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Why so many small businesses still don't have websites in 2017

Why so many small businesses still don't have websites in 2017

I spoke to 20 small business owners to find out why so many still don't have websites (and why most of those who do don't make the most of it)

I spoke to 20 small business owners to find out why so many still don't have websites (and why most of those who do don't make the most of it)

27 April 2017 | 36 minutes read

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Table of Contents

After 20 years of not writing much code, I wanted to find out whether it would be worth my while to get back into active web development. The industry has obviously changed dramatically. More and more small businesses are getting online, it has become simpler and cheaper to host your own website, and WordPress has become the de facto standard for small businesses doing just that. Those who want even simpler solutions are using tools such as Wix and Shopify—no developer required. Some small businesses even forego the website completely, and rely on tools such as Facebook Pages instead.

I wanted to know two things:

  1. Firstly, if there are really any businesses out there without websites and, if so, why?
  2. Secondly, why so many small businesses have websites that are underperforming spectacularly, both in terms of business development and brand positioning.

I found a copy of my local yellow pages—an archaic and almost barbaric practice in the age of Google 😉—but I figured that this would be the quickest way to find local businesses without websites. I selected adverts from categories using a random number generator, and started phoning around until I found 10 small business owners with websites and 10 without, all who graciously agreed to talk with me about their marketing and business development efforts.

In this article, I analyse their experiences, and address the common questions and concerns that they had about web development.

I hope you find it useful.

Major themes

Every member of my research group came from another background, profession, and industry (except for two, who were both from the automotive repair industry). Despite this diversity, their reasons for not having a website were remarkable similar, and I have grouped them into five themes:

  1. Value
  2. Fit
  3. Options
  4. Cost
  5. Complexity

In the rest of this article, I will look at each theme in detail, and try to address top questions and concerns that in each.


Theme 1: Value

I don’t think a website will make any real difference to my bottom line

Your website is a tool. Used well, it is a tool for growth, and an incredibly powerful one at that. But, like any tool, you must learn how to use it, and that can be frustrating. Once you grok the whole website thing however, you’ll be amazed at how much power it gives you, especially for generating qualified leads (which contributes directly to revenue, and if you don’t overspend on your acquisition strategy, to bottom-line results).

If you learn how to use it, your website ABSOLUTELY WILL make a positive difference to your bottom line. I am so confident in this fact, that I guarantee that anyone who contracts me to develop both their website and digital marketing plan, and who faithfully follows the plan for a year, will see at least a 100% ROI, or get 100% of their money back (T’s and C’s apply. Get in touch, if you are interested).

I already have a Facebook Page, why do I need a website?

A Facebook page is an excellent way to engage with your userbase (if they want to engage with you). However, for many reasons, it does not replace a small business website:

  1. If someone grows tired of your posts and thus no longer interacts with them, and stops visiting your page, Facebook will start to remove your posts from that fan’s News Feed. Once that happens, you need to start paying to promote posts to people who have liked you, or begin advertising to engage new users (neither of which is free).
  2. You don’t have much brand control. No matter how cool your profile picture, page banner, and posts, it is never going to be anything other than a Facebook page. Facebook in turn does their best to make sure that fans of your page have a great Facebook experience, not a good your brand experience.
  3. You cannot optimise a Facebook page for search engines, like you can with your website, and so, you’re the chance of your Facebook Page ranking high in search engines is slim.
  4. People often want to know more about you than you can effectively communicate within the constraints of on a Facebook Page. A website gives them an additional channel, whit better structured and more relevant content
  5. Lastly, AND MOST IMPORTANTLY, you DO NOT own your Facebook page NOR any of the content that you post to it. By posting, you sign all rights to the content over to Facebook (they are not being evil, it’s just the nature of the social platform business and they must do it to steer clear of legal action down the road). Furthermore, they can DELETE OR SUSPEND your page at a moment’s notice, taking all your fans with it.
  6. A website helps you convert social fans to a permission-based email lists. Great for sending marketing emails, but especially good if you lose an important social media page, group or account.

I already have a profile page on [insert website name here]. Why do I need a second website?

If you have an online profile with your local business chamber, or a listing service such as BizCommunity, that’s a good thing! However, almost everything that I said about Facebook pages also count here; buyer beware.

