Start a Dating Site: What You Need to Know About Dating Business Before Launching
Did you Google “how to start a dating site“? Or maybe you saw an ad with “start your own dating site free” or you’ve heard about an offline matchmaking company decided to go online and now it has a lot more customers or you’ve read about a company that used a social networking site as a new marketing channel to get more clients and payments and thus you’ve decided to rush into it as well to seize your fair share of profit?
Sorry for being a complete killjoy, but it’s much better to prepare a plan first. It’s not obligatory, of course, but studying it in advance will be of great help for you to make the right choice for your business.
We emphasize here two main aspects that can be used to decide whether it is time to start investing in your online dating site:
1. Your business and personal finances
2. Your goals
Understanding your business finances
In order to achieve successful scaling and growing of your business, you need to consider these key factors: your cash flow, the amount you can invest and what you can take as a salary.
How much can you invest?
Well, this one is a tough question as there are a lot of considerations. If your goal is to swiftly scale your business minimum expenditures, then you can consider not taking out the revenue from the business for yourself but putting it back and use for marketing. Similar to what a client Steven Smith did when starting his online business:
He decided that he can afford not taking any salary from the company for first three or fourth months and put all of the money into advertisement and design, in order to achieve as swift growth as possible. When these 4 months passed, they managed to achieve thrice the ads returns for the same price. That can be counted as a tremendous success and it couldn’t have happened if they took money out of the company from the beginning.
There are different ways to keep an eye on your finances and the flow of your business assets. But for the initial stage, let me introduce a simple, but a useful framework to manage your finances and find out where the money will go to, called Profit First, a system introduced in the book “Profit first” by Mike Mihalovich.
In his book, Mike outlines this technique as follows:
• Owner’s Compensation
• Operating Expenses
How your revenue is redistributed to each section is based on your business economic model, your company’s size, what dating niche and your general idea of paid services you want to introduce on the website.
But let’s make a simple illustration for a better understanding of Profit first:
Your total revenue per month is $1000 and according to this framework, it would look like this (all numbers are exemplary and not the recommended ratio):
• Owner’s Compensation (40%): $400 (your salary)
• Operating Expenses (40%): $400 (site expenses cover)
• Taxes (10%): $100
• Profit (10%): $100
This simple formula gives you a general idea of where the money goes at a high level, and where you can find money for investment if it suits you.
What is cash flow?
Our last, but not least, section of the business finances is cash flow. It always makes you aware of how much cash you possess, where do you lose and receive money and where you might run into problems.
But what does cash flow represent? The closest to reality explanation of this term is: “the amount of cash and non-cash funds flowing in and out of your account”. There is “positive cash flow” – when you get more funds in your account than out and “negative cash flow” when it’s vice versa and you require external money infusion to keep the business afloat.
In order to map cash flow, you state how much money you have at the beginning and at the end of a specific time period (week, month, year and etc). At this point, you can calculate whether your online dating business has positive cash flow when, at the end of the said period, there is more on the account than at the beginning or it’s the negative cash flow.
The cash inflow is usually the result of one of three operations: financing, operating activities or investing, although it also occurs as a result of charity or gifts in the case of personal finances. Cash outflows arise from expenses or investments. This is true for both corporate and personal finances.
For both types of finance, cash flow is important for determining paying capacity. It can be presented as a record of something that happened in the past (for example, the sale of a product), or will happen in the future, reflecting what a business or an individual expects to receive or spend. Cash flow is crucial for the survival of companies – having a sufficient cash balance ensures that payments to creditors, employees, and others can be made on time. If a business or an individual does not have enough cash to support its business, it becomes insolvent, and a likely candidate for bankruptcy, if insolvency continues.
The company’s cash flow statement is often used by analysts to evaluate its financial performance. Companies with sufficient cash balance are able to invest cash in business development in order to get more cash and profits.
Understanding your personal finances
In contrast to the usual work lineup, being an entrepreneur means that you both give and receive a salary. It’s up to you to decide what should be your compensation and this choice inevitably affects how much capital can be put into reinvestment.
There is also the influence of the fact whether the online dating site is your principal income source or not. If it’s not, you can manipulate the percentages of money you put in your pocket and what you spend on marketing campaigns more freely. And, when you just start, you may try decreasing the “salary” portion you receive to push more resources into developing new ways for growth.
