The Hidden Costs: 5 Key Considerations When Starting a Business

So, you want to start a business and are wondering where to begin and what it will cost… most would advise that you start with putting together a business plan, and I don’t contest that… you should, but it’s essential that you’re aware that most business plans, including all the research and financials that they include, do not give you an overall picture of what your start-up costs will be. This article gives an overview of the ways to determine, realistically, what the costs involved in setting up a business will be.

A solid plan? Probably not! A well-formed, flexibly applied plan? Absolutely!

It’s true that the usual manner in which businesses start up, is through an opportunity being identified, determining the ways in which this opportunity can be milked for all it’s worth, (carefully explained in the business plan), and figuring out how much capital is required in order to build the business as outlined in the above-mentioned business plan.

Whilst this is ‘the usual’ and can often work, there is one flaw with this model… It is all developed on the premise that the business will work out right, and as planned, the first time! The reality, is that it is exceptionally rare that everything goes exactly to plan, and most often, even if it does, it’s not first time around.

Often, between the time that a business plan is written, and the time comes to implement, it’s hardly worth the paper it’s written on. Harsh, but true.

In order to more accurately, and relevantly determine your start-up costs, it is essential that you reflectively review assumptions held within the business plan, and be prepared to adapt toward a more flexible approach. Now by no means am I advocating that you don’t need a business plan… I think they are immensely helpful for allowing us to consider as many of the elements required in starting and growing a business as possible… but the plan is only as good as the action you take, and to get the greatest return on action, having plans that are relevant and based on the most current context is key.

Part of your plan should always be to revise the plan… You may have to change things repeatedly as you learn more, determine the impact of what you’ve learned in your business, and then add it to the plan accordingly.

Consider Scaling Down and Pilots

I know what it’s like… you have a fantastic business idea, you see the potential, you see how great it can be, and you want to put in all you can to make that vision a reality. While this is the only way to go for some business concepts which are pretty much, ‘Go Big, or Go Home,’ this isn’t always the case.

Where it’s possible, consider the option of scaling down, and testing the concept. This will allow for you to start up, while saving money, learning from the pilot and being able to action changes, and raise more funds based on proof of concept. This approach not only reduces start-up costs but provides valuable insight around the business, in real terms. It may not generate much profit, but it will offer a wealth of verified information that will help you to determine the next steps… If you decide to proceed with expansion, it is a great basis for second stage funding.

Consider Realistic Timelines and Pricing

Part of calculating your start-up costs will involve figuring out your initial cash flow. Without having actually operated the business this can be tricky. It’s also not uncommon to fall into the trap of under-pricing products and services in order to stand a better chance of competing, and to ‘tempt’ in more business. Be aware that you don’t necessarily need to do this. If you do, raising prices to the market standard could become difficult at a later stage, and you’ll have to do a lot more work in order to break even. My advice- recognise your worth, and price it accordingly.

Consider a Realistic Time-frame for Starting-up

Time is always potential money, and when you’re starting in business, this is true even more. If you’re going to have fixed costs like property leases, if improvements or modifications are required prior to opening this impacts on both time, and money (quite directly). These additional costs add to your start-up costs, but also add to the time before you can start earning. Don’t fall into the trap of under-estimating when you’ll be ready to trade, and build in a good time cushion before you ‘need’ to see funds coming in from business activities. Failure to do so could result in a significant amount of stress, and in some instances, can even result in a business shutting down before it’s even had the chance to take off, simply because there wasn’t enough time allowed to give it a chance to get going.

Consider the Cost of Money

Many entrepreneurs who have a great idea that they believe strongly in, will make the decision to finance the business themselves. At times, this can be at great personal cost, using the credit on credit cards or loans, and tapping into equity from homes etc. While for some smaller ventures the impact may be negligible, for larger ventures, self-financing should be considered exceptionally carefully before committing to this option. If funds are in abundance and potential delays, changes, etc. will have little impact and will be offset by the return, however long it may take… then go for it! If this is not the case, and any delays and progress are not going to plan will cause a great deal of personal and financial strain that could jeopardise business success anyway, then definitely consider other options.

To Conclude…

As you can tell, starting a business does not begin and end with a business plan, but goes beyond that to wider considerations. This article lists some of these.

Finding Time To Start A Business

One of the 1st things we look at during my Amazing Business Creation Workshops (in fact, it’s part of the pre-work!) is actually making time to start planning your business – sort of ‘getting ready to get ready’!

As working mums we can often feel like we have very little time to do any of the things WE want to – and so often I hear women tell me they’d love to start a business ‘one day’ but they just don’t have time right now.

