How To Starting A Business
Starting A Business for under $100
Just how much does it require to Start A Business? Many potential entrepreneurs have found their aspirations to start a business reeling back to reality after starting to research how much it may take to form a business. Like many Americans right now, we’re more interested in finding out just how little it can take to start an online small business correctly.
Depending on your target industry and which sources you’ve polled, you’re idea of launching a business may be to write a grant to a reputable venture capital firm after some considerable research and preparation, garner a sizeable sum of working capital, hire a development team, hold an IPO, implement a national marketing campaign to promote your brand, and begin enjoying the fiscal fruits of your labor. However, starting a business can be done successfully for much less, in fact, you may be surprised to find out just how affordable it can be.
Before beginning a budget outline however, several important maxims should be noted. First, people are generally interested in being self-employed because they have an idea they feel could make money, because they don’t like working for other people and want to be the boss, because they feel they have gained enough knowledge to be successful or have the ability to beat the competition, or because they have a passion for something and simply cannot contain the desire to follow their heart.
Of all the basic, generalized wisdom looming in cyberspace on the subject of Business Start-ups, I would admonish proprietors to carefully weight two pieces of advice: first, if possible, start a business doing something you’re passionate about. In other words, don’t start a business just to escape your self-professed intolerable working conditions or even to get more money – both reasons, though powerful intial catalysts, will ultimately begin to wilt in the long, enduring heat of running a business after it’s inception. Inspect your motives…your business concept doesn’t have to be the focus of your belief system or foundation of who you are, but it should be something you generally enjoy and have some passion for, and something that utilizes your greatest aspect of your personality, talents, and skillset.
Second, don’t start a business on a whim. Even if the transition to self-employment feels whimsical, igniting an almost-childlike feeling of adventure too often missing in responsible adult life, don’t act upon that impulse without some tough introspection regarding your long-term life goals, family considerations, and level of interest. Though initially stirring, self-employment is at its core, just that: providing yourself a job. If the day to day work and production of your business won’t honestly provide you moderate happiness and fulfillment, stop dreaming, leave your coworkers some coffee, put down this article and go back to work. The longer hours, additional workload, frustrating new learning curve, and inevitable mistakes historically tied to self-employement may leave you yearning for your old job, but stuck in a deep hole of monetary and relational debt, as creditors and lonely family members hunt for you.
With those stark warnings in place for your consideration, let’s proceed with an inspection of what it takes to start a business, and how inexpensively it can be properly accomplished. I say “properly” here because we do not want to consider ineffective, illegal, or unlikely business start-up methods that have will create difficulties down the dusty road of commerce, or create businesses without any staying power that are likely to topple under the slightest market adversity.
Forming a business involves, but is not limited to, the following essential basics: selecting your products and services, determing the cost of production – i.e. the equipment, materials, labor, expenses, and human capital required to deliver your product – conducting market research, setting up your business structure, getting the required licenses, insurance, and bonding, obtaining federal and state company tax id’s, and marketing your new business. Each of these categories lightly identifies business basics that each represent enormous pillars of commerce that must be recognized and carefully climbed to reach success and which could all easily topple and crush your new, optimism-strong, structurally-delicate company.
Though product catalog and market consideration may preceed this step, actually forming your business will first require that you choose your business form, such as a sole proprietor, partnership, LLC, or corporation. The structure of your business bears serious tax and legal implications and should be carefully researched. The cost can vary depending on your state and industry, and whether you do the submission and research yourself or pay a professional to do it for you. Forming a corporation in our state requires an $80 fee and a form submitted to the Secretary of State; paying an accounting firm or business professional to submit your application can exceed $600.00. Most importantly though, in the quest for an affordable start-up option, electing to be a sole-proprietorship may cost as little as a $10 registration fee in your state. Choosing to operate as a sole-proprietor may offer less legal protection than a corporation and will require paying a 15% self-employment tax, but it is also the easiest to manage from the blocks when you’re facing a tight budget.
Once your structure is registered in your state, you’ll need to obtain a federal Employer Identfication Number or EIN, which can be your social security number by default for sole-proprietors. You’ll also need to register with your state tax withholding department after receiving your federal EIN number, but both these can be done applied for freely.
