.

Get logos and design work
 
Numerous Web sites, such as Logo Ease and LogoMaker, will design a free logo for you based on options you set via a Web interface. The quality varies, but generally you can get the logo for free for online use. The services make money if you want to download the logo in EPS format, which is more suitable for printing on T-shirts and coffee mugs. A Web search for "free logo" will turn up dozens of additional alternatives.
Another, possibly better, approach is to seek out an independent designer to work on your logo. If you don't need anything fancy, you can find someone to do the job for $50 or less through a simple Craigslist ad. The advantage is that you get to work with a live person (with genuine artistic skills) to create something unique for you rather than a cold, computer-generated logo.
 
As for Web design, you're unlikely to encounter someone who can create an original site for you for a fee within our $100 budget range. If you can't afford a real designer from the start, begin with a simple layout and customize it as you go -- but try to avoid making incremental changes every day or week. When it's time to redesign, do all the work at once to avoid confusing and alienating your readers for a protracted time.

Build an e-commerce site on the cheap

If you're planning to sell a lot of physical goods, you'll need a service that can handle e-commerce transactions, process credit cards and provide security for both. Setting all of this up on your own server is an expensive, time-consuming task laden with security risks. It's best to outsource the functions to a hosted service targeted at merchants. Such services can be surprisingly affordable. Yahoo's popular Merchant Solutions start at $40 a month. E-commerce sites at Netfirms start at a mere $15 a month. You can customize both extensively to match your desired look and feel.

Find a big sales partner

Thousands of merchants use Amazon to promote their goods, giving Amazon a cut when items sell. The big advantage: You don't need a Web site at all to sell there. You can sell just about anything that Amazon stocks by registering as a merchant, finding the product page for the item you're selling and clicking Sell yours here. Merchants must pay $40 a month, plus a sliding scale of closing fees (6 to 20 percent). Individual sellers can sign up to sell with no monthly fees but must pay an extra 99 cent closing fee.
 
You'll find similar services (though less of a selection) at Half.com (part of eBay), and of course you can always try your hand at dealing on eBay itself, which is still a popular venue for selling new and used merchandise, though one drowning in noise.

Think SEO, all the time

Don't underestimate the value of optimizing your Web site for Google. But you don't need to pay an expert thousands of dollars to optimize your site for you: Check out the expert advice from SEOmoz and other search engine optimization writers to learn the basics of SEO, and instill your site with good SEO habits from day one. It takes time for the engines to get to know your site, so be patient. (Just make sure you've submitted your URL to all of them!)

Get bonus income with Google AdSense

Unless you're selling physical merchandise, try adding Google AdSense ads to your site. You might pull in only a few dollars a month while your site is small, but that's more than nothing -- plus, it opens the door for bigger ad opportunities down the road.

Constantly promote your business

How do one-person businesses get big? They're always promoting themselves -- always. Add your URL to your e-mail signature. Create a Facebook group for your business. Write a humorous blog about your product or industry (check out Chris Lindland's Cordarounds blog for ideas). Submit your gems to Digg, Reddit and StumbleUpon. Comment on online stories in your field and cast yourself as an expert. Meet and greet at trade shows. Make T-shirts, stickers and business cards. Give away products to charity events in exchange for an ad. Hold contests for freebies and make people work for the prizes. Above all: Don't let anyone forget about your new enterprise.

File for a fictitious business name

Unless you intend to receive all incoming payments under your real, legal name (as, say, with a personal consultancy) you need a fictitious business name for your company, also known as a DBA ("doing business as"). You need one because of your bank's policies: If you receive a check for Acme Widgets, you won't be able to cash it unless you can prove that Acme is really you.

To make that connection, get a DBA. This is one of the few actions described in this article that you often can't do on the Web. The specifics of obtaining a fictitious business name vary from city to city and county to county, so you'll need to check with your municipality. In my city, you must make filings in person at the city hall (after you've ensured that no other businesses have the same name), and you must place a notice in a paper of record indicating that you've opened up shop. In some cities -- Little Rock, Ark., for example -- you can do the whole thing online. Some regions require county filings, too.

