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Costs of starting up a business

© October 2008 Anthony Lawrence

There's a spirited argument happening between two blogs I've been reading. On the one side is FreeLance Parent who asserts that their business started with $220.00 and that anyone can do the same. On the other side is Men with Pens, who argues that the true costs were much higher and that the shoe-string approach is dangerous.

I'm ambivalent. I think it's great if you have a strong war chest to start off your business. But if you don't.. well, talent and determination are more important than money.

As noted in those blogs and the comments, many of us have a lot of what we need already. If you are planning upon working at home and you already own a computer and a telephone, well, there you are. Maybe it would be better if you had a newer computer, a faster Internet line and a separate business phone line.. maybe it would be better if you had a 4,000 square foot office with a harbor view from the 10th floor and two receptionists to answer your phones and greet the rush of clients.. but sometimes you just have to work with what you have, right?

Some people get downright snarky about this. A Trish Lambert made this comment:

If you're freelancing on an old computer or dial up, call it what it is - a hobby, or a labor of love.

My, how elitist.

She suggested that a person with limited start-up resources should try moonlighting. I disagree strongly with that: your "real" job will interfere with your self employment venture. It will keep you from talking to clients when they want to talk, it will keep you from devoting time to their projects. Your "real" job might also make you too tired to do a decent job on work you do get! My advice is either do it or forget it: starting a half-assed business makes no sense.

You can argue that starting with less money or less infrastructure makes just as little sense, but remember that we're talking about "starting". I'm NOT one for penny-pinching in business. If you can't afford that new computer when you start out, fine. Can you still not afford it a year later? If not, that's not a good sign.

I don't like compromise when it comes to expenses that your business needs. But reality is what it is: if you can't afford something now, maybe you have to settle for "almost as good" until you can afford it. I think each and every compromise needs to be looked at suspiciously, but having to compromise shouldn't prevent you from starting a business.

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Fri Oct 31 01:05:03 2008: 4704   ChristopherShennan

This is sound advice as in many cases you would like the new and improved product but at the end of the day you often have managed for quite a while, and would continue to manage fine with the the not-so-new and not-so-improved one.

Another thing I would recommend is not to splash out on the new product the instant finances become available as on 1 or 2 occasions I've done this only to find that it's not left me with enough capital when a new project has come in. This can sometimes mean you have to juggle payments, request advances or in the very extreme... decline the work... all of which can get very messy.

Fri Oct 31 11:53:01 2008: 4705   TonyLawrence

And that's especially true with computers.

Very few people should be buying "top of the line" for these purchases. In two or three years, whatever you bought is mediocre at best. You'll save a LOT of money and have better average performance if you step down a little and buy more often.

Fri Oct 31 21:50:49 2008: 4710   BigDumbDinosaur

She suggested that a person with limited start-up resources should try moonlighting. I disagree strongly with that: your "real" job will interfere with your self employment venture.

Right you are! Trish Lambert's suggestions amount to trying to serve two masters, which, in my opinion, cannot be done. Either you're working for yourself or you're not. There's no half-way here.


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