Home Business Start Up Costs – What To Expect

by WorkFromHome on March 5, 2012

A home business is a great way to break free of the typical frustrations that come along with the daily grind at a traditional office, but it can be an expensive proposition at the outset. With the combination of office supplies, office equipment, businesses licenses, liability insurance, and other miscellaneous fees, many people simply end up in over their heads before they ever satisfy their first client. Knowing the costs associated with striking out on your own before you actually do so will help you have the best chance at ultimate success, and will keep you from making poor investments that lead to nothing but financial distress instead of occupational success.

The costs below are rough, general estimates. Some business owners may find that they spend less than these amounts, while others spend slightly more. It all depends on the nature of your business — and most of these estimates have been rounded up in order to help aspiring business owners give themselves a good “cushion” in their budget.

Office Equipment ($900-1100)

It’s pretty likely that you’ve got at least one piece of office equipment in your home: a personal computer. Like any office, the computer will be the central part of your home operation and will shape your interaction with clients and customers. If this machine is aging, it may require a few upgrades to its memory or hard drive. Otherwise, it likely can remain untouched and not require room in your budget.

What will require consideration are things like scanners, printers, faxes, phone systems, webcams for virtual meetings, and any other electronic equipment that is necessary to complete your home office environment. Depending on the brand you choose, and whether you go with new, used, or factory reconditioned equipment, will determine just how much room this requires in your initial budget.

Office Supplies ($100-200)

Whether it’s packages of paper to use when printing faxes or documents, or post-it notes to keep your day’s tasks and goals on point, office supplies quickly run into the hundreds of dollars for diligent home business operators. Remember that this covers even those items which are easily forgotten: staples, pens, paperclips, and hole punchers. Be sure you have everything you need to keep documents organized and in good condition, as this reflects immensely on the state of your business in the eyes of your clients.

Liability Insurance ($50+ monthly)

If your home business is going to be producing or selling a product independently, then it likely should be investing in a liability insurance claim that will protect you, the owner, from any lawsuits that may arise due to a product’s features, design, or any malfunctions or defects. Failing to do so will cause the business owner to be solely responsible for any court costs, monetary judgements, and other penalties assessed by a court — and that will be far more costly than a simple insurance policy to cover the business.

Advertising and Marketing ($10-1000)

It’s pretty easy to assume that no one is going to flock to your business without being informed that you’re even in business — and that you’re better than the competition. Advertising accounts for a significant portion of a business’ start-up cost, because it’s the way that new businesses get their first customer. You will need to advertise heavily and across a diverse array of mediums and websites. That will require a big expenditure up front, so be prepared to place a hefty price on conveying your message to your market.

Added Utility and Fuel Costs ($10-100 on a monthly basis)

You’ll now be working from home, which means you’ll be drawing more power and consuming more energy on a daily basis. This will be reflected in your home’s utility bills each month and will be an added expense that will be ongoing. It’s likely that the costs will start out small and increase as your business demands more from you and the office equipment you’ve purchased, so keep in mind that this cost is variable and probably will never go far below what it costs during the first month of your operation. Additionally, if your business involves driving or delivering your product, prepare to pay for more fuel each month than you’ve ever afforded yourself in the past.

Easy to Afford With a Plan

The best way to meet these costs is to carefully consider each one and make a start-up budget for the business you’ll soon be starting. Know what you’ll need to spend to get off the ground — and always round up. This will eliminate unpleasant surprise and assure that your business isn’t doomed to financial ruin before its first payday.

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