Start a business for less than $100: Fact or Fancy?

How much do you really need to start a business? Many budding entrepreneurs have given up in dismay after discovering all the various and sundry expenses that must be covered even when starting the most rudimentary of businesses. In this time of economic upheaval, we are here to tell you that it is still possible to start a business on a shoestring if you do it right and choose the right business.

Depending on where you’ve looked and who you’ve asked, you’re idea of launching a business may be to apply for funding from a  reputable venture capital firm after some considerable research and preparation, accumulate a sizeable sum of working capital, hire a development team, launch an IPO, implement a national marketing campaign to promote your brand, and begin enjoying the financial fruits of your labor. This would be a lengthy, complicated process.  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, there are certain factors to take into account. First, people will generally prefer to be self-employed either because they have an idea they know will be profitable or because they don’t like working for other people and want to be the bossor again because they feel they have gained enough knowledge to be successful or have the ability to beat the competition. Finally, they may just have a passion for something and simply have to try their luck.

Of all the stock wisdom abounding on the Internet on the subject of business start-ups, I would recommend that prospective entrepeneurs should carefully consider the following 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.  Evaluate your motives: your business concept doesn’t have to be something earth-shattering, but it should be something you generally enjoy and have some passion for, and something that speaks to ans is in tune with your personality, talents, and skillset.

Second, don’t start a business on a whim.  Even if the transition to self-employment seems like an imperative, igniting an almost-childlike feeling of adventure, too often missing in responsible adult life, don’t act upon that impulse without some tough self-interrogation regarding your long-term life goals, family considerations, and level of interest.  Though initially exciting, 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 co-workers 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 disenchanted 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 may 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.

Starting 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 steps identifies certain business basics that represent substantial stages of business that must be recognized and carefully climbed to reach success and which could all easily topple and crush your delicate, fledgling enterprise.

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 most states and provinces requires a fee and a form submitted to the appropriate authority; paying an accounting firm or business professional to submit your application can be quite costly.  Sole-proprietorship may seem optimal as the least expensive option.  Choosing to operate as a sole-proprietor may offer less legal protection than a corporation and may require paying a 15% self-employment tax, but it is also the easiest to manage out of 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 even without any employees you may still 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.

Next, you must go about sourcing 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.  No matter how much you try to scrimp on expenses, for a traditional bricks and mortar business, you are going to need to shell out considerable amounts to get your baby off the ground.

We started off with the premise that perhaps you could start a business for less than $100. Hopefully, you have already come to the realization that this is probably unrealistic, although not totally impossible. You have also probably realised that it is better to enlist the aid of a seasoned professional if you are not totally sure of the necessary steps. AIM and its team of executive mentors have helped countless entrepreneurs and would-be small business owners overcome the obstacles to success and establish thriving businesses.

We are ready and willing to assist you in any phase of your business start-up. Simply use our contact page to set up a free, no-obligation introductory consultation.