Investing in an actual business is much different than investing in real estate or stocks of a larger public company. Much of the wealth that citizens hold is built upon owning a small to medium size business. The size of the business is all relative to the location and genre of types of business you are involved in. Regardless of the size, running a business takes time, effort and a skill that not all people have.
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.