How much?

[Evan]

How much capital did it take for you to start your first business? Did you have these resources, or did you get outside help? Through loans, or do you have other investors?

[vangogh]

I wouldn't advise it for others, but I started with no capital. I didn't really need much money to get started. All I really needed was a computer which I already had. If I were smarter I would have had more money saved since I wasn't exactly taking in any revenue in those early months.

I guess I did have a little help here and there in paying the bills from family, but there was never a specific set amount of capital. It was more like "Can someone help me pay this months rent, please?" For whatever reason my family must like me and believe in me since they did help.

On occasion in the beginning I also would so some part time work that wasn't related to my business. I helped a couple of people work on fixing up their homes and other kind of labor to help make ends meet.

Mostly though I self financed everything and started with very little.

[Patrysha]

My first business I started from the household budget...it was a home childcare, so there wasn't a whole lot that I needed to get going other than registration fees, updating my first aid and buying a few safety products that I didn't bother with for my own baby...

Everything has been started on a shoestring from the household budget and then growing through the profit brought in through the business.

[Spider]

I started with UK£7,000 at the time, conversion and inflation, probably about US$20,000 today. That was my own cash, no bank loans, partner and family investors added about $10,000, making $30,000 to start.

Although I started with one worker, we set up to be a bigger company - incorporation, offices, buying equipment, etc. Very soon we had 4 staff and 4 workers. Top heavy - true, but we decided if we were going to grow quickly we had to have the staff first and hire employees as needed. It worked and at our peak we had 40 men in the field.

[orion_joel]

I followed the same strain as Vangogh, with basically no capital. This is to say that i did not need to purchase anything extra to start my business. I used the computer and printer that i already had. Spent under $200 on registering the business name, and i was in business.

I did have to use savings to purchase stock, however this was on the basis get an order buy the stock, get paid for it. So i was not really out of pocket for anything unless i had an order that was going to pay the money back in.

While i have to agree that this is not the ideal way that i would suggest to do things, it still comes back very much to what sort of business you are planning to operate and what the needs of that type of business are. If it is a business that requires a office setup and staff straight away then the capital needs are going to differ greatly to the needs of a business that has little need for additional staff, and any fixed office location.

[Ad-Vice_Man]

$150 to register with the state. A computer I already had. A cell phone and plan I already had. Everything else was purchased after having my first client. so thus... not a start up cost.

[GreaterVisibility]

My wife and I had been cleaning for someone else, subbing out work and using their supplies and equipment. They lost some of the car dealership contracts and we were out of work. We took our last checks and bought some business cards, equipment, supplies, and then hit the phones to contact potential customers. I don't know now exactly what we spent, but I'd say $400 or less to get going. Although having never cleaned an apartment (we cleaned offices, not things like ovens, refrigerators, bathrooms on any regular basis) we decided that was the industry to shoot for. Day work, somewhat regular volume of work as people are always moving, and lots of potential clients out there. I made 5 phone calls, got 3 appointments to meet the management, and landed 2 large communities, one being a property management company with many communities spread around.

Eight years later, and we're still cleaning in our own business, though we eventually switched our focus to cleaning private homes. Not bad for $400 or so.

[vangogh]

I think we're mostly showing how you don't necessarily need a lot of money to get a business going. Looking back over the thread only Frederick spent more than a few hundred to get going, though of course it depends some on the type of business you want to start.

[orion_joel]

I think the main key in how much it costs to get started in your business can be something that can be confusing and it very much depends on the business and the person starting it, and also to some extent what exactly you want from your business.

Now, to expand on what i have previously mentioned above, while it only cost say roughtly $200-$300 for me to actually get started, this is based on what i physically paid out at the time i decided to start my business. What this does not really account for is the things that i already owned or improvised until i had the money and the want to spend it for that purpose.

Before i started my business i had spent $3500 on a laptop, over $1000 on a desktop computer, i owned a printer which cost me $100 or so. I had paper, and ink and pens and envelopes, and all that sort of thing because i had a need for it other then business. This is not to say that i needed it to start a business but they are all things that when you have a business you start using. Later on down the track i spent $2000 on a colour laser printer, which if i had the money at the start i would have purchased up front when i started the business.

So you could say that it really cost me $5,000-$10,000 to start my business, however the costs were not really directly related to doing so. While it is good to look at things and i love to be able to say that i started on just a few hundred, yet in the 6 years i have been in business turned over $600K or more, it is primarily based on the perception of the experience. I am not trying to discount the fact that people see they can start business for little more just create an extra bit of discussion, on your thoughts on this point.

[vangogh]

That's true. Even though I didn't spend much to technically get started I had previously purchased a laptop and software and a printer and office supplies. All stuff I had here before going into business.

Ans I agree it depends on what your business is. It would obviously cost more if I needed employees and an office to start. It would naturally cost more money if I needed a physical store or a plant to manufacture something.

[Spider]

...I agree it depends on what your business is. It would obviously cost more if I needed employees and an office to start. It would naturally cost more money if I needed a physical store or a plant to manufacture something.I was about to raise this very point, Steve, when I saw that you had already raised it. You picked me out as the only one who had spent more than a few hundred dollars to get started, but how many who spent little actually started a big company? I get the idea that most, even now, are one- or two-person busineses. I started with the intention of being in major construction -- not one-house-at-a-time, but office buildings, apartment complexes, hotels, schools, etc. One is not going to start a business like that on a few hundred dollars.

Mind you, that is not to say a $200 start-up cannot grow into a large business, but it would be impossible to move straight into being a large business with $200.

[vangogh]

I only mentioned you since the rest of us posting here hadn't spent much. Obviously some businesses do need more start up costs than others and I know your business is larger than most of ours.