Well, I have news for you – you will NEVER have the time to start a business (or any of the other the things you want to do) unless YOU take serious action to MAKE it!

You see, your time is like a vacuum. As soon as you free some of it up, it naturally gets filled with something else – and if YOU don’t determine what that is yourself, I’m afraid it just gets occupied by ‘stuff’. ‘Stuff’ that’s about as useful for getting you where you want to be in life as a chocolate fire guard.

Think about it – your mum/friend/partner offers to watch the kids for a couple of hours. What do you do? Do you find yourself complaining to your friends that you don’t know where the time goes? Because you spent the whole time sorting laundry/washing up/picking up toys/sweeping the bits off the floor, only to have to do it all again an hour after they get back?

What if you spent that 2 hours really focusing on one particular goal that you’ve had for ages (like starting a business!)? What if you left the other ‘stuff’ until the kids had gone to bed and you knew it was going to stay ‘done’ at least until they get up again?!

It’s difficult isn’t it? It’s very easy to get totally caught up in trying to be everything to everyone – trying to be a supermum – but there really does come a point where you have to make some decisions about what you really want for you and your family IN THE LONG RUN.

Now, seeing as you’re reading this, I’m assuming you’ve made the decision that you would like to take steps to find a better work/life balance, and to do that by starting a business. I’m also assuming that your no. 1 priority is your family.

That’s certainly the case for the mums I’ve worked with so far and it is for me.

Virtually all the mums I speak to, with very few exceptions, say that the main reasons they want to start a business are a) they want to (or need to) spend more time with their family or b) earn more money to enjoy with their family or both.

So, accepting that family comes first, we have to find a way to give enough priority to starting a business in order to actually make it a reality while also recognising the whole reason why you’re doing it in the first place.

You need to find a balance between spending the time you want to with your family AND dedicating enough time to following this path to creating a better life for you all.

Now, I’m not going to say it’s easy – because I’d be lying.

But if you’re determined to create a business you love that can provide for you and your family for years to come AND give you the life balance you’re looking for, finding time to plan it properly is absolutely crucial.

The following tips for finding the time you need to start planning a business around your family come straight from my Amazing Business Creation pre-work. We use worksheets to help us with most of them but you can do the work without. I hope you find them useful:

Find the ‘leaks’ in your time.

Take a pad of paper and write down every single thing that takes up your time during the day. I mean EVERYTHING! Work tasks, kids tasks, the school run, shopping, meeting with friends, running errands for parents, walking the dog, updating Facebook – whatever.

Once you’ve done that, cross out all the things that, if pushed, could go altogether for the next 6 months. Now identify the areas where you could SAVE or MAKE time – limiting time on Facebook for example or, better, getting rid of it altogether (unless it’s for business purposes!); staying up 20 minutes later on a night to prepare packed lunches, set out uniforms and lay out breakfast things; doing your food shopping online.

Maybe you could meet friends less frequently but for longer, or meet them at your house instead of travelling somewhere? Could you use the time when your baby or toddler is asleep, instead of catching up with the laundry? Could you arrange for your child to go to a friend’s for tea after school and offer to return the favour another night? Could they go to after school club for a while?

Once you’ve identified what you COULD do, commit to actually doing it!

Remember, action is what’s needed here, not just ideas. It’s all well and good completing the worksheets and saying ‘well I COULD DO THIS’ and ‘I COULD DO THAT’.

DO IT NOW!

And it’s important not to get fed up about it – remember, it’s not forever, just for right now to allow you to focus on what you want out of life. Then you can slowly start to add things back in (and actually, some things you’ll probably realise you’re just better off without doing altogether!)

Identify your goals

For each area of your life (we do some work on all your individual ‘roles’ during the workshop), start to create a list of all the goals you’d like to achieve.

So create a ‘mum’ list, a ‘wife’ list, a ‘business owner’ list, a ‘daughter’ list and so on.

Write down everything you want to achieve on those lists – long term and short term goals all count here.

Do you want to help your children learn to read? Do you want to re-connect with your parents? Do you want to move to a new house in 2 years? Take the kids to Disneyworld? Do you want to be able to buy your partner a new car or to retire at 50?

Take an hour to really think about what you want your life to look like in a few years time – from all angles.

Lists, lists, lists

From the goals you’ve identified, break them down into the tasks you’d like to do each day/week/month to bring you nearer to those goals.

Spending 30 minutes each night reading with your children, dedicating 1/2 day each weekend to spending with your parents, spending 1 hour 3 times a week dedicated to planning your new business – whatever you think you need to build in to reach the goals you’re setting yourself.

