Finance and Business Blog

I often hear people say they receive x number of hits per day/month on their website, but do they really mean hits or visits? because they’re not the same thing.

A visit is recorded when someone goes to a website, irrespective of how many pages they go to.

A hit, on the other hand, is recorded every time a file is downloaded to a visitor’s browser. So, for example, if a web page contains 10 images, each one of these will count as a hit when the page is loaded into a browser. If the page uses a style sheet, that will count as another hit; the html page itself will also count as a hit.

So you can see that a visit to a single page can generate many hits. It is therefore more accurate to talk about visits rather than hits.

This is the big question. When you first start a web site, often at the back of your mind you’re wondering how much money you can make out of it. Will your site be the next big thing? Will you get two million visitors per day? The answer is, ‘probably not’, but that’s not to say that you can’t make some money out of your site.

Google Adsense

One thing that is often difficult to gauge is how much traffic you need before you can start to make some money out of your site from adverts. Of course, if you stick Google Adsense units (adverts) on your site you can, at least in theory, start earning from day one. The reality though, is that you need to get some serious traffic before this type of advertising will reap any real financial rewards.

For example, you can reckon on one ad unit being clicked for every 50-100 visitors to your site. So, very simple mathematics, if you get 1000 visitors per day, you’ll probably get between 10 and 20 click throughs (a click through is when someone clicks an ad unit) per day.

Now, if you also bear in mind that you might make as little as 1 cent per click through, you might get as little as 10 to 20 cents from your 1000 visitors. You might make a lot more than 1 cent per click through, of course, but taking the worst case scenario of 1 cent per click through, it’s not going to make you rich!

Don’t get me wrong though - I think Google Adsense is a great thing - it’s easy to set up, it’s free to use, and it does bring in some revenue.

Other Advertising Revenue

Once your site starts getting about 500 visitors per day, you can start to look at other advertising revenue streams instead of, or more likely in addition to, using Google Adsense.

You might find that companies start to contact you directly, wanting to place adverts for their companies or products on your site. I know from my own experience that even if you are only getting 300 or so visitors per day, this might be enough to generate some interest from potential advertisers.

But how much money can you expect to earn? Well, for a site receiving 500 visitors per day, you could expect to get $50-100 (£25-50) per month for a 4cm x 2cm (button) advert placed on one of your site’s better performing pages, that’s to say a page that probably has a Page Rank (PR) of at least 5. This might not sound like very much money, but if you have 20 or 30 pages that have a good PR, and you can place three or four adverts on each page, your advertising revenue will soon start to mount up.

Naturally, as the amount of traffic your site gets go up, the more you can charge for placing adverts on your site. Once you’re up to about 5000 visitors per day, you could easily be looking at charging updwards of $1000 (£500) per month for button adverts or banners, and then you’re talking serious money!

I’ve been developing web sites since the mid-nineties, primarily using a text editor to produce web pages. Although I’ve dabbled with wisiwig editors like FrontPage and DreamWeaver, I’ve never made the switch from using tools like TextPad. In fact, I bought a brand new version of DreamWeaver about one year ago and, todate, I haven’t produced a single web page with it. As well as being a complete waste of money, this has also been a missed opportunity to get to grips with probably the best wisiwig editor on the market. The problem is that whenever I start to use DreamWeaver, I always end up switching to the code view. Shortly after that I always think, oh well, I might as well use TextPad again.

The other problem I have is that most of the work I do involves creating/editing web pages that contain a lot of PHP code and this needs to be done in code view anyway. It does mean, however, that I miss out on a lot of productivity benefits I would get if I stuck with DreamWeaver.

We’ve all read plenty of articles that tell us how to drive traffic to our websites, namely to keep on adding good quality content and to get as many good quality inbound links as possible. What is often not mentioned though is how long it takes to build up a reasonable amount of traffic.

