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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on June 4, 2022
Investment range
$2,850 - $6,300
Revenue potential
$30,000 - $100,000 p.a.
Time to build
0 – 3 months
Profit potential
$27,000 - $90,000 p.a.
Industry trend
Growing
Commitment
Flexible
Key considerations to keep in mind when launching your YouTube business:
Starting a YouTube business has pros and cons to consider before deciding if it’s right for you.
Trends on YouTube include:
Challenges on YouTube include:
The most popular video categories watched by YouTube users are comedy, music, entertainment/pop culture, and “how to.”
How to Start a YouTube Channel
To start your YouTube channel, you simply need to sign into your YouTube using your Google account. You can then click on the video icon, which will prompt you to create a channel if you don’t already have one. Then just follow the prompts to set up your channel.
Then, you’ll want to do the following:
The key to your YouTube strategy is to create engaging videos that will get many views. When you’re eligible for YouTube monetization, you’ll need to sign up for the YouTube Partner Program (YPP) in order to start getting YouTube ads revenue.
To qualify for YPP you need to be in good standing with YouTube, have 4,000 valid public watch hours in the previous 12 months, and at least 1,000 subscribers.
Startup costs for a YouTube business range from $2,800 to $6,300. Costs include a computer and your video equipment.
You’ll need a handful of items to successfully launch your YouTube business, including:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Business licenses and permits | $100 - $300 | $200 |
| Insurance | $100-$300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Computer | $800 - $1,200 | $1,000 |
| Camera and microphone | $500 - $1,000 | $750 |
| Total | $2,850 - $6,300 | $4,575 |
Ad revenues are difficult to predict because they are determined by the YouTube algorithm. You can probably expect about $5 per 1000 views once you’ve reached the required levels to qualify for the YPP. Your profit margin should be about 90%.
In your first year or two, you might get six million total views, bringing in $30,000 in annual revenue. This would mean $27,000 in profit, assuming that 90% margin. As your channel gains traction, views could climb to 20 million. With annual revenue of $100,000, you’d make a great profit of $90,000.
The only barrier to entry for a YouTube business is the massive competition you’ll face.
Now that you know what’s involved in starting a YouTube business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research YouTube channels to examine their topics and followings. You’re looking for a market gap to fill. For instance, maybe the market is missing a channel with DIY upcycling video content or a comedy YouTube channel with a certain theme.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as music videos or blog videos.
This could jumpstart your word-of-mouth marketing and attract clients right away.
You’ll just need to decide what kind of videos you want to create. Some YouTube businesses also create branded merchandise to sell on their YouTube channel.
YouTube ad revenues are determined by the YouTube algorithm. Once you qualify for the YPP, you can expect around $5 per 1000 viewers. Your profit margin should be about 90%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will depend on the type of video content you create. If your target audience will be younger, you can market your channel on TikTok and Instagram.
It’s unlikely that you’ll ever need a space for your YouTube business, unless you decide to rent a production studio. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to YouTube businesses.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your YouTube business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding a YouTube business. You might also try crowdfunding if you have an innovative concept.
Starting a YouTube business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your YouTube business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Adobe, Canva, or Animoto, to create, edit, and organize your videos.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Launching a YouTube channel is an exciting venture, and effective marketing is key to gaining visibility. Here are practical strategies to boost your channel’s presence:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your YouTube business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your YouTube business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a YouTube business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working on YouTube for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in YouTube. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a YouTube business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
YouTube is an extremely influential platform with a massive global audience. If you’re creative and want to make a splash online, with just a few unique videos you could start to build a YouTube following and grow your channel into something great. If your videos go viral, there’s no limit to your channel’s income potential!
You’ve done your due diligence to learn the ropes of starting a business, so now it’s time to fire up that camera and get your successful YouTube business up and running.
If you can get a large following on your YouTube channel, your YouTube business can be extremely profitable. Millions of viewers will mean that you can earn significant ad revenue. The key is providing excellent content.
YouTube ad revenues are determined by the YouTube algorithm. Once you qualify for the YPP, you can expect around $5 per 1000 viewers.
To start a YouTube channel with no experience, you should first decide on a niche or topic that you are passionate about and have some knowledge or expertise in. Next, create a Google account and sign up for a YouTube channel. Choose a name for your channel that reflects your niche and brand. Then, create and upload your first video, making sure to optimize the title, description, and tags for search engines and viewers.
Beginners can get YouTube views by optimizing their videos for search engines, using relevant and eye-catching thumbnails, promoting their videos on social media and other online platforms, collaborating with other YouTubers in their niche, and engaging with their audience by responding to comments and questions.
The easiest YouTube channel to start is one that aligns with your interests and skills. Some examples of easy channels to start include vlogs, gaming, cooking, crafts, or beauty tutorials. You can also start a channel that focuses on sharing your opinions, experiences, or advice on a specific topic.
To make a successful YouTube channel without showing your face, you can create animated or illustrated videos, use voiceovers or text overlays to convey your message, or use stock footage and graphics to create engaging and informative videos. You can also collaborate with other YouTubers or hire a spokesperson to represent your brand.
The type of content most viewed on YouTube varies, but some popular categories include music videos, gaming, beauty and fashion tutorials, comedy skits, and educational content such as how-to guides, product reviews, and explainer videos.
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