I only sell off-line. Do I need a website?

Something like 81% of shoppers (and 94% of B2B buyers) do research online before making a purchasing decision. They may still buy the product or service offline—a very large percentage of folks do—but they increasingly make up their minds online. So, yes. You probably do still need a website.

We’ve allocate our entire advertising budget to an upcoming campaign

That’s cool. I understand. You should have a marketing strategy, and that strategy should include various media channels. However, putting all your ads in one basket is never a great idea. Good marketers understand that marketing requires a portfolio approach, with various channels fulfilling various roles. It is about pushing and pulling the right levers at the right time to get the desired outcome, with as little waisted effort and expense as possible.

That said, investing in website and online marketing efforts usually provides an exceptional Return on Marketing Investment (ROMI). That might change in the future, but for now, a good website, as part of a well-rounded marketing strategy, is one of the best marketing investments you can make. And really, compared to the cost of ad buys in media such as newspapers, magazines and radio—which has the life expectancy roughly equal to that of a mayfly—a website provides value over a much longer period, and allows you to reach a much bigger audience.


Theme 2: Fit

Does my business even need a website?

Well, that depends. The answer could be YES or NO, depending on your situation. For instance, a website can be an incredibly powerful tool to help you find new clients and, if you are pursuing a growth, a website can thus be useful. If, however, you are just so busy that you cannot handle any new business, in an industry with brittle price-elasticity, then the answer might be no. That said, if you are not following a growth strategy, you’d better have a well-reasoned strategic incentive for it. Growth is pure oxygen; without it, most organisations flounder and die.

Who will even visit my website? Where will they come from?

No one wants to be the unpopular kid; that’s just human nature. Some anxiety over the popularity of your website is thus understandable (never mind the money you would have wasted if it turns out to be a white elephant). But, if you have a beautiful, fast, and responsive website with high-value content, and apply a little bit of marketing ingenuity—people will come. Doubly so if you run a ‘local’ business, which most small business owners do. It is much easier to rank1 highly in search engines for local searches (“commercial lawyer near Houghton”) than for non-local searches (“commercial lawyer”).

We don’t need a website. We rely on word-of-mouth

I hear you. Word-of-mouth is powerful. When you provide excellent service, it can generate a lot of referrals to your business. Some of these referrals will think “Hey. That company sounds like an excellent fit for my needs! Let me Google them…” When they do not find you online, you have already lost a lot of credibility.

Furthermore, you have not control about HOW someone refers you. Imagine for a moment that you are a fly on the wall at a party, where someone, let’s call her Susan, is enthusiastically telling her friend about an amazing dining experience that she had at a trendy new downtown restaurant, the East Street Eatery2. She is raving about the spicy green curry that she had, and how difficult it is to find a green curry in the city that is both hot and fragrant. The friend listens with rapt attention. Bingo! Word of mouth winning out again. Anyone would try the place after THAT referral.

And then… nothing happens. The friend does not rush out to see what all the rush is about. He simply carries on enjoying the party. Perhaps he doesn’t like spicy food, but politely allowed his friend to regale him. Perhaps he even remembered the name of the place, and Googled it when he noticed a post by Suzan about the amazing experience that she had there. When he didn’t find the restaurant’s website, and therefore also didn’t find their menu, he filed the experience away and will forever think of it

Of course, word-of-mouth also has a dark side. If someone has a poor experience, they are likely to actively urge others away from you. Thus, relying on word-of-mouth alone is probably not a sustainable strategy over the long term. A website can help you spread the risk.

Our clients don’t really use the internet. Besides, they prefer to work with us in person, not through a screen

That’s really two concerns, but as they deal with your customers, I lumped them together in one.

As to the first part, I’ll say the this: perhaps your current customers really don’t use the internet (that much). However, what should concern you is the much greater number potential customers who DO use the internet, and are using it to locate products and services you sell, but who cannot find you because you don’t have a website. To gain business from these customers you MUST become part of their ‘decision set’, which you never will, unless you are online.