For example, if you publish a new website on January 1st with, say, ten webpages and a few dozen inbound links that you’ve managed to set up from other websites you run/own, the chances are that you initially won’t get any traffic at all; and when you check your web stats, the only visitor will be you!

If, from this point onwards, you aim to add one new web page and one new inbound link every day, by the end of February you might be averaging three or four visitors per day; and some days you won’t get any visitors at all (quite often on a Saturday or Sunday - which is a quiet time for many sites as we do most of our Internet surfing when we’re at work!).

The real danger is that you give up at this stage - after all, you’ve been adding inbound links and content for two months now and you’re still not getting any real traffic. The name of the game is patience - it takes months and months of continuous effort before much traffic comes along. OK, sure, there’ll always be sites like MySpace, FaceBook, and YouTube that are overnight successes, but they’re the exception to the rule, not the norm.

Set yourself goals

You need to set yourself goals and take a long term view. Decide how many visitors you want to aim for after, say, six months, and then after a year, and then after 18 months, and so.

For example, it’s realistic to say that after three months of adding content etc, you should be getting visitors every day. After six months, you could well be averaging 20 visitors per day; after a year, 100 visitors per day; after two years, 500 visitors per day; after three years, 1000-2000 visitors per day; and after four to five years, around 5000 visitors per day.

These are just guidelines of course, and you might find that your site does better, or worse, than this. 

Once you can get above 1000 visitors per day (30,000 per month), you have the basis for a business, and you’ll make a bit of money out of Google Adsence, for example. Once you can get up to 3000 visitors per day, you’ll start to attract advertisers who are willing to pay you a few hundred pounds per month to place an advert on your site.

Have a five year plan, and decide what you want your target traffic figures to be. You might not achieve them, and you might need to adjust them as you go along, but like any business you’ll need projections to give you something to aim for.

Remember though, building traffic is an ongoing task and you should always be looking to add new content and build inbound links whenever you can.

Development of Version 5.0 of Earnings Tracker has begun and is scheduled to be released in December 2008.

With the current version of Earnings Tracker it is necessary to add multiple invoice amounts and enter them into a single field. Although this is acceptable, it is not ideal. With Version 5.0, up to eight individual invoice amounts will be permitted per month. I feel that this is probably sufficient for most contractors.

I’m also hoping to expand some of the other areas that currently require multiple amounts to be combined and entered into a single field, for example, monthly expenses. What I don’t want to do is to make the process of adding and editing months too lengthy, so the design has to be a compromise to an extent.

I’ll keep you posted of developments as they occur.

What is Corporation Tax? 

Corporation tax is a tax on a company’s profits. The current rate (fiscal year 2007-2008) for a business (limited company) with a profit of between £1 and £300,000 is 20%. For the fiscal year 2008-2009, the percentage goes up to 21%.

How do I calculate Corporation Tax?

Let’s assume that a business has a turnover of £100,000, pays out £50,000 in salaries, and has other expenses (that can be offset against tax) of £10,000. This gives us a figure of £40,000 that is subject to corporation tax.

Therefore, for the fiscal year 2007-2008, the amount of corporation tax due is 20% of £40,000, which equals £8,000.

For the fiscal year 2008-2009, this figure will go up to £8,400 because of the rate increase to 21%.

When does Corporation Tax need to be paid?

Corporation tax is calculated at the end of every accounting year and must be paid to HM Customs and Excise within 9 months of the financial year end. Therefore, if your company year end date is 31st March, you must pay your corporation tax by 31st December of the same year.

Introduced in April 2002, the VAT Flat Rate Scheme offers small UK businesses the opportunity to simplify their VAT accounting. To qualify for the scheme, a business must have:

• a VAT exclusive annual taxable turnover of up to £100,000, and
• a VAT exclusive annual turnover, including the value of exempt supplies and other non taxable income, of up to £125,000.

Businesses must check each year to make sure that their annual VAT inclusive turnover does not go over £150,000. If it does, they must leave the scheme. 

How does it work? 