Take Control Of Your Time

The next step I recommend (and it sounds a bit extreme but it works!) is to take an appointments diary (I use the Franklin Covey planner system and provide this for mums who join my longer term programmes) – one of those that breaks each day down into 15 or 30 minute slots – and schedule your next week.

Try it once and see how you get on with it.

Plan slots for everything you want/need to do each day and try to stick to them. Try scheduling your WHOLE day for 7 days and commit to trying to stick to it – 1 hour to get the kids ready in a morning, 45 minutes for the school run, 1 hour to work on planning your business, 1 hour housework… whatever suits you. But remember to build in slots for all the roles we covered above. Just try it and see if it works for you.

I even used to schedule in time for the kids bedtime routine – to make me concentrate just on them for 45 minutes… nothing else. You’d be amazed how quickly they went to sleep afterwards! It has to be said, sometimes I really need to make an effort on the parenting front, I’m ashamed to admit!

Of course, things change, and you have to re-arrange things during the day, but having a plan to work to can really make a difference… if you want it to and you’re willing to really commit to giving it a go.

Well, there you go – just a few tips to get you started… I hope you’ll give them a try.

Starting A Business (With Minimal Resources)

I have had several people tell me that they want to start a business but do not even know where to begin. Honestly, it can be pretty overwhelming if you don’t have any steps to follow. Thus, what I am going to share with you here can serve as guidelines for you.

Be sure that what you intend to do is your passion.

Don’t just jump into any business because it’s a fad, your friend made money out of it, you think it’s going to make money, or whatever reason other than it being your passion. So before you even think about setting up your own business, ask yourself the following questions: What do I love to do? What do I enjoy doing? What am I really good at? What am I most experienced in doing? From here you will know what your passion really is. And if the business you are thinking of setting up does not fall in this category, forget it. It is not going to work.

Work with what you got.

Do not even attempt to think of thousands or hundreds of thousands if all you have are hundreds. I am not talking about financial projections here but where you are to begin. If all you can spare is $500, then work on that. If all you have is a computer and phone, then work with what you have. Start with what you have, not with what you don’t have. Then work your way from there.

If you need top-of-the-line equipment, look for slightly used ones for sale instead of buying it brand new. Keep your costs low.

Invest wisely.

Whether you plan to borrow money or you have enough savings to start with, learn to invest wisely. Write down everything you need, and prioritize.

Your priorities should be your main business tool or equipment, as well as your promotional tools.

Find out what business laws you have in your city/state.
Some cities/states do not require you to register a business unless your gross yearly earning is over $12000. If this law applies to your location, and if you are not sure how much money you will be making on the first year, then don’t register your business yet. Test the waters first and work your way from there. As far as I know, if your business is not legally registered, you are only allowed to use your name and not any other name for the business.

One way to really start low is to experiment first. If you plan to venture into a food business, try cooking from home and sell your food to your neighbors and friends. If you want to do wedding planning, then let your friends know and do their wedding planning for them, for a very minimal cost. You can even do it for free. This is a good way of building up your credentials.

Get all your tools ready.
Other than the equipment, furniture, supplies, and other things you need for your business, the ‘tools’ that you need to prioritize are your “promotional tools”. These include your business card, website, flyers, business sign, letterheads, brochure, social media, etc. The kind and extent of promotional tools you need will depend on the type and size of business you are thinking of. The basic promotional tools for any type and size of business are business cards, website, brochures, flyers, and social media. Do not even attempt to start a business without these tools ready; otherwise you will be like a soldier in battle without his ammunition. Likewise, do not attempt to do all these yourself unless you have the skills and experience in doing so.

And don’t forget the most important tool of all: your business plan. This is your blueprint – where everything about your business lies. It is what you will need to apply for a loan, to apply for a grant, and to create your promotional tools.

Leave your promotional tools in the hands of those who are more equipped to do it. This is where I can be of help to you.

Promotion is the key.

Once you have all your promotional tools ready, it is going to be easier to promote your business. Have your business cards with you at all times and give it to anyone you meet. Your business card should already have your website and social media addresses. Flyers help a lot when you are promoting a product or a service that is better presented through visuals such as photography, weddings, flower arrangement, etc. Brochures are most effective if your target audience are groups of people such as church, organizations, corporations, etc.

Utilize every opportunity and connections you have. Keep promoting!

Build relationships.

Repeat business is the biggest indicator of a good business. And the only way people are going to refer you to others, or do business with you again, is if they are satisfied with what you provided them with. Customer satisfaction is not so much how good your product or service is but how good they felt about you and what you did for them. It is all about the relationship that you build with people.

