I would like to start an online business like elance@com or freelancer@com or guru@com and was thinking how much would it cost to start such a business. my main concern would be the advertising costs. what do you think?
My first concern, in an established and crowded market, would be unique market positioning. Sure, you can throw massive money at it, and hopefully break into the market. However you’re far better of if you can differentiate yourself from the competition in a way that is considered superior by key segments of the market.
How can you serve your customers better than elance and the others?
my main concern would be the advertising costs. what do you think?
Advertising costs are the tax you pay for having an unimaginative service with no competitive advantage against established, entrenched competition. So the cost will be high. Count on little, if any, word-of-mouth.
Who wants a clone, with no detectable difference (and sorry, just because you believe there’s a difference obligates nobody in the market to agree with you). Excepting, of course, the one big difference: You’ll have little to no volume of traffic to motivate either a client to post on yet one more board, nor a worker to bother looking.
Bottom feeder sites for penny ante chislers are a dime a dozen. Everybody wants to do one. Find some way to upend the mechanics of price over judgement sites, you’ll have uncovered a competitive advantage. Price is no substitute for judgement. Lowest bids are not the road to the best value for clients.
Viewing what’s being bid on as a lowest price commodity won’t foster long term high value clients for the bidder.
All these sites do is oversupply workers and undersupply work. The mechanics of the site demand a plunge to the bottom, price-only competition which often takes short cuts, that doesn’t support value for the client. So you see the CraigsClones giving way to the 99Clones, which in turn give way to the FiverrClones.
Five bucks?! I am waiting for the next logical step of the bidders paying the clients. My guess is it will be started by the same colleges who came up with the concept a college education so cripples your ability to work for pay you have be an unpaid intern to relearn how to work.
The reason these sites exist is price is a nice, comfortable data string for programming to use. Price is easy. Value is hard. Value is like talking rainbows and unicorns to a programmer – if it does exist out there, somewhere, value ain’t the programmer’s problem. (As the programmer sees it)
Unfortunately a site based on value competition would be the competitive advantage you’d want. Because practically no programmer would conceptualize how you’d do it. Not that there aren’t ways. Just that the concept is alien to everybody in the market space right now.
Sort of like the MP3 player or smart phone market, pre Apple. The market is viable – but not for a copycat.
That is quite a bitter rant. I would be more inclined to consider pacifier’s advice.
If you are actually trying to follow the elance.com model with the same audience they have, you’ll have your work cut out for you and unless you have a legitimate edge it’s unlikely that any amount of advertising will get you caught up to them.
That said, if you have something more specific in mind, like a marketplace that is targeted towards a market that needs/wants/doesn’t have such a service it could certainly be done. You’d have to look at that market and consider it’s size and the manner in which you would reach it to really determine the advertising costs.
Creating a site like that isn’t such a massive endeavor technically, but elance puts quite a bit of time into customer service, support, transaction processing, etc. so it’s not just a little website.
As you consider business ideas, keep in mind that even a good idea will always meet skepticism from someone. Just because there is competition in a field doesn’t mean that you can’t enter that field, you just have to have a good plan that makes sense. I am involved in a startup right now and we’re entering a market that already has 2+ strong competitors that have 2 or 3 years and some money behind them - a huge advantage. My and my partner, however, think that we can do a better job servicing this market and we’re going to risk some of our own capital accordingly. We’ve been told that we’re crazy and we’ll never catch up with the market leader, but we’ve also been offered millions of dollars in investment money.
The people that said we were crazy were people that haven’t been all that successful in business. The people that offered us money are those that are accustomed to taking calculated risks for large returns, and are looking for other such opportunities.
So, without any further detail it’s hard to answer your question. And, it’s true that you’ll need something ‘special’ if you are planning on simply competing in the online labor/service marketplace. However, anything is possible so think positive and do your homework.
That is quite a bitter rant.
Which would be completely at odds with my normal mixture of Pollyanna and Shirley Temple.
