Whenever people start telling me their business ideas I start going into over drive almost feeding off their excitement and intensity. Talking about starting a business or building an idea gets me pumped. I start spouting off pros, cons, asking a ton of questions and am generally happy for that person and their breakthrough idea. Start up Business costs are always part of the discussion.
The September 2010 Fortune Magazine had a great chart comparing starting a business today and 10 years ago. The example was for an electric bike store and included five categories:
- Incorporation – Then was $1,500 now is a couple hundred bucks online
- Branding – Then was $20,00 now is $7,000 with the use of freelancers and open source software (almost EVERY single blog you read is built on free software)
- Marketing – Then was $75,000 now is $1,000 with the use of social media and google AdWords
- Employee Costs – Then was $792,000 now is under $20,000 with the use of freelance writers and paypal
- Rent – Then was $175,000 is Manhattan Retail Space now is under $10,000 with the use of a P.O. Box.
To be honest the “now” numbers actually seem high. I really believe for most small business ideas you need a lot less than the $40,000 in the “now”example.
Creating my Next Small Business Venture
I like creating small little ventures to complete my multiple streams of income. I just don’t believe in these small ideas enough to think they will replace my day job, but they will increase my ability to do exactly what I want with that day job.
A couple months ago I was out with a couple which were pregnant (they subsequently had their child on July 11th) when the idea of way came to to create an online baby pool website for them. I made a non-automatic pool site where people would come and make their guess as to when the baby would be born. As the guess came in I would get an email and then add it to the calendar for all to see. It was a lot of fun, but I figured if I could create this initial site in 10 mins over a couple beers, why couldn’t I create a site where everything was automatic. It turns out it was a lot harder than expected!
However, I really believed in the profitability of this site and thus created a game plan to launch the site (if there is an interest I can go through the details). The point of this post was to share with you, that you don’t need tens of thousands of dollars to get your next idea of the ground. The internet has changed all that! I was able to create that site for under $500 (granted it isn’t ready to go live yet, but I am proud of it so far). Will the site be a huge success? I don’t know but I do know that it felt great stepping up to the plate and actually swinging rather than just talking about it.
$10,000 for a PO box? Shouldn’t that be more like $100?
Keep building those streams of income Evan. Little streams eventually turn into a river!
I LIKE THAT! Little Streams turning into a River! I am going to write that somehwere
Glad you like it! I’m actually working on a new post on exactly that topic. 🙂
Another thing is that if you actually open up a small business somewhere, lots of places are allowing people to rent an area on a month to month basis because of the situation of the economy. So honestly, if your small business didn’t work out you wouldn’t be in any sort of a bind with your lease.
Month to Month leasing opportunities should be out there…Great point
I really really like this post. Why? Because I’m in the middle of my own little extra online endeavor. I met with an OLD OLD friend of a friend last week, and he really opened my eyes. Let’s just say I have a lot of work to do:)
Goodluck on the business, keep us updated!
Keeping you updated?! I’d love to hear about YOUR endeavor
$200 a year for my PO Box! 🙂
Yeah I think their numbers are a bit off
Cheaper, yes. But no less risky. According to the SBA, about half of new businesses make it through their first five years. Don’t quit your day job!
Well…that’s assuming you still have a day job. 😉
1000% Correct on risk. But you miss a 100% of the shots you don’t take AND if that shot doesn’t cost you your home or next meal all the better.
Great topic. I’m new to blogging and not really doingn it for profit (yet?). But I’m brainstorming ideas for an additional income stream. I’ve been slowly putting together the list of low-cost things I could do that have the potential to grow. Some folks get hung up on the “how.” That was historically my problem too. I’m now focusing on the “what” and then I’ll figure out the how.
Congrats on starting the blog. I love running my site. If you ever need any help at all let me know (just taking a quick look at your site – switch to wordpress NOW it will only get harder and harder).
One reason why starting your own business is today cheaper than ever before results from our having access to a global pool of workers via the Internet and overnight shipping.
We can outsource a great deal of information-making work and streamline many operation processes both because of technology but also because of access to cheaper though competent labor cross-country or cross the world.