This topic discusses the estimated startup costs for this business idea. Startup costs are what you need to pay in order to be ready to begin business operations. The amount of these costs also helps you decide if the idea suits you.
List of items in startup costs
Note: I am only showing one month for certain expenses. You should be able to get your first job or two in a month. Then these items become operating expenses, not startup costs.
The assumed startup costs for this business idea, using a frugal style of business operations, consist of the following items:
Advertising and promotion (1 month) -- Small classified advertisements in a local newspaper, or a national newspaper or magazine.
Business insurance (1 month) -- Business liability insurance. (Talk to a local insurance agent to see if you need this coverage.)
Governmental requirements -- Local fees and business license. (Note: You might also be subject to state and federal deposits and registration fees, but these will vary. So I have not included them in these startup costs.)
Office equipment -- Business telephone, desk accessories (stapler, paper clips, pen and pencils, etc.), and listing adding machine. (Note: Use the kitchen table and chairs for your desk and chair at first.)
Office supplies -- Check blanks for business checking account, file folders or large manila envelopes (for filing papers), lined writing tablets, and pads of accounting journals and ledger.
Other operating expenses (1 month) -- Business telephone expense.
Reference book -- Bookkeeping for Dummies (Paperback). (Note: The "for Dummies" series of books are easy to read manuals for normal people, not dummies.)
Here are the dollar amounts for a frugal business operation:
Note: See the Planning costs and expenses subtopic in the Business Plan on another page for ways to reduce these startup costs.
This topic satisfies the Starting business operations subtopic in the Business Plan page.
Preparing for business operations
Completing the startup requirements -- This is the last step needed just before you start business operations. See the Listing the startup requirements subtopic in the Business Plan for the items remaining to be completed.
As a minimum, you should have discussed the business idea with your family, set up your business entity, and satisfied all governmental and insurance requirements.
Operating the business
Soliciting customers -- Place classified advertisements in your local newspaper and/or a national newspaper or magazine. Use a simple, honest description of your services. (Once you become well known in the community, you should benefit from word of mouth advertising from satisfied customers.)
For additional ideas on soliciting customers, see the Sales Methods page in another section.
Qualifying customers -- Hopefully, some of the people who read your advertisements will inquire about your services. During this initial telephone conversation, you should determine:
See the preceding Profitability of idea subtopic for my thoughts about setting your fee.
Getting customers -- After you review your methods and services with prospective customers, they might agree to pay for an initial consultation. This service might continue for an indefinite time.
After gaining sufficient experience, you could try for as many customers as you can handle.
Determining needs of customers -- To insure satisfied customers, you need to determine what they want from you. You need to replace assumptions with specific information.
After you and the customer agree on the service to be provided, you need some background information.
Continuing on, you need to determine how and when to contact the customer for your telephone consultations. You also need to determine how you will be paid.
Note: The following activities for this business idea are based mainly on the Use a Budget to Lower Expenses page.
When preparing a budget, you can use the expense categories shown on the Reduce Living Expenses main page. These are "Auto and Travel Expenses," "Clothing Expenses," "Drug and Medical Expenses," and so on.
Preliminary service activities -- Ask the customer to fill out a schedule of their average monthly living expenses using the above categories.
It would be very helpful if the customer identified most of the larger expenses in each category. Thus under food and grocery expenses, some major items might be breakfast cereals, canned goods, dairy products, frozen TV dinners, meat, produce, soda pop and snacks, and soups. An estimated breakdown for each major category would be good enough.
After you receive the schedule of average expenses from the customer, you can review it and see if some expenses seem excessive.
Main service activities -- During the first major telephone conference with the customer, you can discuss expenses that seem excessive. This discussion might use some of the concepts of the Deciding where to cut expenses topic on another page. The customer probably won't want to make big changes all at once. Don't force the issue. Ask the customer to try for a five to ten percent reduction in one expense category.
During the second major telephone conference, you might discuss ways to make larger expense reductions. This discussion might use some of the concepts of the Making the changes topic on another page.
Here are some other methods you can discuss with your customers:
You probably want to telephone the customer every one or two weeks after each major conference to see how much progress is being made.
At some point, you would end the telephone calls. (This would represent either success or failure of the budget process.)
Final service activities -- From time to time collect your agreed upon fee from the customer. (Your agreement with the customer should specify the frequency and amounts of these payments.)