And, in case, if the dating site serves as primary income, it’s okay too. You will just need to point more attention and mental resources to managing the ration of business and personal assets, to achieve the most optimal solution for you and your dating business.
What should be the salary for myself?
In order to determine what your personal salary should be, you should be able to clearly see how much your lifestyle really costs. When you have these numbers right in front of you, you will understand that this amount is, basically, what your owner’s compensation should be and you will not allocate more funds in there than necessary. Additionally, if you can considerably decrease the living expenses, you will have more available funds to put back to business purposes.
There are several ways to keep track of your spendings:
• Use a budgeting app like Mint or YNAB. They keep the history of all the things you purchase and you can easily see how much you really spend.
• Go through your bank statements for the past few months. It’s the best way to take note of all the spending patterns you have. And if you don’t have previous statements, you can start collecting them now, they will be a huge help later on.
• Every month, prepare a plan for your expenses. You can use the information you gathered above to do that. Just try to create a plan as close to reality as possible, so you can stick to it.
Once you know how much you need to spend per month to maintain your desired lifestyle, this number can tell you the salary you pay yourself.
Overall, most of your money decisions are about setting priorities. Once you understand personal and business finances, you can make more informed decisions about how you want to use your money to achieve your goals.
Understanding your goals
Now when we have a general idea of numbers behind your dating site. It’s time to talk about what is your motivation, your goals.
Investing in your business should ideally begin with a clear hypothesis. Although this may take the form of personal intuition, at least there must be a loose thread linking activity with ultimate business value. This way it makes your business strategy much better than a random assumption or blindly copying tactics from other people’s cases.
No one can deny the fact that when you are spending your funds on something, you expect something fruitful to happen. But how can one track the results and see whether the business really did achieve growth and it’s not just your mind showing what you want to see, but not the reality? Well, you can integrate Google Analytics into your site to receive daily/weekly reports, or have statistics on revenue you receive on your bank account. But whatever it is, be sure to keep track of your key performance indicators (KPI).
KPI is indicators of success in a particular activity or achievement of certain goals. It can be said that KPI is a quantitatively measurable indicator of achieved results. Thanks to these indicators it becomes much easier to understand what actions should be performed to increase the efficiency of the business.
KPI can also be used at the planning and control stages of various activities, acting as an element of the planned results and allowing you to define the vector of the company’s development more clearly.
The methodology is based on two theories – the idea of ’monitoring and revising goals’ and ’managing through goals’. The meaning is to predict the results based on set the goals and plan their achievement through the implementation of KPI. The system is used to ensure that employees, carrying out their usual duties, do not forget about the realization of the intended goals. When performing KPI, staff will be rewarded, which is a strong motivation for employees.
Reassessing the results
It is always hard and scary to make any changes related to money, especially if there is a chance you might just lose a hefty sum.
But adapting, changing and evolving is always necessary. Without transformations, there will be no progress and you won’t be able to scale your dating business. This is why, every fixed period, you should check your KPIs and reevaluate your latest steps and decide on a new course of action if you see decline or stagnation of the performance indicators of your dating business.
However, there is another ‘but’ – how can one be sure that the new changes will increase the profit and not diminish it before implementing them on your site? To tell you the truth, you can’t. The internet audience is too fickle and unpredictable. What worked for someone else, may not work for you and vice versa.
But there is a way out and it’s called A/B or split testing – a way to measure page performance through comparison. The point of the method is to create page A, copy it and change some parameters, for example, title, button, image and this will be our page B. Then half of the site visitors will see page A, the other half – page B. Then you can see what goal (order, purchase, subscription) was achieved more often, and thus what page had higher conversion.
Okay, let us take a closer look at A/B testing through this example: let’s assume that you get $5 from every 100 site visitors, but you can get $10, you’re just not sure how to do it. And this is why tests are necessary here: to find out what strategy can earn more, how to achieve it and what is the upper limit.
Before testing, you must define a goal. Without a clear goal, even the most promising results would be invalid.
And now it’s time to start?
Taking into consideration everything that we discussed above, it’s still not possible to give a clear reply to whether it’s the right time to start a dating site. But now you have the necessary information you need to make rational decisions that will profit your business!
And here is a special gift for those who reached the end of the article 🙂
The ROI (return on investment) calculator – here you can calculate your returns and plan ahead to promote your dating site efficiently and cost-effectively!