Have you ever asked yourself this question? “How much money do I need before I can start a business of my own?” And, what would you need (materials, a building, licensing, etc.) before you can even start making money with your business?
If you are asking these questions, I assume that you are considering a conventional business; one where you need to have a building for customers, a cash register, employees, and plenty of products on hand for purchases. These “brick and mortar” businesses often take quite a lot of capital to get ready.
Let’s say you were thinking about opening up a laundromat in your neighborhood. Before you can start racking up your profits in quarters, you have to purchase a plot of land, build a structure, purchase a bunch of washers and dryers (with attachments for payment), and hire some staff to run the laundromat when you’re not around. This will most likely have an initial cost of at least a quarter of a million dollars – and you still don’t have an income!!
Perhaps you don’t want to go through the trouble of finding that plot of land and erecting your laundromat building. Maybe you have an option to buy a laundromat franchise. Another individual will provide the building, the materials, and the proven system for success – it might cost a little more, but there’s definitely a better chance for success. The only thing is, it’s still going to cost you a bunch of money up front, and it will take quite a while for you to recoup your initial investment.
Just for fun, I thought I’d look up some franchise costs:
- Subway – $108,000 and $300,000 (need at least 50% cash)
- Wendy’s – $250,000-$600,000
- Papa Johns (my favorite!) – $160,000 and $395,000
- McDonald’s – Over $1,500,000 (need at least $300,000 cash)
“Low Start-Up Cost” Businesses
Why is it that people don’t consider you a serious business owner if you only spend $1,000 to start your business? Why are individuals encouraged to take out a large loan if they want to “go it on their own”? The chances that you’ll be still be in business in 5 years is 20%. If you took out a $250,000 loan, there’s an 80% chance that you’re going to be struggling to pay that off for the rest of your life with nothing to show for….. yeah…. real smart.
Call me conservative, but I’m on the other end of the spectrum. I would prefer to keep my initial expenses low and reduce the risk of a financial disaster in the event that something terrible happened to my investment.
Benefits of a Low Start-Up Cost Business
No loan needed – keep more of your profits
Still have a chance for large returns
Don’t have to quit your day job
Can grow it as fast/slow as you want
My initial start-up for my website was about $100 (and that includes my L.L.C.). I don’t know if there’s a cheaper start-up cost than that! After about 3 or 4 months of daily work (which amounted to about 15 hours of work a week), I earned enough to break even on this investment.
After 4 months of work, I realized that I made a very low hourly wage, but I had no debts and my future earning potential was rising with each day. The purpose of my site has always been to help my readers with their finances, but I began to wonder how much other bloggers make with their sites.
I researched a bit, and found out that most sites (about 50% of them) make less than $100 a month, but then there were a few that made nearly a thousand per month, and a few more that were in the $2,500/mo. range. The number that caught my attention was this one: Nearly 10% of the websites out there make $15,000/mo. or more! I had no idea that this kind of money was even possible! And just think. It most likely all started with a $100 investment, just like mine.
Other Low Cost Businesses
There are quite a few businesses that have a low start-up cost. Plus, if you come up with a proven system for you business, you could easily begin another one in your spare time and double your income! Here are a few ideas besides the blogging business I already mentioned:
- Create and App – If you know how to code and you have an idea, you could really be rolling in some cash!
- Write an eBook – If you have the knack for writing and find an audience, this could be quite profitable as well.
- Create an iPhone Repair Business– Daniel Vitiello started his own iPhone repair business for practically nothing and is making more money than you would believe! I nearly purchased a franchise package from him.
- CAD Services – My friend just started his own business with CAD design. He already has the software and is very skilled already. In the future, he could hire others to do his work and make money while he’s at the beach if he wanted.
Have you started a business for practically nothing? Is it still a profitable venture?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.