Is My Idea Economically Viable?

Due to the nature of my business model, the costs of running the company will be pretty low. Aside from my own daily needs – food, bills, rent – the only other expenses I will incur with my work is advertising and product subscription. This low expense is because I already own all of the necessary equipment for creating 3d models, and therefore a high cost would only come from replacing these if they were to malfunction. For this profit/loss model, I will include my daily living costs to obtain a more realistic figure of my yearly earnings. 

How I have calculated my estimate charts:

• I’m estimating the growth of my business using starting figures based on how many friends and family members I believe will support me by subscribing within the first month. I’m then using the equation X+1/2Y rounded down. Thus, X is the starting figure for each month (compounding) and Y being the month’s number. The number compounding each month will decrease once it reaches month twelve to account for the Plateau that most small streams hit around this point.
• My estimate for donations each month is based on half of the current subscriber count rounded down, with the average donation amount being £3. I have chosen £3 as the estimated donation value on Twitch because my minimum donation value is £1 – I foresee many people donating the minimum value to trigger the donation’s text-to-speech function. So I slightly raised the average to account for the people who will contribute more significant amounts. 
• My estimate for AD revenues for Twitch presumes that I have active viewers equal to four times the subscriber count but that 50% of them use AD Blocker. I’m then calculating the revenue from ads at £0.005 per AD roll per person, presuming that one AD roll is watched each hour and that I stream for four hours five days a week. (How Twitch Ads Work and How Much Do Streamers Make From Ads? – Madskil, n.d.)
• Similarly to Twitch’s above AD revenue estimate, my Youtube and Social media AD revenue estimates are based on the same equation, with a slightly different multiplication value. Youtube AD revenue will be multiplied by five because Youtube AD revenue is somewhat more reliable than Twitch (still halved for AD blocker, though). Social Media AD revenue will be multiplied by two (also still halved for AD blocker), as I predict I will have a slightly lower social media presence than other platforms. 
• I have based Commission estimates on the assumption that I would receive one commission every two weeks, at a standard rate of £150.
• I have based the Professional Freelancing estimates on the assumption that I would work for one week a month at twenty hours a week, producing work in a professional capacity. For this, I have estimated pay at £10 an hour.
• For standalone model income, I have estimated £2 per model download (some models will be marketed in the £5 – £10 range, while others will be only £1), at half the number of subscribers rounded down (a reasonably good estimate for the number of downloads per month) squared (to account for the number of models that are available to purchase steadily increasing over time).  

The charts are as follows:


Looking at these figures, you can see how the start might feel very rough, but hopefully, in time, my hard work would pay off. Deducting my current average yearly minimum spent on bills and essentials (£8000), plus an estimated £1000 on advertising per year, results in a £1025 profit in Year One, and a £31398 profit in Year Two. An astounding amount, though reflective of the amount of hard work I would need to succeed in this business. 

Overall, after evaluation, I have found that I would likely not need investment. However, if my bills become higher in Year One or my business encounters any unforeseen expenses, I may have to reconsider looking for investment or loans.

In summary, my idea targets a niche currently unfilled and which can grow and produce large profits exponentially. I am delighted with my business idea. Thus, I will potentially look to put this plan into motion if I find myself in a stable enough financial situation to support the potentially rough Year One.

References:

Madskil. n.d. How Twitch Ads Work and How Much Do Streamers Make From Ads? – Madskil. [online]
Available at: <https://madskil.com/streaming-academy/monetization/how-twitch-ads-work-and-how-much-do-streamers-make-from-ads/>
[Accessed 5 July 2021].

Word Count: 742 (Not including Charts)