Integrity counts the most.

Integrity is more than trust. It is the result of consistent trustworthiness. It means that you walk your talk… you deliver what you say you will do… you stay committed to your commitments. When you have integrity, customers will prefer you over your competitors. They will choose you because they know that they can rely on you, whatever happens.

Work harder than an employee.

Some people who are considering setting up their own business think that if they do this, they can relax and act like the big boss who seems to do nothing but walk around. The opposite holds true. Since you are your own boss when you have your own business, you really have to operate like a boss. And bosses are not just walking around. They are the ones who do almost all the thinking, problem solving, decision making, financing, networking, and all the more difficult and tedious mental tasks. Add to this working like the hardest working employee you can ever find. In short, you are the boss and employee at the same time, unless you plan to hire people under you.

Stay committed and consistent.

Once you start a business, you have to remain committed to it. It’s not an experiment that you can just start, and then end when it does not work in a few months. You can’t be dictated by your emotions. You have to get going no matter what happens. This brings us back to what I said in the beginning of this article — find out what your passion is.

Starting a Business for Beginners: The Fool-Proof Internet Marketing Plan

If you find your search the web for “starting a business for beginners”, then no doubt you’re looking for an easy way to evolve from employee to entrepreneur, and perhaps a home based business opportunity is what you’re looking for.

Of course, there’s no such thing as a business without investment…

However, thousands of people have found their way out of the “crab trap” by discovering how to market online.

While we all look for step by step instructions in the beginning, let me just say that, as an entrepreneur, it will serve you well to start thinking outside the box…

When you constantly look towards others for approval or questioning what to do next, then you’re operating inside the box – and that’s an employee mindset.

Having said that, I will lay out for you a “starting business for beginners” checklist to follow to set you off in the right direction…

1) Training for how to market online is mandatory.

Assuming you would like to operate a home based business opportunity, the easiest and most cost-effective way of doing this is to learn how to market online. However, whatever it is you choose to market, you’ll get nowhere without the proper training.

Network marketing companies especially are notorious for not advising their distributors how to market… they are known for recruiting newbie after newbie full of hope, but does not have a clue how to sell or recruit.

You can’t just go off and start running blind on these things – having no plan is the same as planning to fail!

2) Market the training.

Whether you already have a passion for a home business idea or not, you’ll be a step ahead of the game if you decide to market the training itself. There are hundreds of different online training courses out there – and, once you buy it for yourself, most will off you a commission for simply promoting the link online.

If you’re using the training as “bait” to capture a lead to get them into the deal that you’re really passionate about, marketers call this a funded proposal. If you choose to market only the training products, this will limit your overhead substantially, because there’s nothing to buy and stock up on.

And, when you’re first starting a business online, be sure you have another income source!

3) Work your new internet marketing plan part time.

Starting any business at all is always a risk, so you can imagine how you should be cautious about jumping in head first when starting a business for beginners!

Remember that there is no such thing as a business without investment, so you’ll need to be working at something else to build capital while you grow your business.

4) The best internet marketing plan will pay you 100% commissions after business expenses.

This means that you first get the commissions – 100% – as you would for something digital you might create yourself that can easily reproduced digitally – and then you take a portion of that and put back into your business for administration and marketing.

An example of administration costs would be the costs for your merchant account to funnel money to your bank account. It’s advised that a good marketer should invest 20% of his profits back into the business for marketing.

5) Up-sell your stuff.

It’s been proven time and time again that it’s way easier to sell more products or services to an existing customer than it is to get another customer. Here again is why I lean strongly towards learning how to market online… Because, with a good internet marketing plan, up-selling features can be promoted on an automatic basis.

6) Create professional capture pages.

The “capture page” is also called the “landing page”, because it’s where your prospective customer first “lands” on the internet when searching for your keyword phrase. In this case, however, I’m using article marketing, so you would first land on my article or blog when you search for “starting a business for beginners”… And then, once you click on one of my links, that’s the landing page.

A good professional landing page has professionally worded “ad copy” (marketer’s lingo for compelling text that touches people emotionally.) It will sometimes also contain a short video.

“But wait a minute”, you say, “I thought this was supposed to tell me how starting a business for beginners could work for me… and this is a bit overwhelming”…

I know… don’t worry – no need to get overwhelmed…

Just remember that no one is born an expert internet marketer, and there’s always a learning curve. But once you commit to learning, there’s no greater reward than learning how to market online and helping others do the same! There’s even an internet marketing system out there that’s actually designed for starting a business for beginners!