How to Start an SEO Business
Pretty basic question for an SEO right? It would be nice if the answer were equally as basic or simple. It's an important question, even more so since a sweeping update by Google knocked out unsuspecting webmasters.
Beyond the stuff we know got hit (some RIGHTLY so), we probably will never know the true ramifications with respect to how many "little guys" had their livelihoods or potential livelihoods destroyed by a heartless, unforgiving, and sometimes inaccurate algorithm.
Evaluating the Risks
I know people who worked their rear ends off and had their business fail, in addition to people who were lazy and failed. Sometimes it's timing, sometimes there's some luck involved (though luck is generally brought about by hard work), and sometimes it's just a matter of working harder or spending more then your competition.
The risks are plentiful for the self-employed and they only scale up if you:
- have a family to support
- have a mortgage
- need to buy health insurance
- have limited capital to invest
- can't afford to lose on a few of your bets
Ways you can combat those issues are to:
- live below your means
- work a part-time job at night or during the day
- have your spouse work part-time
- not buy every single device that Apple makes :)
- be prepared to work longer hours than you'd like
The problem is that self-employment, especially if you've worked in the corporate world before, has all the allure of the pipe dreams sold in The 4 Hour Work Week (I guess Tim Ferris doesn't count self-promotion as work, even though he does it about 100 hours a week :) ).
You might think self-employment is all about working less, spending more time with your family, going to the beach while everyone else is in a cubicle, and all that jazz. While it certainly can be at some point, it is not how you will start out 99% of the time.
Self-Employment Screw Jobs
Start looking around to find an accountant who will tell you what your tax liabilities will be as a sole-proprietor or a single-member LLC. If you really want to take a kick to the shins, get a quote for health insurance and see how much it doesn't cover.
A friend of mind recently pointed out to me that all the individual health insurance plans do not cover maternity costs. You can get coverage for that under a group policy but unless you have employees you are going to be paying roughly 4x the cost of an individual plan for you and your family.
He lives in the US, is self-employed, and has a family. The American dream right? For he and his wife to have a second child, they would need to get a group health plan at least 60 days prior to the wife becoming pregnant. Say that everything works out to be on-time, they are looking about an increased cost of about 20-25k over the course of a 9 month period to have a child in the United States!
All of that is assuming a perfect pregnancy and a 100% healthy baby. The point is to layout just one large, large risk you might be unaware of ( rubbish health insurance ).
Another thing to keep in mind, beyond the health insurance, is that unless you start one there's no retirement benefit, no paid vacation time, and no paid sick time. It is a really good idea to purchase short-term and long-term disability insurance for yourself as well.
It's Not an Either Or Question
The smartest thing to do would be to starting whittling down your household bills now and start slowly building your business. Keep your day job and work at night, you'd be working 15 hour days if you started from scratch anyway so why not do it now but get paid (with benefits) for your time?
Once you begin to make some cash on the side, see how far you can scale it (reasonably) before you need to make a decision on whether to fully jump in or whether to keep it as a side gig where you can eventually outsource a good chunk of the tedious work.
Some people loathe the idea of a boss and that's fine. Even good people have bad days so it's not always going to be peaches and cream but if you are in a spot where there is mutual respect and fairness then I'd say hang on to it until you can financially manage to go out on your own.
Even when you are "the boss" working for yourself if you have any level of success you will soon be "the boss" with employees of your own. And many successful businesses don't have 1 boss, but rather hundreds or thousands of them - their customers.
Maybe it's Not for You
Self-employment is not for everyone. It takes awhile for it to really pay off professionally and personally. When you first start out you may not have enough capital to outsource things like:
- web design
- programming
- link building
- bookkeeping
- content creation
Not being able to outsource all that upfront is probably a good thing. Many attempts at outsourcing fail because the outsourcer is not competent themselves in those particular tasks. Having experience in these areas is helpful because if a freelancer or staff member leaves you hanging, you'll be able to keep things running efficiently while you search for another staff member.