As to the second point, more and more research is showing that MOST customers like a personal touch, but only at a time and place of their choosing. Thus, it is important, for instance, to provide a telephone number on your website. Equally important is to strike an appropriately friendly and open tone (albeit in line with your brand lexicon), to reply to customer emails and social media messages quickly (preferably within the hour; at least within a day), to provide an amazing “about us” section on your site (that also showcases your key staff), and to personalise the service experience for them whenever possible (your email marketing is a good place to start). All these things help to make a website more personal, while still giving your customers choice on when and to what degree they want to get personal with you.

My competitors don’t have websites either, and they seem to all do fine

So, get ahead of the curve! Sooner or later, most of them will want a website (the good ones, at any rate), and by then you could be years ahead with your own web-jitsu. In a world where competitive advantage is very difficult to win, and even more difficult to hold on to, I for one am willing to grab hold of any gains I can get. Besides, just ‘doing fine’ does not seem like a recipe for long-term happiness and success.


Theme 3: Options

Option A. Develop the site in-house

Bringing the development function in can have a lot of advantages, the biggest being that you are 100% in control. For demanding sites, like major news sites, this might be the best option. The major downside is that it can have a significant impact on staff and technology requirements, and thus creates a large ongoing cost centre for the business. For most small businesses, this is probably not an option, at least when they just start out.

Option B. Hire a freelancer, freelancers, or agency

There are some obvious advantages to hiring someone who knows what they are doing. Since I am a freelancer, I am probably biased, but I think that there are some great advantages to working with freelancers who are experts in their fields. For one, you work with the person who really is the expert. In the agency situation, your work is very rarely done by senior staff; in fact, it is very likely getting delegated to the lowest rung of the agency that can “pull it off”, and the involvement of agency leaders, at least with most smaller accounts, is merely cursory. That said, there are certainly good agencies out there who deliver stellar work.

A major challenge when working with either freelancers or agencies is lack of control. You probably won’t know how the work is done internally, which can leave problems or quality issues “under the hood”. These are difficult to detect without specialist knowledge, even when they have a direct impact on your business. For instance, a site that is not optimised for speed, might become unbearably slow for your users with even a modest rise in traffic. This has a huge impact on your site’s conversion rate, and can negate all the time and money you spend on optimising your landing pages.

Another common problem is failing to optimise your website for search engines, which compromises your rankings in Google and Bing. As a small business, you might think that you are not ranking, simply because you are small, never suspecting that this is a function of your site’s content, code, or design.

Bottom line? It is best to make doubly sure that the contractor you choose has a good reputation, and guarantees the quality of their work. I would also suggest asking for evidence that every aspect of their guarantee has been met.

I have a friend who can make websites…

Is your friend a qualified web developer? If so, congratulations! You are fortunate. Be sure to impart a sense of urgency, and insist on setting milestones, even though this might be difficult to do with a friend.

If she however only really does it as a hobby, or she is just starting out, you might want to consider that ‘making pretty pictures’ is just a small part of what goes into a modern web design projects. The brunt of the effort is expended on:

  1. Programming the HTML, CSS, JavaScript, database, and server-side logic that makes your site go, and optimising it for speed, search engines rankings, and visitor expectations.
  2. Researching, writing, producing, testing and optimising engaging content for your website and landing pages, blog (if you have one), social media platforms, video platforms, etcetera. The goal is to ensure that your visitors get the exact information or service that they need, develop an accelerated affinity for your brand, and are motivated along to each next step in your sales funnel.

Option C. What if I cannot afford a to develop in-house, nor to hire a web developer?

Do you even need a web developer or in-house development team? A few years ago, the answer would have been a resounding yes. Most homespun websites simply looked terrible, and did much more damage to the brands that represented them than they did good.

These days, however, it depends. If you can operate a modern word processor, you can probably learn how to use one of the hundreds of website builders on the market. One example of this is Wix, www.wix.com, which is one of the most consistently top-rated website builders now on the market. For e-commerce sites, I have had great success with Shopify.

Both these providers offer a huge selection of premade, customisable templates and thus do not only solve the problem of coding a website, but also the problem of designing it. Remember that you always have the option of hiring a web developer later, if you run into trouble.

