Avoid the High Cost of Starting a Business

​When I started my first business many years ago, I felt everything had to be perfect.  After all, after 30+ years in banking, I saw firsthand how shortcuts could derail a business.  So, my partner and I hired a small business coach to help us fully form our business idea; hired an attorney to draft our contracts; engaged a firm to develop our logo and website and a CPA to prepare our tax returns.  When all was said and done, we collectively spent close to $50,000 and had yet to generate $1.00 in revenue.
 
While I regret the money spent, I learned so many lessons that I’d like to share.

1. Make sure you have a clear idea of exactly how you will generate revenue and what the actual cost of acquiring that revenue will be before you spend more than $1,000.  Online courses, Google searches, talking to people in the industry and test marketing are just a few of the ways to do this.
2. Use online services like Legal Zoom instead of a private attorney if you are creating a simple business.  They can set up your corporation, get your tax ID, act as your registered agent and create a business license if needed. They have additional services for much lower costs as well.  On average you might spend $500-$600 today vs, the almost $3,000 we spent on legal fees years ago.  Note, if you are starting a more complex business, such as a partnership, you may need more legal advice to protect everyone’s interests.
3. There are a ton of website services out there now.  In our defense, there weren’t quite as many back then.  But first decide what the purpose of your site will be. Is it to generate revenue through product sales? Through advertising? Is it just to validate the your business to prospects, such as people seeking coaching or consulting? Is it to blog and generate brand awareness along with social media?  Once you determine the purpose, you can decide at what level you need to invest. Many sites can be created fairly easily by yourself at no cost, and there are lower cost services to help you create simple websites.
4. As a former banker, keeping track of your revenue and expenses is critical. But you can do this easily through Google Sheets or Microsoft Excel online until you convert to a software like QuickBooks.  You may need to file a separate tax return, but if you keep your house in order all year, the cost will be minimal.

 
I hope some of these tips will help you save money as you embark on your own small business.  The other unfortunate thing for us is that after we spent all that money, we never did launch our business as my partner went back to banking.  Yet another lesson learned and a topic for another day.
 
For a decade, The Profitable Idea LLC has been providing successful workshops for entrepreneurs to learn how to forecast sales and expenses for a new business idea.  Our self-paced program will be online soon for startup and small business owners.  Join our email list to learn more and to receive special offers when we launch!
 
All the best,
Cindy Flanders