Starting a business always costs something. Anyone that tells you otherwise isn’t taking everything into consideration. The only “business” I can think of that doesn’t require an output of cash is a blog (and only if you don’t buy your domain, a nice theme, etc) – but even that takes enormous amounts of time so it still costs something. The type of business you choose to start will dictate the amount you will need to start your business.
If you are starting an independent service type of business then your start-up costs can be minimal. I’d budget around $250 – $500. This should be enough to cover the basic start-up costs to promote yourself and be official. There are many “extras” that will quickly bring up your costs. For example, if you want a professionally designed logo, website, and/or promotional materials that will instantly add hundreds – if not thousands to your total. If you are starting a location-dependent business then your start-up costs can vary wildly from a thousand dollars to millions. It’s hard to tell you exactly how much you should budget to get started. To give you an idea of costs, the best thing I can do is share what it cost me to get each of my businesses started:
- The Advancement Company – This sole proprietorship does not have a location. When first getting started, the only out of pocket costs were for my domain ($10), hosting ($200), business cards ($75), assumed name fees ($45) and some basic web design help to get my website started ($200). I already owned DreamWeaver, which I used to start my website. Over time I did invest more to have my website updated, purchase evaluation analysis software, etc. So, it was around $530 to get started.
- Deckci Decor – This Limited Liability Corporation was operated out of mine and my business partner’s homes for the first year. When we first started, we focused on offering just chair covers, sashes, and table linens. We wanted to keep it simple. Because we operated it out of our homes, we were able to save a lot of money and have minimal start-up costs. How did that work? Well, we met with clients at coffee shops or their venue and we had them pick up and return to our homes (unless they paid for delivery/pick-up). We already had washers/dryers at our homes so we didn’t have to pay anything extra for a laundromat. To cut down on costs, we ordered a sample of all the items we planned to offer to show clients – but we didn’t actually have the full inventory until we got their final count. This meant 1) We didn’t have to pay thousands right away to stock everything and 2) We didn’t order more than we needed. Clients gave us a non-refundable deposit when they booked, so we were able to use deposits to pay for orders. This meant all we had to pay for start-up was: website/domain ($210), samples of all items we planned to stock ($300), business registration/assumed name/llc ($300), and marketing/promotional materials ($300). So, it was around $1,110 to get started.
- The Woof Room – This Limited Liability Corporation was location-dependent. We planned to offer dog daycare and boarding, so had to have a space – and a large one – to accommodate our plans. Starting a location-dependent business is the most expensive and risky because of the location, leases, etc. But, with great risk comes great reward 🙂 The Woof Room cost around $54,000 to get started. That is broken down into rent + deposit ($9,000), renovations/build out/equipment ($40,000), business registration/insurance/city permits ($2,500), and marketing/promotion/website ($2,500).
Hopefully this is helpful for you and gives you an idea of how much you will need to get your business started.
Photo Credit: Alison Bowden