Some final advice on selecting the best option for you

So, when should you hire a web developer, and when should you go it alone? I think this it is a “budget vs. urgency vs. quality” type of equation. If you need a high-quality website quickly, and you don’t have a lot of free time to spend on it, it might be best to spend the extra dough on a web developer or agency to help you.

The converse is also true. If you have the time to learn a tool like Wix or Shopify, and you are willing to cope with the disadvantages that these tools have, you can roll your own site in at a fraction of the cost of hiring a professional. What are these disadvantages? I made a list:

  1. Lack of flexibility. Most website builders have hard limits on what you can do with them. Generally, what you get is what you get. You cannot extend or change their functionality in any real way. Usually this is not a huge problem; you must simply make peace with only being able to play with the toys that they give you. But it is a factor.3
  2. Lack of uniqueness. Because all website builders use a finite set of templates (which you can usually customise in terms of colours or fonts), they tend to look a bit “same-y”. That might not bother you, and could even be a good thing, if you are OK with a site that is potentially less memorable than one designed specifically for your brand.
  3. They are often V E R Y,   V E R Y   S L O W. Because these types of services host hundreds of thousands (or millions) of sites on the same architecture, need a LOT of code overhead to provide their functionality, and serve your site to your clients from server complexes that are potentially situated very far away from your customers, they can at times become so slow they scare away visitors. This decimates your conversion rate—customers are extremely sensitive to site load speeds—and thus effectively increases your marketing cost.
  4. You don’t control their platform or their policies. If you host your site using industry standard tools, you have a lot of flexibility in terms of service providers. If your hosting provider angers you, or starts delivering poor service, or suspends your hosting account for some arbitrary reason, you can be up-and-running with a different provider in under an hour. If any of those eventualities come to pass while hosting with a website builder, you are basically screwed. You will probably have to recreate your site from scratch using a different provider, and that could take weeks.

Theme 4: Cost

The biggest worry about running a website is cost. I think that many service providers shy away from telling clients the truth about website costs, because they are worried that clients will be put off when the find out that developing a kick-ass website costs more than a pack of gum. My answer to that is that if your client doesn’t believe in the VALUE a website, any price is too expensive.

How much should a website cost in 2017?

My sincere answer is ‘it depends’. Costs vary widely, depending on the scope and complexity of the project, but rates hover between $60 USD and $200 USD per hour, depending on the provider. Freelance developers typically charge less than agencies, but agencies have access to more resources. I include two website costing examples later.

For reference, I currently charge $75 per hour (2017), and offer discounts for larger volumes of work.

Now, let’s get into the specific. I have broken down website development into five basic cost centres (arranged here more or less from most to least expensive):

  1. Marketing
  2. Development
  3. Maintenance
  4. Hosting
  5. Domain

Cost Centre 1: Marketing activities

Creating high-quality content for SEO and lead generation

If you are a small business owner, chances are that you don’t have a marketing department. That leaves two options: you can create content yourself, or you can get someone like me, a gun for hire, to create it for you.

Creating content for yourself is certainly possible. Like everything else, it does come with a learning curve, but a lot of successful entrepreneurs learn to roll their own. Sometimes this can be as simple as writing a regular blog.

If you are developing the content yourself, you should calculate the value of your own time (remember to include the opportunity cost of not doing something else in that time), multiply your hourly rate by time spent on content generation, and add any applicable disbursements. That will give you a good idea on what it costs you to do it yourself.

Most professionally produced content projects incur billable hours somewhere between the 5-hour and 200-hour mark, depending on length, complexity, technical requirements and legal considerations. To give you some idea of what you could expect at each of those extremes.

  • 5 hours: a simple blog post of about 300 words, with an image sourced from a reputable photo stock library. Additional costs would include the cost of the stock image, which can be anything from $0 to $150, depending on the library and licensing terms.
  • 200 hours: a 2500-word thought leadership article, with three to four bespoke illustrations, an interactive data visualisation, four to five charts or tables, and two professionally produced video segments, each with talking head-style corporate interviews. Additional costs would be the hiring of videography equipment, which could range between $2000 and $5000, and let’s assume travel costs of at least $500.

At my current rate of $75 per hour, project A will thus come in at between $375 and $525, depending on the photo stock that is selected. Project B will likely come in at between $17’500 and $20’500, depending on the actual equipment hire and travel expenses incurred.

