Starting a Local Site: Creating a Budget
But if you want to sustain the site long-term, you need to think early on about how to run that site as a business. And the first step in that is to draw up a budget for the site.
Uh-oh, you say. Sounds complicated. The only budget you ever dealt with was your newsroom’s daily news budget, which was about words and stories, not numbers. Or you slogged through a government budget or two or three as a reporter, but you can’t imagine how to create one from scratch.
Take a deep breath. This isn’t that hard. But it’s essential.
First of all, you need to figure out what you’re going to need to spend money on. Think this through, and make a list, estimating the annual costs (which might change over time). Generally, you only need to estimate the first year, though it doesn’t hurt to plan a couple of years out. Expenses might include:
- Hosting (i.e. any annual payments for your blog platform)
- Equipment and software or site tools
- Site design (don’t get hung up on this—the standard blog platforms cover this quite well, for free or very little)
- Payments to site contributors, if any
- Office supplies
- Travel and entertainment (even if it’s just to cover coffee with sources)
- Marketing (very important)
Now, let’s move over to the other side of the ledger: Revenue. How much advertising do you expect to sell? What other possible sources of revenue will you have? Make a list, and think about it carefully. Without money coming in, you can’t pay those expenses.
On all of these items, be as detailed as possible. For instance, figure out all of the possible marketing efforts you want to do, and what they might cost, rather than just throwing a lump sum at “marketing.” Think about different ad sizes and prices, and how you can get advertisers sharing different ad units. (We talk about this a lot as part of GrowthSpur ad-sales training. End of plug.)
Incidentally, it helps, if this is psychologically possible, to try to do expenses and revenue very much separately of each other. That way you can be the most realistic about what’s coming in and going out, rather than shaping one to fit the other. Once they’re done, of course, they need to balance—or turn a profit.
Now comes the hardest part: The reality check. Be very honest with yourself as you estimate the numbers in your budget. Then go through it again, being even more honest (everybody always underestimates marketing costs and overestimates advertising revenue). Then go through it and try to cut it a bunch (Do you really need personalized stationery? Are you paying correspondents way too much? Will they work for free? Can you possibly sell that much advertising in the first year? Be brutal.). Then run it through the honesty test again. It ought to be just about baked at that point.
You can lay it out on a monthly basis, if you want, or simply create an annual budget. Use an Excel spreadsheet, or Quickbooks (or even Quicken), to plot it out. There are some generic budget templates online that might help you. You can Google for more help about drawing up a budget—there’s plenty of expertise out there.
Don’t overthink all of this—a budget is mostly an educated guess. Just try to think of anything that should be in it. You generally don’t need massive detail—just categories. But understand how you came up with those categories, and be realistic about justifying what’s in them. (As they used to say in school, be sure that you can show your work.)
Some potential pitfalls: You’re almost certainly going to be overoptimistic about revenue—you won’t sell as much advertising, or attract as much traffic, as quickly as you think. You’re probably going to find that you need to do a lot more marketing than you expect (but look for cheap marketing aids, like social networks, getting involved in local events, etc., rather than envisioning expensive marketing campaigns).
And rid yourself of any illusions that you’ll be able to pay your friends—or yourself, for that matter—a living wage for contributing to the site. You may get there eventually, but probably not in the first year or two. One of the biggest mistakes new local site operators make is thinking they can pay for stories and photos at the same rates traditional media outfits pay for them. Not going to happen, and doing an honest, realistic budget will help you understand this from the jump. You’ll realize quickly that you need to look for volunteers, or promise token payments. You’re going to be living on a shoestring for the first year or so, at best. Beware of Champagne tastes on what’s going to be very much a lite beer budget.
Even if you run your site essentially as a hobby and public service—and like it or not, that’s how you’ll start out—it’s helpful to go through the budget exercise to keep yourself from running into any unpleasant fiscal surprises later. It’s a good dose of reality and planning that can help you really understand what it takes to provide coverage of a local community. You can run a great site for practically pennies, not to worry. But be sure you know exactly how you’re going to do that. Starting off with an honest budget will help you get going in the right direction toward success.