Depending upon your type of business, state laws, and company employees – if any – you may may not need to require any insurance or bonding initially. For sole proprietors without any employees you do have to carry workers compensation insurance. Licensing, bonding, and insurance requirements will vary by state and industry, but for online retail companies, none of the above these may be required.
Then there’s obtaining everthing needed to actually deliver your product or service. For a local retail company, it may be necessary to rent a commercially zoned retail building and purchase the products and furnishings to fill it. For service companies like a plumbing or mechanical company, you may need to purchase tools, trucks (or some form of transportation) and materials before ever getting a job. However, still roving for the most inexpensive means of building your business dream, starting an online company can have much lower associated costs. To be an e-tailer you need a domain or url (your web address), a hosting solution, a website, a shopping cart software, and a merchant account to accept payments.
There are numerous ecommerce companies offering easy-to-use, ready-in-no-time ecommerce stores that make it failry easy for inexperienced entrepreneurs to succeed. One I like offering high-quality, professional websites, hosting, domain, store management software, shopping cart, and support is AWDCommerce (http://www.awdcommerce.com), a Montana based ecommerce software development firm and web design firm. For $39.99 per month, which includes your site hosting, they provide you with a quality website and all the tools you need – from ecommerce management to marketing and analytics – to operate your business.
With inexpensive, faciliting companies like AWDCommerce, choosing to start with an online company may be a wise choice with a much lower initial investment. While I don’t advocate starting a company half-heartedly working nights in your attic office, developing an online business can be done while holding another job, and for some, may be the only real possibility of ever feeling the winds of occupational freedom.
When it comes to marketing, online businesses may gain another advantage over locally based businesses, not only because they can sell to a greater demographic – a legitimate consideration in an ailing economy – but because online search engine optimization, cost-per-click, email, and viral marketing campaings can be conducted initially for very little – probably considerably less than local print advertising would cost anyway. Resources are virtually unlimited online and for an entrepreneur willing to submit themselves to some additional education, they may be able to gain valuable visitors for free. Certainly local businesses can seek grass-roots style means of getting the word out as well – creating flyers, making pamphlets, etc. – so online businesses don’t necessarily own my vote here.
All votes cast though, Starting An Online Business may be the most affordable option for those obligated to extreme penny pinching, and with all-inclusive ecommerce available to help with a host of professional services, establishing a believable brand and quickly creating a professional catalog may be significantly easier than trying to compete with local businesses.
Plus, along with the excessive splendor of working in your pajamas, operating a web store may carry several additional advantages over any other form of business. All businesses will have to be formed in your state and will require a tax id number and all businesses will require bookkeeping, customer service, etc. However, getting a website up for an online store can be significantly cheaper than renting an office – and with less long term obligations.
Sure, there are companies willing to charge you your arm and leg for a website design, but you’re eventually going to need those, and others, like AWDCommerce, can provide a stunning professional storefront for a very small investment. You’re home can be your office, if you have a decent workspace safe from interruption, and you can create a professional site online that acts as your visible company headquarters. It’s just easier to generate brand confidence online than it is renting an small, ageing office space in the old part of town that still exceeds your budget as you try to quickly create local business awareness in time to get your first sale before paying your next rent installment.
If you don your plaid pj’s and spend some time digging in Google, you’ll likely uncover a similar story when it comes to marketing, developing a product catalog, and so on. Though it will still be hard and success will still probably depend upon your effort and business acumen, e-tailing has also become fabulously formulaic. That is to say, so many people have done it, and so many companies offer it, that the system is down pat. You can sign up with one drop-shipping distributing giant who will provide you with all the product information, and you just sell. Much easier than putting together a competitive brick and mortar. Besides, having less cost involved means you’ve got more time to pursue your dream before the debts pile too high and your spouse gives you an ultimatum.
In any event, when it comes to starting a business on a budget, ecommerce has the edge – becoming an web retailer can be achieved for less than $100. For those cubicle-weary few, pensively eyeing the boss’s window office, such manageable start up costs may seem like a better way of blowing a paycheck than the usual weekend fare.
About the Author
Christopher Pickering is a previous web-retailer and resident marketing specialist for a ecommerce software company.
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August 31, 2010 11:53 pm | 
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