Starting your own business
As strange as it sounds, a downturn in the market can be a great time to start your own business. Generally when things are a bit tight, many companies will start to look at ways to make their businesses more efficient, and one way to do this is to use smaller suppliers who have lower overheads, and can still maintain a high level of quality.
Of course, simply being really good at what you do isn’t going to be enough to build a successful business, there is a whole lot of other stuff you will need to think about before you can take the plunge.
Step 1: What are you going to sell?
It isn’t a bad idea to know what you are going to sell before you start a business, otherwise making money can be quite difficult. There are two types of business that you can consider: Product based, where you sell things (either real things like hand soap, or imaginary things like software); and service based where you sell your time and expertise. Both have their pros and cons.
Product based industries can make money while you sleep!, especially if your clients can purchase what you are selling without your direct input. Obviously, you will need some sort of product, which will incur some sort start up cost. If you are selling real products, this is a real cost – many manufacturers will make you buy stock upfront.
Generally, service based industries have a lower start-up cost, assuming you are already an expert in what you do. All you need is some willing clients to engage you for your services, and the time to provide those services. The obvious downside to service based industries is they are generally time dependent, and unlike hand soap, you can’t buy more of that.
You have to spend money to make money
When starting a business, there is a rule of thumb that says you should have three months worth of running costs in the bank. You can do some pretty quick calculations to work out what three months of running costs will be:
- Calculate any recurring, monthly personal expenses you already have: ie Rent/Mortgage, monthly phone bills, electricity etc.
- Estimate any new expenses you will have due to the business. Think carefully – there may be things you can go without initially, and there will be other items that sound extravagant, but will really save you money in the long run.
- Add as little bit of spending money – all work and no play makes new business owner something something.
If you are smart, you can get save heaps of money by knowing when to use free services, when to use monthly services and when to fork out some cash up front. Check out this short list of products that can help you out:
A computer.
There aren’t many businesses these days that can justify NOT having a computer – email is a really important communication tool, and storing documents electronically can save space and paper. Laptops are pretty cheap, and even mid range computers have more than enough grunt for day-to-day tasks. While you are at it, printers are pretty much throw away items now – you can get all-in-one units, with a built-in scanner and copier for around $200.
Cost: Starting from $600 + $200 for an all-in-one printer/scanner/copier.
A backup system.
It is scary how many businesses don’t backup their data properly, especially when it is so easy. If you are lucky enough to be in a country with permanent internet connections (like ADSL or cable) you should use a service like Dropbox. It acts like a normal folder on your computer, and will automatically upload your files to their secure server. You can even synchronize those files amongst multiple computers, and share folders with other Dropbox users. The free account gives you 2Gb of storage, which is plenty to get started, and the upgrades are pretty cheap.
Failing that, go and get a external USB drive – most modern operating systems have some basic backup software installed (such as Time Machine for OSX and Windows Backup for Windows). Just remember to run the software regularly!
Cost: Free! Or around $100 for an external drive.
Internet Account
In many countries you can get ADSL connections pretty cheaply. Don’t worry about getting a business account right away, home accounts are usually pretty reliable, and are generally much cheaper. You might even be able to get high speed wireless internet, either via 3G modem (attached to a mobile phone) or via a 4G dongle. These will allow you to work from your local coffee shop or library when you want to get out of the house.
Cost: From $29 per month
Accounting Software
While you can probably get away with a spreadsheet for a while, getting some accounting software will help you stay more organised, and will allow you to sub-contract your accounts to a bookkeeper. Again, online solutions give you the most flexibility – we use Saasu (it integrates with 88 Miles), but we have also heard good things about Xero, Freshbooks and Blinksale.
Cost: Around $30 per month
Your own domain + Google Apps
partylover69@gmail.com may be a perfectly fine email address to share with your friends, but it doesn’t look very professional. Domain names are cheap, so there is no reason for you to not have a proper email address. Google offers a service called Google Apps which allows you to setup email using your domain, as well as calendar and basic word processing and spreadsheet for nothing! You will still need to park your domain somewhere – many domain registrars can help you out.
Be aware that some countries (such as Australia and Ireland) have restrictions on the names you can register, so you may need to register your business name first.
Protip: Make sure you store the domain registration password somewhere safe, because if you decide to hire a web developer in the future to build you a site, they will need it.
Cost: Domains start at $8 per year for a .com
Phone
Pretty much everyone has a mobile these days, so it’s easy enough to use that when you are starting a new business, but if you want a landline number (clients have a habit of calling mobiles at all hours of the day), Skype offers a service called Skype In, which allows you to register a phone number, that is attached to your Skype account. You can then use your computer to make and answer phone calls, or simply redirect the number to your mobile (at extra cost of course).
You can also check with your ISP, and see if they offer bundled VoIP services with your internet connection. While more expensive then Skype, it’s still cheaper than a landline, and the call quality will be better.
Cost: $2/month per Skype-in number, plus call costs.
As you can see, starting a business takes a bit of financial planning, but it isn’t nearly as hard as it was a few years ago if you are smart about what you spend your money on! What services do you use in your business? We would love to hear about them in the comments, or via twitter.