You're absolutely right that you can't start or grow to a larger business without some investment. It's interesting though how little you can start some businesses. Without checking I suspect that most of us who had little start up cost have online businesses and we're probably either the entire company or there are one or two employees. That's certainly my situation. All I needed to start was some basic equipment that I already owned and my own knowledge. Over the last year though, I've been looking to grow and so have been investing more money toward that end.

This is one of the ways the internet has changed things for good and bad. It's great that some can start a business quickly and easily without a huge investment. On the other hand you end up seeing a lot of garbage businesses because it's so easy to start one.

[Spider]

I really don't think it's any easier today than it was in the past. If you wanted to be in business before computers were invented - let alone, before the internet - you just painted a sign and hung it outside your front door. Or went around, knocking on doors, offering to do such-and-such work. You didn't even think about incorporating or getting a DBA, you just started. You borrowed some cloth from a friend and sold it one piece at a time in the local street market. You bought some produce for a few pennies from a local farmer and sold it by the side of the road. In fact, that was the principle behind all the old, large businesses that we know and love (?) today - JCPenny, Sears Roebuck, General Electric, Shell Oil....etc, etc.

In fact, due to the increase in regulations, laws, zoning, public safety, etc. it is probably a lot more difficult today to start a business than it ever was. But it's not difficult and you build what you can with the resources you have.

The difference, I would say, is attitude. Today's schools - for all the complaints levied against them - produce a greater level of independence and a desire to better themselves in children than ever before. Sure, there is still a lot of work to do in that regard, I don't doubt, but I believe it is better than it was in the past.

Attitude trumps all!

[vangogh]

I think it's still easier now with the internet. Granted you didn't have to spend a lot to go door to door or sell at the local street market, but that's still more than sitting in your home and working on a laptop.

You're less constricted by time now. The local market had specific hours when it was open. You can sell your ebook or your software while you sleep.

I'm specifically talking of business online here. The situation offline may have more complications now, but online people can write a few pages of content, slap AdSense on the pages and consider themselves to be in business. That may not be the most sustainable business model, but it's still a way many people jump into business online.

It's true that people are more independent now. I couldn't tell you if it's the school system since it's been a long time since I was in a classroom. I suspect the internet has something to do with it as well.

[orion_joel]

When you consider business online, i think it is even less costly to get started. In reality, to start a business online really i do not have to register a business name. I could in reality start a business for absolutely no cost, not even the other associated costs i mentioned.

I can walk into the local library here, use the internet for free, as long as i am a member of the library, sign up for a free hosting account or blog, and recommend sites i joined as a an affiliate, admittedly it may or may not end up a good business, who knows but it could be done for free. You can take it another step with spending maybe $30 or $40 a year registering a Domain for $10 and small and cheap hosting account, again using the public library internet access.

I think the key to remember with internet based businesses is that if you spend more money there is a chance that you will have more success however you can do the same thing and have it cost $100 or $10,000 on the internet and it may not mean you succeed any more.

When you take it offline, i think that it can be much more difficult to overcome the hurdle of the cost involved in starting a larger business. Almost anything that requires an office or store, immediately takes anything from $20K per year in leasing, fit-out, stock, staffing, services (Phone, power, ect) all add more to this. I think that these sort of costs is what makes online business so attractive to many people.

[greenoak]

evan ,we started with a few hundred and on our own property with no overhead.....the good thing was we were discovered early in a super hot market and we offered something very much wanted...... we were willing to sell a very popular thing, antiques, at bargain prices and with a very low mark up for us..we had a huge turnover and reinvested ....
i dont think a bank would have given us money...our plot was to buy from dealers to sell to dealers.....plus antiques maybe look like junk to bankers...anyway we were outside the box...
we were lucky, or whatever you call it, to connect to very good buyers right away..buyers who would buy over and over again from us....buyers who made money from us over and over...
we made our living off it by the 2nd or 3rd yr....slim as it was back then.......
the bad part for us was if we did a good job picking, as we call it in the antique world, the buyers would never refer anyone else to us...they wanted all the goodies....
hope there is something relevant for you in this ...our accountant said it was an unlikely plot...... ...ann

[BillR]

Our first company was started out of a basement with a $2000 advance on a credit card. It was computer consulting and that fee carried us until we recieved our first check for our services (80 hours X $75/hr) = $6000. The guy who received the advance was eventually paid back in full.

Our second company was started with $100,000. That got us two employees, a small office, and an immediate start for sales. We were bought out of that venture by the original two employees (also partial owners) after the 2nd year for a decent sum.

Although I am still part of the first company I am planning the third company now. I will in some way, shape, or form exit the first company and then use up to $250,000 to start the third one. My immediate first costs will be:

-Office - $2K/mo
-Infrastructure (network, email, file server, CRM software) - $20K up front
-Training - $40K up front
-Staffing (3 people - cost unknown).
-Misc office equipment $5K

[orion_joel]

Bill, that is a perfect example of building one business off another, to have greater means to start from a position that requires more financial needs.

I am in a similar position fairly small upfront for my first business and it has provided some good returns. However while i am in a similar position to start a business with similar capital to what you mention for your second am at an absolute standstill on just what business to go into.

[BillR]

Bill, that is a perfect example of building one business off another, to have greater means to start from a position that requires more financial needs.

I am in a similar position fairly small upfront for my first business and it has provided some good returns. However while i am in a similar position to start a business with similar capital to what you mention for your second am at an absolute standstill on just what business to go into.

Sent you a PS off-list. I think you'll like it.

[orion_joel]

I almost got caught on what PS was, but figured you meant PM.

[BillR]

I almost got caught on what PS was, but figured you meant PM.

Yep - typo :)