Email marketing

So, you’ve created some amazing content. Now what? You need a way to capture the contact details of people visiting your website, so that you can start the process of converting them into qualified prospects. The most important data point to capture is an email address. It is also very important that, in the process of capturing an email address, you get explicit consent to send information and offers to it.

Although you can collect email addresses and get consent by building your own inhouse system, it is much simpler, safer and faster to use an existing service for this. (I have had very good luck with MailChimp, but any similar service will likely suffice).

Coming Soon: A Rough Guide to Email Marketing I plan to write a rough guide to list-building and email marketing soon, if you are interested in receiving it (once it is available), please sign up for my occasional newsletter.

Email newsletter services typically start in the sub $20 per month range for email lists with less than 500 subscribers, and $150 per month for a list with 20’000 subscribers. Some services also provide “pro” services with more advanced features at an additional cost.

Writing a good email newsletter should cost somewhere between 4 and 20 billable hours. At my rates, this would thus be between $300 and $1500, plus stock costs. Let’s budget $150 for that, which brings your cost per email to between $450 and $1650. For budgeting purposes, let’s assume that an average long-form newsletter will incur about 20 billable hours on average (in my experience, that is about right), and a short-form newsletter about four billable hours on average. (The latter is best for announcements and sales promotions; the former is best for news, happenings, updates, content promotion, etcetera.)

Let’s assume that you will send one long-form and three short-form newsletters per month, to a list of about 20’000 subscribers. If you don’t have any add-on services to your account, this schedule will run you $3150 per month. In other words, about the same as running one full-colour advertisement in a monthly magazine with a similar circulation-figure4, but much more measurable, targeted, and engaging. Not to mention, at exactly four times the frequency. Best of all, you have your subscribers’ PERMISSION to market to them. They WANT to hear from you! It doesn’t get much better than that.

Google AdWords, Facebook Ads, and retargeting

Pay-per-click (PPC) advertising is a very important traffic driver for most websites. For small businesses, the two most important services are probably Google AdWords and Facebook Ads. The basic idea is that you place advertisements via Google’s and/or Facebook’s platforms, and pay them an amount for every click-through from those adverts. Usually, you will set things up so that these click go to a landing page on your website, from where your goal is to entice the user to take up an offer (“Subscribe to the FREE Fearless Leader newsletter, for monthly leadership inspiration and interviews with the globe’s most successful CEOs!” or some such). Retargeting is a special kind of PPC advertising that is shown to visitors who have visited your website, but that have not yet taken up your offer.

Someday I might write a guide on PPC advertising. Until then, subscribe to my newsletter for occasional tips on PPC and other digital marketing topics, specifically tailored to small business.

How much should you budget for PPC? On most networks, you can set your own budget, so this is up to you. The only guideline is that you want to spend less than you make. In the digital advertising world, you can measure how much you make with much more accuracy than in traditional advertising, so setting an appropriate budget is a bit easier. The same principle applies to re-targeting and email marketing (see the previous topic). Theoretically, if your gross margin including advertising costs is healthy, you can scale your advertising budget to the point of where your sales velocity (how many sales you conclude during a fixed period, usually a month) saturates your performance capacity (how many sales you can credibly handle during the same period without negative impacts on quality or service).

Social media

If you’ve got it, flaunt it! One of the best uses of social media is to post titillating titbits from the high-quality content you so dearly prepared. However, as many social media luminaries have pointed out, social is about being generous, and giving value freely before expecting value in return. You can ascribe your own meaning to that idea, but I think it simply means to mostly not talk about yourself. Rather, use your social channels to energise your customers by being really interested in them, and interacting about the things that matter to them. Occasionally, you can throw in morsels of your own story, by linking to things on your blog, or news articles about you, etcetera. First prize if these links are also interesting and important to your social community.

In other words, being good at social is a lot of hard work. For that reason, it is NOT free. It may be free to post, but you need at least one dedicated social media manager to help you nurture that community. Ideally, this is someone who lives and breathes your organisation and its values, but who also loves social and has a keen ear for the tone of your community. That is why social media is best done by someone from within your organisation. You can still use an outside resource like a freelancer or agency to provide support from a strategic and production standpoint (which gets you the best of both worlds), but I truly believe that you should budget for a social media person on your team. More than that, as the business owner, you should get involved with your social media community yourself (just never post anything with a hot head).

