I spent years working behind a desk in corporate America, secretly dreaming of becoming an entrepreneur, quitting my boring job, and working for myself.
One of my biggest fears was how much everything would cost to make that dream happen.
I was scared from the start: See, one of my coworkers did one of those multilevel marketing schemes on the side, and she’d constantly tell me how expensive everything was.
First, she had to pay a consultant to make an official business plan, then file for her yearly business license. Then, she’d need to buy products in bulk, then pay for advertisements so she could get more clients and sell at a profit. She might need to pay for extra storage, shipping fees, an expensive website, not to mention eventually hiring employees to manage everything for her.
Total cost? More than my yearly salary – and that was before she even started making any money.
It made my head spin. I was still paying off my student loans and hadn’t made any money as an entrepreneur so far – how could I possibly pay to open a business? Was I doomed to work a terrible nine-to-five job forever?
I wish I could talk to my younger self then. I’d tell him what I know to be true now:
“You don’t need any of those things to become a successful entrepreneur.”
It’s been three years since I’ve been working for myself as an entrepreneur, and I know a whole lot more about how much it really costs to have a successful first year of business.
Nowadays, I pay quite a bit each month for my business expenses. But when I first started out, I didn’t need most of the things I pay for now. Odds are, you don’t either.
If you’re an aspiring entrepreneur, here’s a basic list of just about everything you’ll need in your first year of business.
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1. Email Software (Free–$50/Month)
A successful entrepreneur needs two basic pieces: something to sell and people who will buy.
No matter what products or services you’re selling, you need a list of customers (leads) you can sell to. You get that by building an email list.
Luckily, this is pretty cheap. Tools like Mailchimp are straight-up free (for your first couple of thousand email subscribers), then perhaps $25–$50 dollars/month for between 2,000 and 5,000 subscribers, which should carry you through your first year.
The ability to message your readers is crucial for your business to survive.
2. A Decent Website (Approximately $100/Year)
There are two subsets to this:
A: A domain ($20/year)
B: Website hosting ($60–$80/year)
Your domain is your website’s name, like jeromesmith.com or mohamedphotography.com.
Website hosting is basically like giving your website a home on the Internet, allowing people and search engines to find you.
Good website designers often charge a minimum of $1,500 to $5,000 to design a new website from scratch.
You almost certainly don’t need this in your first year. At most, perhaps consider buying a $50–$100 website theme that looks good, but that’s it. We want to get your business up and running, not win awards for the best-looking website.
3. Sales/Landing Pages ($25–$100/Month)
Again, remember the two key pieces every successful entrepreneur needs: something to sell and people to buy it.
Sales/landing pages let you create something to sell, capture customer’s emails, and allow customers to input their payment information to receive their product.
Frankly, this was one of the hardest expenses for me to sign up for because I definitely wasn’t making $100/month at that point!
But after a few months of deliberate hard work creating products and services to sell, I was making thousands of dollars a month and getting customers – easily justifying the monthly cost.
Whatever you’re selling – an eBook, web design services, hand-made luxury dog leashes – you need a place where people can go online, view your product, put in their credit card information, and buy it.
4. Camera/Video Recorder (Just Use Your Smartphone)
I’ve created several successful products just by shoving my iPhone in my wife’s hand and having her record my sales pitch from home. Then, I upload them into YouTube for free and there’s my video.
Even when I sell physical products like my books, I’ve just used my smartphone to take good pictures. Again, we’re not going for any awards here, just to get your business running and money flowing back into your account.
5. Freelancer Services ($5–$50/Gig)
When I first started out as an entrepreneur, I tried doing everything myself.
I sucked at it.
I remember trying to turn a Word document into a nice-looking PDF and I just. could. not. do it. I spent a couple of hours each day for a week getting more and more frustrated as I tried.
Finally, I just paid a freelancer about $20 to do it for me.
They finished the job in like half an hour.
Don’t get tripped up trying to do everything perfectly yourself. Often, you can save a ton of time by going to places like Fiverr or Upwork and having someone else design PDFs, do web research, design your website, integrate your payment gateways into your site, and edit your headshots.
Freelancers saved my butt countless times that first year. They’ll save yours, too.
6. Tax Help ($200–$500 or Just Do It Yourself)
During my first year as an entrepreneur, I was making money from all kinds of random places. I’d be shipping physical products, selling online courses/coaching, and getting paid both hourly and by-the-project for freelance work.
All the tax information was making my head spin, so my wife and I found a reputable accountant who took care of everything for a few hundred bucks. Of course, you could still do it all manually yourself, but I was more than happy to pay a small fee to have it taken care for me.
This brings up an important question you may have already considered: What should you call your business? Are you self-employed, or should you get an LLC? Should you apply to be an S Corp or C Corp? What tax bracket is your business in?
If you don’t even know what I’m talking about, that’s OK. I asked our accountant the same questions and here’s what he told me – even though I’d made about $20,000 that first year, he explained I probably didn’t need to worry about making an official corporation or business license until I was consistently making double or triple that.
You should always talk with a certified accountant about this, and your business/products will probably look very different than mine. The point is this: Don’t get tripped up trying to figure out these questions until after you’re actually making some money from your business.
This is the process by which wealth is accumulated; first in small sums, then in larger ones as a man learns and becomes more capable. – George S. Clason
So at the most, we’re looking at around $250/month for everything you need – website, email list, and sales pages.
When I think back to those first few months, $250 seemed like a lot of money to me. I mean, I was making virtually nothing from my business, and $250/month seemed like throwing money down the drain.
The good news is, you don’t have to start out that high – just pick one of two expenses at a time. Make your website for $100 dollars. A couple of months later, start collecting emails. Think of your first product, then buy some sales pages to put it online.
The goal is to start breaking even as soon as possible, then increase your price and products to start making a profit.
In the first few months, I was paying about $100/month for a couple of services. In the meantime, I was creating online courses, coaching programs, writing books, and any other products that made sense for my business.
When they were ready, I paid a little more to get them live online. Then, I started making sales. By month seven, I made $4,000 – more than justifying all the expenses I had made up until then.
Your first year of business is going to be a wild ride and it doesn’t cost that much to even start. You might be thinking spending a couple of hundred dollars a month is a lot, especially if you’re not making any money yet.
That’s OK. I was there, too. Start small. Master one tool at a time. You’ll become more capable and confident, and you can move to the next tool.
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