Let’s say you’re a consultant, small business owner, who wants to build a social networking site and community. You don’t have the backing of a big company or venture capital funding. You may even want to create a community and social network around your passion, favorite activity, or business experience. A place where like-minded people connect with each other, share advice, make referrals, build businesses and contribute ideas.

How much does it cost? What about construction, design and programming? Can you really create your own social networking site without costing millions and thousands of dollars?

If you can.

The good news is that it is quite easy to create your own social networking site. You can bookmark it and it provides many features such as profiles, photo and video sharing, podcasts, groups, discussion forums, and more. The options are endless. You can set up a free social network in a few hours.

The bad news is that it takes time to learn what’s available in terms of social networking sites. If you don’t have a big budget, a DIY (do it yourself) solution is what you need.

Ning and CollectiveX are two social media options that don’t require a lot of technical skill. With Ning you don’t need any programming knowledge, and you can bookmark your social network and add a wide range of features. There is also no charge; however, if you want to do advanced customizations, you’ll need to upgrade to the premium option for a fee. CollectiveX has similar features, and if you explore open source software, you’ll find that the options are even better.

The most important thing to know before setting up a social network is what fits your goals and what is possible. That means you need to be clear about what your goals are and you need to do your research.

Here are 4 tips for creating your own social networking site on a shoestring budget.

1. Do your research

Be aware of what is possible. Do you want a social network hosted on the servers of another company or do you want to host yourself? Hosting on another company’s servers may limit you. Hosting on your own servers may require you to have some technical skills. Explore what’s possible by typing “creating your own social network” into the search engine of your choice.

2. Understand the cost of free social media solutions

You get what you pay for is as true on social media as anywhere else. Building a social networking site on a shoestring budget means you’ll have to make some compromises. For example:

o You may have to live with the company’s ads on your site (they get the revenue, you don’t)

or you may not have a domain name, which could hurt your organic search engine traffic,

where you will have limited branding options,

or you may be limited in what you can put on your site (such as certain scripts or even products) Scripts are often needed for things like tracking visitors to your site. “Free” can quickly become less appealing if you don’t have all the features you want on your social media site, so keep this in mind early on and decide if it’s something you and your business can live with.

3. Assess your technical skill level

Do you know the difference between your .php and your .asp? Or do the words “add this html to your template header between the opening and closing tags” make you break out in a cold sweat and a blank mind? Then either choose a system that is completely DIY (and that can be limited) or budget money to hire someone who has the technical skills you need.

Many people underestimate the need for technical skills in the future, because they don’t need them at first. Whose. You’ll gain some technical knowledge as your site grows, and you may find that you have no desire to spend time on technical tinkering. Consider this from the beginning. There are plenty of trained people who can help with the technical side of social networking sites, they don’t cost an arm and a leg and will save you a lot of headaches down the road. Hiring a skill you don’t have is a wise investment in your business.

4. What business model do you want to follow?

Different business models require different approaches. For example:

o Do you plan to build a site that generates revenue from advertising revenue, sales of your own products, or affiliate sales? Then you’ll also need ways to collect payments, promote products, and build your affiliate network.

o Will your network be a fee-based membership site that provides content for its members? Then you’ll also need to have a system to regularly deliver new content, collect fees, and also a way to keep your members informed whenever you have new content.

o Do you want to generate publicity, noise and awareness for your business or a particular non-profit cause? You will need to know how to use existing social media and tools to generate potential traffic and followers and create viral content.

Whatever your answer, take the time to assess your strategic goals, your options, and your skills before you jump in and set up your social networking site. Look at what others have done, especially when researching your software options. Contact them and ask about their experience, especially how they found the startup phase and how long it took them to get their social network up and running. Everything you want to do has probably been done by someone… take advantage and learn because their experience can save you a lot of time.

Setting up a social networking site (and the necessary social networking apps) doesn’t have to cost thousands of dollars. However, it requires planning and research. Success is the result of being strategic about your goals, figuring out what’s possible, deciding on the best social media model to achieve your goals, and budgeting some resources to hire the help you may need.