Not to step on the web startup tag line “hey gang, let’s throw up a web site!” Not that there’s anything wrong with the 'lil Rascals as a show, just not as a business model. …or management team.
Sagewing, you have proven time and again that you know what a business is and how to run it. So when you say that you’re about to start a clone site I know that you’ve thought it through and weight all pros and cons to come to a sensible conclusion as to whether it will work.
You’re also willing to invest in it, whereas most most people that want to start a clone want to start it for as little money as possible and expect it to return millions, acting under the believe “If I just build a clone and tweak this-and-this parameter a little bit so my site will be “better” than [name of original site it will be an instant hit. I’d hardly have to advertise at all because people will instantly love it. They love [name of original site here] don’t they? My site is even better because of [perceived extra value] so they will most definitely love my clone as well!”
The. world. just. doesn’t. work. that. way.
I’m not saying the OP falls under that second category; I’m merely saying there are (too) many that are.
Thanks for your words and I agree that there are plenty of people who are overoptimistic about clone sites, etc. But then, people come to a forum like this for business advice because they want to do business and are willing to take risk, and some mentoring can help an over-eager person to evolve into a real business guru. I don’t know many people who succeeded in business without some spectacular failures (i.e. I don’t like to talk about my early affiliate marketing efforts!).
We aren’t exactly creating a clone of our competitors, though. Instead, we’ll be going for the exact same market using the exact same channels and offering the exact same service. Our edge will be simply that we feel we can do it in a much better way for a cheaper price (and there is a specific reason we will be able to do that) so I’m willing to bet some money on this.
It only takes ONE competitive advantage sometimes, especially in a huge market like the one we are entering. Sometimes you don’t even need that - Pepsi and Burger King have done very well as a ‘number two’ who’s edge was simply to get into the market and compete. They were strong competitors, though, with excellent skills behind them and a growing, virtually endless market.
Wouldn’t have anything to do with that Thailand programmer shop you’re looking for in your signature would it?
So, you are going to compete on what seems to be just price… and feelings?
Actually no, our business model will look nothing like the competition and the savings we get from our existing offshore network will only be realized during the initial build and won’t be instrumental to the success of the business.
And you post indicates that you are predisposed against an offshore model to begin with I’m doubtful that any further dialog would bear fruit. Emotional and critical commentary about the evils of offshore development is the hallmark of those who fear for their own security, but is not a perspective rooted in rational thought.
Wrong. I have many international clients, therefore I am the offshore worker 
. If I need to have a development shop in the future I’m going to use people with a good work ethic, no matter where they are located.
I was asking a question because I was interested. Thanks for ignoring my question though. Was trying to provoke some conversation about feelings and business choices as well, but… yeah, I seem to have provoked other feelings (:
Ok, fair enough. I guess I’ve had too many unwelcome debates about the merits of offshore development over the last 15 years. I misinterpreted the mention of ‘feelings’, I think!
I hereby retract my snippy post and apologize for misreading your comments, sorry!
For sure you will know the starting costs.
The advertising if you can have 10k I can make you a campaign. If you have 100k I can make you I campaign.
I’m saying the costs are related to you: how much to you want to have success with this business and how fast.
Elance kind of web site is quite a complex business, in modern economic science it is called two-sided or multisided market. You need to solve ‘chicken and egg’ problem and set your prices for both sides of market very right.
Check works of A.Hagiu if you want to read some theory around this subject (BTW, in one of his job he wrote about one similar with elance web site - TopCoder).
Did anyone address the question about price? I was thinking 50k might get you started. Sometimes it can almost be cheaper to buy a business than it be to start one.
I have no idea how much would it cost for advertising but here are some tips and free resources to help you reduce cost for your startup:
-Grace
First of all, you must be clear on what all you would like to do with the startup. Do you just want the website or recruit employees too? If you just want a website, you can get it done with 2K USD. But if you want to have employees and start it big time, then the cost would go sky high.
I agree with DCrux. You have to offer something different, a difference that is visible for all. Try to study the website similar to what you want to start, see what people like and see what people don’t like about their service and try to come up with you’re own twist.
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