Working for a family business or a steady corporation isn't something to be looked down upon by any means. The key to mitigating the risks on both sides (getting laid off for example) is to be financially prudent, continually invest in yourself (earn a degree, start a side business), and be loyal to whom you work for or with. If you do those three things you will typically be ok in any reasonable situation.
Start Off as an Apprentice
Maybe you know someone in the SEO or PPC industry that might be willing to have you work with them for awhile or perhaps you aren't ready to fully go at it on your own just yet. Most employers realize that the best employees sometimes are the more motivated and ambitious ones and with that comes the risk that those employees will look to move up and on at some point.
Starting off this way has risks too (might not be as stable as a large corporation for example) but you can learn a lot about the overall and day to day processes that make that particular person or group successful. I'm not for the idea of building your personal brand on the back of someone else's brand equity but if your brand develops from the hard, quality work you do for someone else then that's great.
I wouldn't go in with the sole purpose of using your position to quickly build your brand and bolt. I'd go in with the purpose of working your butt off for someone who gave you a great opportunity and see what develops from that. Usually the latter will result in both sides being more than happy.
Eliminating Distractions
This part is more relevant if you have a non-working spouse or a spouse who might work part time. Little things that can really add up to time sucks include:
- paying the bills
- making the monthly budget
- dealing with household vendors
- scheduling and rescheduling family appointments
- doing the household shopping
- etc...
You should be focused on your business and the associated responsibilities. If you are doing any of the above, try to transition that to your spouse or significant other. It's not just the hour or two it might take for you to do those tasks but it's the stopping of your business activities and the mind-flow disruption associated with starting and stopping tasks frequently.
Evaluating the Decision
In this weak and unstable economy it is really hard to reasonably project out 5 years on a life changing decision. There are so many variables to take into account that it's difficult to give a tailored answer to each situation.
If you are at the point where you need to make a decision or want to make a decision down the road, there are some key points to keep in mind but financial variables are some of the most important variables in this equation.
It's fine to want to do something and have the drive to do it but if it's going to potentially create a financial hardship quickly then it is really the wrong decision. There are a few really good options for someone who is on the fence for financial reasons.
We covered some of the reasons above, such as:
- learn and work on your business part-time while keeping a day job
- see if you can start by working with an experienced person in the field
- take up a part time job and/or see if a part time job is a good option for your spouse or significant other
- start living below your means and save some cash for rainy SEO days and for investing in knowledge + small ventures
The other elephant in the room is stress. The stress of being the breadwinner is stressful enough, but if you have no safety net or if your business is brand new (thus more unstable than 9-5 corporate stuff) as well then it is really stressful. This is something to keep in mind and something you might want to try and emotionally reconcile before you start.
You might also find that doing it part-time and maintaining a "day" job is a really good fit emotionally and financially. If Google blindly swings an ax, and you get hit, you can rest assured that the sun will still come up tomorrow and will that direct deposit on Friday :)
The point remains that there are many options available to you to help figure out if working for someone else or yourself is really the best fit. In either case, working and studying harder (and longer) than others is a solid base to start from :)
Comments
I think it takes a little bit of insanity to be self-employed; I say that as someone who has been working for myself for 7 years now. ;)
It certainly is not getting any easier.
In the last few months Google has deranked a few of my pages that were on the first page and in their place are sites that are scraping my content. Very nice.
Then, they banned my 11-year-old Adwords account for an ad I deleted nearly 8 years ago.
They are really spreading the love far and wide.
Google continues to perpetuate a world where they encourage the exact type of behavior they are trying (supposedly) to stop. Why is there so much spamming, deceptive advertising, affiliate desperation and gray/black hat SEO? Simply because they have ceased to foster any sort of fair or open environment where legitimate businesses can compete- so people get desperate. It's harder than ever to get your business seen in Google- even if you're willing to pay for it.
I've also experienced the frustration of self-purchased health insurance. Aside from taxes, it's my largest expense- and they fight me on everything. It's a constant battle to get things covered and their argument is always that "I'm not part of a group so exceptions apply". I've seriously considered canceling it and just sticking the money in an account for a sort of self-insurance. Of course, when a few days hospital stay can cost six-figures it's never that easy.
