Paper Cuts: Start Up Costs
Can I tell you all a not-so-secret? Yes? Alright, here you go: HAVING A BUSINESS IS EXPENSIVE, and STARTING A BUSINESS IS EXPENSIVE.
I kind of wish somebody really spelled that out for me when I first started. So, I'm spelling it out for you. E-X-P-E-N-S-I-V-E.
When I first started my stationery business I was under the impression that if I grew organically over time, I wouldn't have the same business expenses that other people might have. But the truth is, we all have the same expenses, I just spread mine out over the course of several years while I grew. I never took out a business loan, and I was shocked (SHOCKED) at how many of my small biz friends did take out loans. Not that I think loans are a bad thing, I was just so darn naive about costs that it never dawned on me to take out a loan.
Part of why I worked full-time for so long while growing my business was because of the huge investment that a growing business demands. I supposed my full-time salary was essentially my version of a business loan.
Did you know that most businesses don't really profit in their first three years? So don't beat yourself up if you started a business 1 or 2 years ago and still have debt or are just breaking even. In the world of social media I feel like so many small businesses make it seem like they EXPLODED into mega bucks overnight. But the truth is they didn't, and there's a good chance that their huge success is due to a huge investment (that they might still be paying off).
Last year was my second year in business (as Sincerely, Jackie Inc., I'm not counting my years as Believe Notes) and I spent over $36,000 on my business.
THIRTY-SIX THOUSAND DOLLARS.
And that didn't include any advertising, since I learned my (expensive) lesson on that the year before.
Those thirty-six thousand dollars were spent on launching an entire collection of invitations and buying samples of each suite; it was spent on lawyers, accountants, trade marking, website hosting, and other fundamentals; it was spent on fonts, software, a new computer, and all of my client & print costs. It was spent on participation in styled shoots, product testing, print errors, ordering mistakes, and all sorts of things that GO INTO EVERY BUSINESS.
Now friends, please don't panic! If you're pricing your product/service well than you should recoup all of your costs (plus some!), which is why it's so important to know what pricing structure works for you, and where/what you can afford to invest in your business. I have a certain number of clients I know I need to work with each year, at a minimum, to give me X amount of dollars to reinvest, and X amount of dollars to live off of. I also knew last year would be particularly expensive, and I planned for it ahead of time. There are always hidden costs out there, so I try to keep a reserve fund available for any emergencies (like when my computer died last year!).
I hope this post has been helpful for you! I don't want to scare you, but rather let you know that wherever you are, I've probably been there (and may still be there!). This whole business thing is scary, especially because of the money involved, so it's really important to be smart in making sure that you grow a profitable business instead of a crazy expensive hobby.
Wednesdays here on the blog are all about sharing Paper Cuts, which is a behind-the-scenes, down to Earth business advice series. I hope you've enjoyed today's Paper Cuts topic, and look forward to having you back next time! To read past Paper Cut posts, click here.