Traditional advertising and promotion

Traditional advertising and promotions is one of the most under-utilised resources for sending people to your website. The advantage of utilising your website, is that it allows you to both capture more leads, and track the effectiveness of your off-line efforts better. A good idea is to push folks to your website for a competition or giveaway, and this might add some cost to your budget. But chances are that you could simply trim the fat from your existing campaigns so that you can afford these initiatives.

In other words, promoting your site offline is usually not any additional cost. Simply make sure that you promote your website on every piece of advertising or promotion that you put out, and figure out three or four website specific promotions each year to specifically drive folks to your site.

Cost Centre 2: Designing and coding

This is where the actual “building” of the website happens. An interesting property of this cost element is that it does not become significantly more when you add more pages to a website, as most of the work usually goes into realising the underlying programming. Adding each new page thus becomes a simple and inexpensive operation. It amuses me when web designers or agencies still quote clients for the number of pages that the eventual site will contain: it is a relic of a bygone era in web development5.

But, I digress. Depending on the scope and complexity of the project, hourly rates range between $60 and $200, and the project may require anything from 20 hours (for a single landing page), to 60 hours (for a small ‘static’ business or personal website), to upwards of thousands of hours for a large-scale ecommerce implementation.

Most small business owners, however, can expect to pay anywhere between $2’500 and $15’000 for a non-ecommerce website, and upward of $20’000 for a small business e-commerce site. Your mileage may vary.

Cost Centre 3: Site maintenance

It is important to maintain a website. There are three main categories of maintenance:

  1. Content changes and additions (such as new landing pages for your marketing campaigns, new blog posts, changes to marketing copy, etcetera).
  2. Changes or additions to underlying code (templates, components, functionality, business logic, etcetera).
  3. Routine maintenance tasks to the server and/or database driving your site. This cost grows quite a bit with technical website complexity. For instance, a simple static site (which will cover the needs of probably 95% of all small businesses) has almost zero routine maintenance. A WordPress-based site on the other hand has ongoing maintenance requirements, and you should be prepared for at least bi-monthly maintenance to your plugins and backend database to plug or prevent holes in your website security, optimise performance, etcetera.

In all these cases, you are looking at an hourly rate of between $60 and $200, depending on provider, and hours based on the cost and complexity of the maintenance tasks required.

The cost of developing content aside, site maintenance should not cost you more than one or two billable hours per month. And, if you have an ongoing maintenance agreement with the developer, most of what you need in the way of maintenance should already be covered.

Cost Centre 4: Hosting

For 99% of websites, hosting fees are negligible, in the order of $5 to $100 per month. Larger sites that generate lots of traffic can, however rack up substantial costs. This is something that most small business owners really don’t need to worry about, except of course if you are in the business of providing a web-based service (in which case you have wasted a lot of time reading this old thing, haven’t you? Are you perhaps a stalker 😉?)

Cost Centre 5: Domain registration

Domain registration runs in to anything between $10 and $30 per domain per year. It is also a good idea to register common misspellings, alternative spellings, plurals, and other variants of your domain name (example.com; examples.com; exampel.com, xample.com; …), alternative top-level domain names (example.net; example.org), and regional domain names (example.de; example.co.uk; …).

You might also consider registering domains for all the brands that you own (superwidget.com; superwidgets.com; super-widget.com; super-widgets.com).

Domain cost can thus also get pretty much up there, but most small businesses will register just two or three domains.