Still, I can't imagine working for someone else, I guess it's my nature. I'm not a "trade time for money" kind of guy. I prefer to be in control of my destiny no matter what...but it certainly isn't getting any easier.
I actually have a draft post (that still needs a lot of polish) which is titled "how Google creates black hat SEOs." I agree with you 100% in terms of...
I have no doubt that Google has an "Adwords Whitelist" the same way they admit to whitelisting certain sites in organic search results.
If you're an ad agency with an 8 or 9-figure spend or a household brand-name then you have no worries about falling on the wrong side of the "quality score". In fact, I wouldn't doubt that "quality score" is all but completely disabled on larger accounts.
The problem is that not only does Google shut you out, but they make any sort of redress impossible.
In my case they gave me no warning whatsoever before banning me. They initially insisted they did, but then later recanted and admitted to banning me without warning because my violations were "egregious". How can an 8-year old deleted ad be "egregious"?
They then said they would possibly reactivate my account if I were to edit the site in question to "bring it into compliance"...except I don't own the domain. Never did. It was an affiliate ad (for a benign family-friendly product I should add) that I ran years prior. When I brought up the absurdity of the solution they simply said, "not our problem" which is, of course, pretty much their standard line.
Sure I can advertise other places...but I can't reach Google's customers there. As an individual I can choose to use another search engine, but as a business I cannot magically make potential customers do the same. I HAVE to use Google or give up a huge market share.
JFK's quote, "Those who make peaceful revolution impossible will make violent revolution inevitable." seems apropos here. The "violence" is the efforts of blackhat SEOs and advertisers to take back their share of what was lost through whatever methods they can use to circumvent Google's guidelines.
Most people are happy to follow the rules if they feel the game is fair. Of course, Google doesn't even publish their rules so it makes it tough.
When I see people getting permanent bans while trying to advertise their local pizza shop or plumbing business there is something seriously wrong with the system.
Excellent Post! As a 10-yr SEO and start-up agency entrepreneur, you are hitting many nails squarely on the head. Anyone who is considering starting their own SEO consulting business and eventual agency from a blank canvas, take to heart this article!! One of the Pro's of SEO is the fluid nature of our industry and survival of the fittest -- those who are smart, nimble, hard-working & client-focused can survive & win and it keeps things very fresh & challenging! But that Pro is also a Con. Not only with algorithm shifts and the feeling of holding water in your hands --- but also with a watered down marketplace of "SEO experts" who make it more difficult to legitimize our industry. SEO is highly-unique in the business world as most niche industries don't have such perceived risk to all stakeholders.
I can't stress enough the financial burden you carry, especially if you are a single-income household with a family, in a volatile industry that is further impacted by a recession; and oh yeah, often unrealistic clients :-) and competitors trying to make SEO a commodity through pricing & crappy solutions. To minimize your own stress, you need to already have a rainy-day fund (which you should keep building for when the $h#% hits the fan), an accepted family budget that you can stick to, access to credit or cash when you need it, and a well-defined profit margin for your services. Flying solo, YOU are the inventory -- you have to be able to SELL yourself & services -- then be prepared to change hats & deliver the goods.....day in & day out. Oh yeah, you have to somehow keep a pipeline of new opportunities b/c we all know there is a life cycle with SEO client work. Your rainy day fund helps bridge the gap in between work. I highly recommend 6-month+ contracts that yield you recurring revenue -- this gives predictability and consistent cash flow you can manage.
This is not for the faint of heart and comes with all types of stress points. It is highly rewarding to work for yourself and succeed in an innovative market -- I believe the Pro's outweigh the Con's -- but each person is unique and you need to be certain this is right for you. Go the part-time, side job approach at first to make sure you are mentally, physically & financially ready to fly solo and start your own SEO business. Good luck if you take the plunge!
thanks for the great post dexineffex!
Thanks for the detailed posts about your experiences, very interesting and informative!
What it will really come down to, and I can't stress this enough, is your ability to generate leads and collect receivables.