Check with your official city and county Web sites for specific instructions. Fees will range from nothing to about $50 to have any DBA and relevant licensing (see below) taken care of. Just make certain you go directly to the municipality to do the task: Intermediaries claiming to file forms on your behalf are often expensive scams.

What about additional licenses?

Again, this is a locale-specific issue. Some cities make you file for a special license if you're going to be working from home (the city doesn't want you snarling traffic if you open a cookie shop in your kitchen, for example). Others require certain types of businesses to file additional paperwork to get a license. Again, the rules vary dramatically from place to place, but usually you can take care of it all while you're filing for a DBA (and, in fact, usually the city won't give you a DBA unless you've handled any other relevant licensing issues already).
 
Also, if you're selling physical goods, you'll have to collect sales taxes if your state requires it (as most do). Check your state's Web site to learn about collection and filing procedures. Usually you won't have to pay any upfront fee.

Incorporate? Skip it

Many "starting a business" guides will encourage you to incorporate, citing the legal protections that such a move offers. Their assertions are true, but unless your new venture is selling herbal Viagra online, your risk of facing a serious legal headache while your business is in its infancy is minimal. It's far cheaper, easier and faster to operate as a sole proprietorship, especially in dealing with finances and taxes. If things grow complicated, you can always incorporate later.

The simple business bank account

You can open a second bank account if you'd like, but if you're a proprietorship and have a DBA, you can use your personal bank account for business and not have to worry about multiple accounts. Your bank will even print your DBA on personal checks, making them suitable for business use.
If you really need a second account, ask your current bank if it has any special deals for small businesses. Many banks, for example, offer free business checking if you maintain a certain minimum balance.

Set up a switchboard
If you're expecting a lot of incoming phone calls, an answering service might be worth the investment: You'll seem more professional to customers, and you won't be roused from bed at the crack of dawn by callers who don't understand what time zones are.

You can have a live answering service (similar to the one your doctor uses) for $20 a month -- or less, if you have minimal incoming calls. Another option is to do it virtually: For about $10 a month, you can get an 800-number-based system such as RingCentral that answers calls with an automated greeting, routing calls to you (or other employees or contractors) or to voice mail depending on button presses.

If phone calls aren't a big deal, consider a second landline or a dedicated cell phone that you can use for business: Adding a line to either is easy, and with a cell phone you can even share minutes under a family plan.

For a little more: Get a virtual office

The world doesn't need to know you're working in your basement, so many business owners turn to a P.O. box for the official address of their company. A bare P.O. box, however, doesn't seem all that professional, and you can't receive UPS or FedEx shipments there.
Another option is a virtual mailbox service, such as that of Regus. With a virtual mailbox, you get a physical mailing address and someone who will sign for packages from other carriers. The catch is that people sending you mail still have to put the abbreviation PMB (for "personal mail box") on the envelope, though it's less conspicuous than with a regular post office box. You pick up the mail once a week, or the service forwards it to you at cost. The plans cost $100 to $150 per month.
You can step up from there to a more serious arrangement: A virtual office setup gets you not just mail service but a live receptionist who answers the phone however you like, plus access to a physical space with offices, conference rooms and even videoconferencing facilities. Fees can range from $250 to $325 a month.

These costs are admittedly beyond our $100 budget, so consider whether you really need them before signing a contract. With so much business conducted online and via phone, you may never deal with visitors at all.

For a little more: Offload fulfillment and shipping

Selling physical goods online often means long hours spent in your garage packing up orders to ship to buyers, and then standing in long lines at the post office to mail it all off. Another option exists, thanks to the wonders of e-fulfillment: You pay someone else to do all the inventory handling and order shipping for you. Fees can be pricey unless you have the volume to mandate it: Efulfillment Service costs $70 a month flat, along with $1.85 per order processed and 25 cents per cubic foot per month for inventory stored, plus actual shipping fees.

Alternatively, you could hire a student or other temporary help to do the work for you a few days a week, but you'll still have to find somewhere else to park your car.

By now your business should be up and running -- but that, alas, was the easy part. Now get out there and publish, promote and sell, sell, sell. And remember that even if, in the worst case, your business fails, "CEO" always looks good on your resume!

By Christopher Null, PC World