I’m asked fairly frequently about the cost of starting a home-based business. Some people are interested in joining an already formed company as a salesperson, selling items such as jewelry or kitchenware through home parties, catalog orders and online. Others are interested in creating a company from scratch. Perhaps they design clothing or do photography.
The amount of money that it takes to start a home-based business really fluctuates and depends upon the type of company that you hope to open. Service businesses are generally cheaper to start since you are not creating a product and therefore don’t need to purchase materials, storage and, possibly, to pay others to help make the items.
With a service-based industry, start up costs revolve around what it takes for you to market and advertise, as well as any equipment and supplies that you’ll need. A photographer, for example, would need a camera, backdrops, lenses, software and other equipment as well as business cards, flyers, brochures, advertising space and additional marketing materials.
When I talk to new companies about start-ups I generally list things that I feel they would need in order to make a go of it, and I tell them the approximate price of each. Some of these include:
Website: Typically $750 and up depending upon your needs, plus added costs for hosting and any bells and whistles that you might want with your site, such as a shopping cart or flash intro.
Business Cards: $50 and up for design and printing
Brochure: $250 and up
Press Release: $150 and up
Equipment & Hardware: Varies, but you’ll likely need a computer, fax machine, printer, scanner, dedicated phone line and Internet access
I ran across an article by Score that stated that most home-based businesses require a $10,000 investment.
If you are considering opening a home-based business, first make a list of the required expenses, including both one time fees like advertising and those that will reoccur each month, such as phone line and Internet access.
Next, determine how much money you would need to make in order to clear these expenses. And remember that each month, new purchases will arise. For instance, with my company I’m in constant need of some type of equipment or software, as things change so often in the field and I’m always replacing software or adding equipment.
Finally, figure out how long you can continue to either break even or actually lose money before the company would go bust. Very few start-ups make money in those first few months, as you are still covering what you lost when you opened up your doors. Can you afford to go several months without making any money? If not, you might want to save a bit more before you take the plunge into business ownership.