Putting it all together: the cost of a running a website like a pro

Example 1 - The College

Assume that you are the principal of a small, private, distance learning college, and that your annual website costs are as follows:

ITEM COST PER YEAR
MARKETING  
Content Development (48 blog entries and 4 in-depth pieces per annum) $107’200
Email Marketing (4 short-form and 1 long-form newsletter per month to a list of 20’000 subscribers) $41’550
Pay-per-click Advertising on Google and Facebook (assumed budget) $120’000
Social Media and Community Management (Staff and Production Budget) $130’000
DEVELOPMENT & MAINTENANCE  
Non-eCommerce Site $30’000
HOSTING & DOMAIN  
Site Hosting Fees $6’000
Domain Registration Fees $90
TOTAL PROJECTED ANNUAL COST $434’840

Suppose that this website produces an average of 2’000 associate degree registrations per annum. Let’s assume that the average annual cost for an associate degree (a two-year qualification) is $6’8006. Furthermore, let’s assume a 30% retention from year one to year two. That means that this website is responsible for $17.7 million in turnover, over two years. Thus, your website and online marketing activities comes in at about 5% of turnover, in respect of these specific courses, that is. For a distance learning college, that is incredibly reasonable. Since your online-marketing activities are turning a profit, you can however theoretically scale up your advertising efforts to 3’000, 4’000, or 10’000 registrations, if your administrative and academic systems can cope with the workload. At 10’000 registrations per year, this website will generate 5 times the revenue at just about 2.5 times the cost. Thus, your marketing cost as a percentage of turnover will decrease to less than 2%, leaving a juicy budget for use on brand-building and customer experience activities.

Example 2 - The East Street Eatery2

This time, let’s assume that you are the owner of the trendy new 300-seater (75-table) restaurant, East Street Eatery in downtown Plano, TX:

ITEM COST PER YEAR
MARKETING  
Content Development (12 medium-length blog entries per year) $7’200
Email Marketing (4 short-form newsletters per month, and 1 long-form newsletter per quarter, to a list of 5’000 subscribers) $21’000
Pay-per-click Advertising on Google and Facebook (assumed budget) $24’000
Social Media and Community Management (Staff Budget) $50’000
DEVELOPMENT & MAINTENANCE  
Non-eCommerce Site $21’000
HOSTING & DOMAIN  
Site Hosting Fees $360
Domain Registration Fees $90
TOTAL PROJECTED ANNUAL COST $123’650

A 75-seater full-service restaurant with an average turnover of 2-hours per table, an average of two covers per table, and operating hours from 7:30am to 11:30pm, has a cover potential of 2400 patrons per day at 100% utilisation. Of course, the actual covers at even a very successful restaurant is likely to be only about 20% to 30% of that (folks tend to eat at most three meals per day). Splitting the difference at 25%, that is about 400 covers per day at capacity.

Imagine that you have just opened, the initial hype cycle has died down, and you find that you average just 510 covers per day, at an average check (bill, in most of the rest of the world) of $35 per. You think that you can do better, and want to get your covers up to an average of 600 per day, and an average check of $40. You figure out that folks are generally very happy with your food, service, decor, and locale, and that they are telling others about you, but that those people cannot find you because you don’t yet have a website.

A great website, combined with a competent on-line marketing effort can get you there. It allows you to not only develop new customers, but to also increase purchasing frequency of existing customers, so that you improve your cover realisation. Your new-found popularity will allow you to manipulate your menu prices and specials to move your average check closer to your goal.

So, what is such an improvement worth?

Covers Average Check Turnover/Year (360 days)
510 $35 $6’426’000
600 $40 $8’640’000
DIFFERENCE   + $2’214’000

Norms for restaurant marketing spend should ideally fall within 3% to 6% of turnover (more, if the restaurant is just launching, running a particularly deep promotion, or rolling out a special public relations programme). Working at 6% of turnover, at the initial projected turnover of $6.4 million, that means that East Street Eatery should budget about $385’560 for marketing. That means that the website investment will require about 13 of the budgeted cost, which is in-line with current norms (according to smart folks like Forrester). East Street Eatery’s digital strategy marketing budget should thus not increase because of their website and online marketing investment. It might require of them to shift their marketing spend from other media to online. This means that moving into online has a ROMI of thousands of percent.

What if I simply cannot afford a website?

As you can see from the above analysis, a good website costs a bit of money. However, running a website that doesn’t give you a decent return on your investment is just silly. If your website is not at least breaking even, it is merely a vanity project. If, on the other hand, your website is generating a decent profit, it isn’t expensive at all.

How much are you really losing?

