Starting Your Own Business: Do You Have To Risk Your Life Savings?
Most people think that starting their own business has to be an expensive endeavor. While it is true that many successful entrepreneurs self-fund their startups by racking up massive debt on their credit cards, it definitely does not have to be that way.
Thanks to the internet, starting your own online business is as inexpensive and risk free as ever. In fact, I highly recommend that you create a business that is well within your own means rather than risking your life savings all in one shot. If you can handle it, it’s best to start your own business while you have a steady job or an alternative source of income.
Photo By Rob Lee
I’ve received many questions regarding how much we spent starting our wedding linens business and I’d like to enumerate all of these costs below. As you’ll find out from reading this post, we risked next to nothing to start our online venture. The monetary aspect of starting your own business does not have to be stressful at all depending on what market you choose to pursue.
Webhost – $7 A Month
You might think that an online store would require an extremely expensive hosting solution in order to process transactions quickly and reliably. The truth of the matter is that you aren’t going to have many customers early on anyways so you may as well start out cheap.
We chose Bluehost.com because they offer an inexpensive hosting solution with tons of features already built in. Let’s face it, why pay hundreds of dollars for dedicated hosting when you are probably only going to be processing single digit customers a day in the beginning?
When business eventually picks up, you can easily move your store to a more expensive hosting solution later. Even if you are technically challenged, your hosting service will be happy to help you out for free.
Shopping Cart Software – Free
Most people are intimidated by the amount of web development required to start a website or online store. Well guess what? There are a ton of free options available to create a shopping cart for your website at no cost whatsoever. In fact, I can name several free shopping carts off the top of my head that power thousands of online stores across the globe.
If you are thinking about starting an online store, make sure you read my article on choosing the right shopping cart software. The bottom line is that you don’t need to be an expert programmer in order to implement a professional looking website.
Digital Camera – $200
You don’t need a fancy smancy camera to take pictures of your products. While an SLR camera certainly helps, you can easily take great product pictures with just a pocket camera.
You can get away with an inexpensive camera because by the time your photo reaches the web, the resolution of your photos will be on the order of hundreds of thousands of pixels which any old cheap digital camera can handle.
The key to taking great pictures is to take them in a well lit room during the time of day when there is the most ambient light. If you only have time to take pictures at night, it is extremely easy to create your own lightbox for your products. Just do a google search for “do it yourself lightbox”.
If you’d like to learn more about how we take pictures for our online store, make sure you check out our articles on 5 Tips for Establishing an Efficient Picture Flow For Your Store and 4 Things to Avoid with the Product Pictures on Your Online Store.
Shipping Materials – Free
That’s right! Shipping boxes and materials are free. Most shipping carriers will provide you free shipping boxes and even tape for free just for using them as a carrier.
The United States Postal Service for example offers a wide variety of different shaped boxes for free as long as you ship using priority mail. It’s as simple as going on the USPS website and ordering them. There are no fees, no charges whatsoever. They don’t even charge you for shipping!
Computer – $100
If you are reading this article, you already have a computer. In fact, who doesn’t have a computer these days? The key to remember is that you don’t need a powerful computer in order to run a business unless what you are selling or creating is computationally intensive.
When we first started out, we were running the business on a cheap AMD Athlon Thunderbird based machine that I picked up second hand from Craigslist. It certainly doesn’t take a super computer to run Quickbooks or Excel. Even today, we still perform the bulk of our online store operations on this cheap computer.
Inventory – $322.90
You’re probably thinking that $322.90 doesn’t sound like enough money to stock an online store and you are correct. We didn’t fully stock our online store in the beginning. For one thing, my wife and I were somewhat skeptical that we were going to sell anything at all. We also weren’t sure which products would sell and which would not.
As a result, we stocked a wide variety of products but in extremely low quantities. All it really took was 2-3 orders of a single product and we would be sold out. Sound like a customer support disaster waiting to happen? I’d like to explain our mindset at the time.