Overall, this is a very good post that brings up a lot of good points, but if anybody is serious about starting an SEO/SEM company... it's all about strong sales and reliable cashflow, and don't let anybody tell you otherwise.
I'm sure fellow marketers will agree, developing and executing a solid strategy that consistently provides you with new clients and guarantees timely payments will save you quite a few grey hairs, and probably your sanity... but above all, let you keep your boat afloat.
Honestly, everything else is irrelevant and can be learned / improved / corrected along the journey, including even key components such as customer service and actual SEO execution.
Obviously, this is a lot easier said than done... and I will try to give a few basic pointers that might get the snowball rolling.
Lead-gen:
1) It's an uphill battle competing against the best in the industry
2) Even if successful, it will take time
Now, this is not to say that you shouldn't promote / establish yourself online, just saying that even though this is a great long-term objective, it's a generally poor and unreliable strategy to claim market share when you're just starting out.
Cashflow:
thanks for the great contribution!
"...an increased cost of about 20-25k over the course of a 9 month period to have a child in the United States!"
Please can you elaborate on this point... where do you get that figure from and should I be worried? We moved to Mountain View from the UK recently and already have two kids... admittedly, I'm employed full time, but I have ambitions of replicating what I have in the UK over here in the US... What you're essentially saying is that if we were to go on and have a 3rd child we'd need 40-50k a year extra?!?!
or even a fee that you would have to cover if you already have a corporate job, but if you work for a small business (or own your own business) almost no health insurance plans will cover maternity, or will only do so at a significant cost increase ... and whenever you get any health services in the US without having health insurance they charge you 3x 5x or sometimes even 100x what they charge insured people, basically trying to bankrupt you through a sleazy program of cost shifting.
In my experience, a lot of what you said is true. It helps to start off working somewhere else and than slowly transiting out... However, it's always going to be scary when you finally make the switch, but I'm very happy I did. The risks, challenges, and rewards of owning a company is a lot more fulfilling then working for someone else. If you want, you can read my story about starting an SEO company
[edit: link spam removed...feel free to do your "inbound marketing" comment link spam garbage to BrewSEO.com on someone else's site, not ours]
I found this article with a Google search.
I was looking for articles that talked about "How to start an SEO business," because I'm interested in learning "How to start an SEO business."
This article doesn't say, teach, share or give ANYTHING about "How to start an SEO business." In fact the post name "starting-an-seo-company" is misleading as well.
Maybe if I search for "Why you should not be self employed," or "The Risks, Debt, Decisions and Distractions of being Self Employed," perhaps I'd find an article at SEOBook that gave a checklist and explanations of things to do
so readers would know "How to start an SEO business."
This article legitimately falls into the category of webspam because it uses a subject and a page name to target an important keyword then presents an article about the woes of being self-employed. And forgive me, but the several subjects broken in this article are not "news." The material is common sense.
This is webspam to get people here so that SEOBook gets more exposure.
I joined SEOBook to learn how to become a trusted authority and to start an SEO business.
I am disheartened and disappointed at this article, the title which does not deliver and the intent of such practices.
Chris
... are an idiot.
If all of the tips in this article were so obvious & all common sense driven based on things that everybody knows and practices then there wouldn't be so many forum threads about SEOs going under. In fact, a friend just sent me another one today & I am sure that issue happens every day of the year.
If you gained nothing from this post then feel free to write your own better & deeper post. I hope some ignorant jackass then comments on it calling it deceptive spam because it didn't precisely fit their opinion/needs/wants/desires.
And if you are stupid enough to expect someone to write and frequently update an entire business plan for you publicly FOR FREE & guarantee success with it, let me know if there is some market instrument to bet against you, as I will gladly make that wager all day long.
With your piss poor entitled attitude you are destined to fail & anyone who takes the other side of that bet will make a tidy sum.
Please tell me you see the irony of finding an article about 'how to do SEO' ranking highly for the keywords "how to do SEO", then complaining about the authority of the source creating and sharing that information.
Thanks for sharing your awesome experience with us! I think I started at the wrong point with my SEO business and maybe this will help me along my fresh journey. Thanks mate!
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