How much money does it take to start a business?
I often get asked how much money it takes to start a business, or I speak with someone who wants to start a business but hasn't because they think it will take a ton of money.
We've heard for years "it takes money to make money", well my response is yes, no and maybe.
Years ago it would cost a small fortune to start a business, any business because everything included real estate: an office or storefront, furnishings or fixtures, equipment, utilities, maybe products, and that's not even including the high expense of marketing.
If you didn't have a trust fund to draw from you would need to create a business case and do your dog and pony show from lender to lender to get a business loan.
Today it's possible that you could still have similar circumstances, but the internet has created a VERY low entry to business. Now, if you have a business that sells physical products then your situation may be different, even without a brick and mortar physical presence, there are expenses to procuring products that you just don't have with services.
Because my expertise is service based businesses, and more specifically, online service based businesses, that's the perspective the rest of this is going to be from. Not that you couldn't apply it to physical products, you certainly could, but just know that there may be other things you may need to keep in mind that I won't touch on here.
Now moving forward, Just much do you need to spend? Well that really depends on you. Can you do it for free? Probably not, but you CAN do it for minimal cost. Back in the day Hewlett-Packard started with $538!
So what are the things that will impact how much you spend?
The biggest factor is TIME. No doubt about it, starting a business will have you hustling for a while, but if you have a bit of discretionary funding then you can trade some of that time for dollars and pay for services or products that will save you time. If you don't then you'll can absolutely DIY it. Some examples are:
Building a website
Social Media Management
Developing your brand
Building your list/audience
Marketing & advertising
Premium vs Standard vs Economy - When we're just starting out we feel that we need the best of everything and all the bells and whistles we can find because that's what our clients want to see right? Well no, they don't, what they do want is a solution to their problem and they want someone who can provide that solution, is relatable to them, and has a professional presence and doesn't come across as sketchy.
A great example of this is your website. You have a ton of options when it comes to creating a website:
Hire a web designer: this option will be the most expensive, and your business can and probably will pivot drastically in the early stages of your business that you will probably wind up having to spend more money hiring them again redesign it because it probably won't be built in a way that you can do that yourself.
Build a WordPress site yourself. This can cost you as little as $5-$10 per monthly for hosting with a web host like HostGator, you can also spend money on templates (themes) but there are tons that you can get for free. It's the learning curve that could cost you hours and hours of time figuring it all out and getting things the way you want them. Tip: You now know that your business will change as you figure it all out, keep it very simple and you'll be good to go. The benefit of a WordPress site is that the functionality you can add to it at any time is practically unlimited!
Or you can use a drag and drop solution like Wix, Squarespace or Weebly. Monthly fees run from $5 - $25 depending upon the features needed and both Wix and Weebly offer free options. Keep in mind that free options will usually have some sort of advertising or branding on your site that you can get rid of for $5 or $10 a month. My favorite of these is Wix because they have hundreds of free templates and they have 3 different options for building your site depending upon your level of knowledge, from drag and drop to coding.
Marketing & Advertising - Now here is where you can spend your dollars instead of that web designer, and spending money here can have your business off the ground much quicker, but it's not absolutely necessary.
For example, you know that your potential clients mainly hang out on Facebook, so you can create a valuable freebie, write some copy, or record a video, that makes you relatable to your client base and spend $5, $10, $50 per day or more running a Facebook ad. It will take some time to get it right, but this is probably the fastest way to build up an email list of people you can actually sell something to at some point.
Instead, you could spend time nurturing and positioning yourself as an expert in other people's Facebook groups, in your own Facebook group, you can attend and/or speak at local MeetUp networking events, and leverage your existing network to build an audience as well.
Tip: Your marketing & advertising efforts could be a huge waste of time and money if you haven't done the proper legwork upfront to really know your potential clients.
Ultimately, you can pay thousands of dollars to hire a web designer that will create an award winning website for you, but that alone will NOT get you clients. But if you pay GoDaddy $12 for a URL, add another $2 to get an email to go with it (because let's face it email@example.com does look sketch) and host your site for $5 per month on a Wix website you've spent less than $75 and will have a professional online presence for a year, and spend what money you do have on advertising or something else that is not your strong suit.
And lastly, where do you find the money to do this? Well that depends on you too. Just like finding the time in your busy schedule to work on your business, you may need to prioritize your expenses to be able to divert some dollars to it as well. It's a well-known fact that whether they have it or not, people spend money on what is important to them, such as:
$300 per month for the premium cable package over $8 per month for Netflix
Upgrading your cell phone every time the latest and greatest model comes out
Social life with dining out, movies etc
Vices like shopping, alcohol, or cigarettes
Monthly gym membership over exercising at home
Name brands over generics
There are ways that we can save money each month if the reason we want to do it is a priority for us. And if you look at those examples, most of them will also free up time for you as well!!
So the question is, is building your business and a future for yourself and your family a priority for you?
That's it for now, so go take some action and create your incredible life.