For starters, we weren’t 100% sure that we could trust our vendors. This was our first order and we were somewhat skeptical that we’d receive the same quality product that we saw on the show floor.
Second of all, we wanted to play things extremely safe in case we didn’t sell anything at all. Worse case scenario, if a customer wanted a large quantity of a certain item, we could take a small loss and place an emergency order to our vendors and have it shipped express mail.
Placing a small initial order of a large variety of items also allowed us to test the market and give off the facade that we were a well stocked store.
Do You Have $629.90 to Spare?
If you don’t, then you might want save up some money before you begin. But seriously, 600 bucks is next to nothing for the opportunity to start your own business and make infinitely more. Bottom line, there doesn’t have to be any major monetary risks to starting your own venture. Getting over the mental aspects is hardest part.
Did you like this article? There are many more articles like this on entrepreneurship, kids and money and how to open an online business on this website. Read about our journey how we went from earning 0 to 100 thousand dollars in 12 months with our online business. Looking for some laughs? Read about some of our crazy customer stories.
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If you really want to start your own online business and quit your day job, then you absolutely have to check out my guide on How To Create A Profitable Online Store In 5 Easy Steps.In this guide, I reveal the steps that my wife and I took to earn 100 thousand dollars in the span of just a year. Best of all, it's free!
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What an excellent article on how to go about what you need to start a business. Thanks for sharing your journey with us!
*smiles*
Michele
P.S. I gave this article a Stumble.
Hi Michele,
Thanks for taking the time to read the article and thanks for your support!
You’re welcome, Steve! I definitely agree with your last sentence, too – it’s getting over the mental aspect that is sooo hard, especially if the person doesn’t have a support system.
Hi Steve,
I absolutely agree. There is no reason to tak unnecessary risks! One of the great attractions of online is the incredibly low cost of entry and start-up. If you are selling stuff which others will drop ship you may not even need to carry inventory.
Thank you for sharing this! Those numbers is about what I spent to start my business. It doesnt take a lot of money these days, just careful planning.
Hi Evan,
The only problem with low barriers to entry is that there will always be a ton of competition. Good thing is that 90% of these people will drop out within the first few months. Drop shipping is definitely a nice strategy if you can pull it off, but generally it is less profitable than if you stock your own stuff.
Hi Carla,
I just read your personal blog for the first time today. I hope every turns out okay and that you will still have time to pursue your small business.
This is an article worth reading, thank you!
Hey Steve, remember when I asked about starting your own e-commerce site on Twitter? This post (along with the link to your earlier post on picking the shopping cart software) was just what I needed to move on with my idea!
Most importantly, I was curious to hear about how you started out with the inventory. Now I know the answer. Did you, btw, think about the opposite way to go of starting with only a few product but getting a bit more of each? Do you think that would ever make sense, or is it limiting the customers too much?
Thanks for sharing! Really useful stuff!
Hey Jarkko,
I’m so glad that you found this article to be useful. In regards to your inventory question, I think it depends on what you are trying to sell. For us, our competitors all carried a wide selection so we felt that we needed to as well. In most cases, you are forced to carry large quantities of a single product because most distributors (at least in China) won’t sell to you unless you buy in large quantities. Fortunately, we found someone that was willing to let us “test the waters” albeit at increased prices.
If you are selling something truly unique, then I don’t think it’s necessary to fill out your store but only you can be the judge of your target market.
What an excellent article! I think you explained very well on each and every obstacle.
br0 any suggestions for online business other than online store??
it’ll be really helpful to me..
[...] stuck ever again, you need to start a side business. These days, starting something online costs almost nothing so there really is no excuse not to try. Our online store currently costs around 80 dollars a month [...]
[...] Starting Your Own Business: Do You Have To Risk Your Life Savings? [...]
[...] Starting Your Own Business: Do You Have To Risk Your Life Savings? [...]
[...] good example would be Steve Chou of MyWifeQuitHerJob.com. Steve and his wife started their online wedding linen store with a mere US$629.90. They’d literally risked next to nothing to start their online venture. 2. Minimum risk. Risk in [...]