Let’s say that a business has a turnover of £50,000. VAT is chargebale on this as follows:

£50,000 x 0.175 = £8,750

Giving a total revenue of £58,750. The VAT Flat Rate percentage is then applied to this figure. (The percentage varies, depending on the trade sector, but is in the range 5% to 14.5%.) 

If we assume a VAT Flat Rate percentage of 13%, which is the percentage for IT businesses, we have:

£58,750 x 0.13 = £7637.5

This is the amount (£7637.5) that has to be paid to HM Customs & Excise (the tax man). So, the difference between the amount of VAT charged for the supply of goods or services (£8,750) and the amount paid to the tax man (£7637.5) is £1112.5.

So, for an IT company that has no expenses they would have gained £1112.5 by the end of the year. However, if a company has a lot of expenses during the course of the year, they would probably be better off to not be in the VAT Flat Rate Scheme. This is because they would be able to offset the VAT they paid out on the expenses, against the VAT they received for the supply of goods or services. For example:

If an IT company has a turnover of $50,000, and incurs £15,000 (+ VAT) worth of expenses:

£15,000 + £2,625 = £17,625 (this is the total cost of the expenses)

The £2,625 can be offset against the £8,750 of VAT charged for the supply of goods or services:

£8,750 - £2,625 = £6,125

So, the amount paid to the tax man in this instance would be £6,125, which is less than the £7637.5 paid to the tax man for the VAT Flat Rate example given earlier. In this case, the company would be better off to not be part of the scheme.

It’s hard to believe that the Wold Wide Web was only invented fifteen years ago in the early nineties. It seems in many ways as though it’s been with us for as long as we can remember. What did we used to do in our lunch hours at work before the Web… read newspapers…play computer games….I can’t really remember. 

For many of us as well, it was not until the mid- to late- nineties that the Web started to dominate our lives so much. We do so much now on the Web: book flights, buy goods, keep in touch with people, find out information, and much more.

How will the Web change over the next fifteen years? I wish I knew! It seems to me that the “big” changes that have had a real impact on us (Google, FaceBook, MySpace, Wikipedia, and so on) are very difficult to predict - if they were, we’d all be rich! Who would have guessed that social networking sites would have been so popular.

The one thing we can be sure of is that it will be exciting no matter what.

I was interested to see that some of Google’s ex-employees have launched a rival search engine - cuil.com. Taking on Google is a brave and, some might say, crazy thing to do. We are all creatures of habit, and tempting people away from their current search engine to a new one will be a mighty big challenge.

 It’s interesting how cuil displays search results in a quite different way to other search engines. Myself, I found the layout a bit awkward because I wasn’t sure whether to read across or down. With other search engines, you start at the top and go to the bottom - simple!

How relevant the search results were with cuil was something else I was unsure about. I tried searching on a few terms that I use on a regular basis and found that some of the entries I would have expected to see in the search results were not there. Does this mean that cuil’s results were better or worse? - I’m not sure.

I think it’s courageous to take on Google, but I would be surprised if we’re all using cuil in a few year’s time.

Earnings Tracker, John Dixon Technology’s FREE accounting / bookkeeping tool is proving to be a very popular software download. Version 4.0, which was launched at the beginning of August 2008, is currently being downloaded about 20 times per day.

The software is availbale for download from various software download sites, and is also available for download from the download page on the John Dixon Technology website.

Key features of Earnings Tracker include:

• FREE to download or use, with no conditions (time limits, limited functionality, etc)
• Enables company revenue and spending to be easily recorded
• Enables salary, expenses, and pension contributions to be easily recorded
• Calculates VAT due
• Calculates dividends that can be taken
• Enables dividend tax vouchers to be generated
• Calculates corporation tax due
• Works across multiple financial years
• Calculates retention rate
• Enables individual spreadsheet columns to be shown or hidden
• Written in open source software (PHP and MySQL) so can be easily customised
• Integrated online help