  1. If you choose to build a very nice-looking but “barely functional” website with a website builder of your choice, the cost is very low – usually, less than $20 per month. If it doesn’t bring in any business, you effectively throw $240 in the water per year. “Big whoop…”, you may think, “I’m cool with risking that”.
  2. However, if you develop a website with engaging content and an online marketing strategy that delivers superb results from it, it could easily cost you $40’000 per month or more, as in the first example given above. That’s a lot of dough. But, if your website investment generates substantial profits, the cost really doesn’t matter that much (within reason). Your website becomes a profit centre, rather than a cost centre. In fact, if you think about it, without such a website, YOU COULD BE LOSING MILLIONS. And $ millions are a heck of a lot more than $240. If the owners of any of the two businesses given in the example above decided against investing heavily in their websites, they would lose millions every year.

The value of a professional

If the risk associated with investing in your website is a serious concern to you, my advice is really to save up enough to hire a trusted agency or freelance professional. Obviously, I am biased, but a reputable provider really does help to reduce your risk, and can get you from concept to profit much sooner than going it alone.

The value of your content

Something else to think about is that a website with great content is an asset. It can bring you value for many years, even if you reduce your investment after a while. A site that is offers a lot of great content will generate site visitors week after week, even if you reduce your publishing schedule from once per day to twice per week, or from weekly to monthly, for instance. But there is really no reason to throttle back on your site budget, unless it is no longer turning a satisfactory profit. Even then, it is probably best to analyse any underlying problems, and fixing those if possible, so that you keep on making the most of your website assets.


Theme 5: Complexity

I don’t even like sending email, and you want me to run a website?

Running your site could be as easy as picking up the phone. Give your agency rep or freelance supplier a call, tell them what you need, and let them give you a call when it is done. It really shouldn’t be a slog.

I wouldn’t know what to do with a website

You don’t have to be an expert. A reputable supplier will be able to put together and entire strategy for you, develop the site, create the content, optimise for search engine placement and speed, do any required maintenance, build your prospects database, produce marketing emails, schedule and monitor PPC and retargeting ads, and, take care of all the other details that needs to be taken care of. Like in so many other things, it comes down to trust. Find someone that you like and trust, and give them the freedom to run with your web project.

Additionally, as I have tried to make clear throughout this article, it is entirely possible for you as a business owner to learn the skills that you need to run a successful website. If you need someone to guide you, give me a call.


Conclusion

In the end, small businesses owners are underinvesting in websites and online marketing because of fear and misinformation. I hope that I have addressed most of the concerns that you have in this (exhaustively long) post. But, if not, PLEASE get in touch and help me make this article better.

In the end, I decided that I will get back into web development. I think I’ll enjoy it even more this time around, with technology now at a level of maturity at which it has become almost entirely diaphanous, leaving developers free to concentrate on exploiting the business value of their projects, rather than merely the technical details of it. A second reason is that I can see that there is a lot of need for teaching small businesses (and frankly, a great many large businesses as well) how to turn their websites into profit centres.

If you want to find out more about my web development services, please contact me, or take a look at my page on web development services


  1. Ranking high means to be featured within the first page or two of an internet search engine’s results page. [return]
  2. Names, characters, businesses, places, events and incidents are either the products of my imagination or used in a fictitious manner. Any resemblance to actual persons, living or dead, actual juristic persons, or actual events, is purely coincidental. [return]
  3. With some sites, like Shopify, you can replace almost the entire front-end (the bit that your end-users see), and just use their back-end business logic (the part that allows you to process cards and manage your store). This gives you an incredible amount of control, at least more than most small businesses will ever really need. [return]
  4. Calculated at 12.5c US per reader on the published circulation figure. Includes production costs of $650. [return]
  5. The same goes for charging extra for responsive design. All websites should be responsive (meaning that they are accessible, useable and visually appealing on all devices); it is not significantly more effort to develop a site that works well in any device, and not something you should be charged more for. [return]
  6. Depending on where in the world you are situated, tuition fees at private colleges tend to run between $3’000 and $30’000 per annum. A quick online search reveals that, in the US, $286 is an average per credit rate for online colleges. At 24 credits per year for a full course programme, that works out to $6’800 per annum. [return]