How much money do people need to be self employed? (employee, credit)

[wclac]

Does anyone know how much money needs to be saved to own you own business?

[elgusano]

That would depend entirely upon the business.

[Bydand]

Originally Posted by elgusano

That would depend entirely upon the business.

100% correct. If you are cleaning houses the amount you would need for equipment and supplies will be much less than if you are starting an excavating business. Could be less than $100 or more than $500,000. Depends on the business and credit going into it.

[wileynj]

I started my business 11 yrs ago with a $1000.00... a dream and ambition! It's an HVAC and Environ. Contracting Business. It took a good 2 yrs. before it took off but I think if I had more money on start-up... it would have been quicker. But like others said...depends on what type of business? Service, retail, etc. Insurance will be your biggest expense upon start up - assuming you will need it?

[sunsprit]

Aside from the issues of how expensive your "business" start-up is ... tools, equipment, supplies, inventory, materials, insurance, rent/lease deposits, utility deposits, office equipment/supplies, licensing (if applicable), marketing/advertising expenses, general operating cash flow, taxes, employee costs .... the range of business "start-up" expenses can range from very little for a home-based one person intellectual service business to a trade service business to a retail/wholesale sales business. Essentially, it can be as much ... or as little ... as the business model requires. It takes a lot of money to start up virtually any business ... even that little corner "lunch counter" restaurant where you're just serving sandwiches and burning eggs/bacon in the AM while the coffee pot is perking along.

However, on the personal side ... if you're going into a start-up "business" full time, then you need to honestly evaluate the marketplace and assess the liklihood of a return on investment, positive cash flow, and actual excess cash flow that can come back to you in the form of compensation for your time/effort/investment. IMHO, if you don't have two years worth of personal living expenses set aside BEFORE you go off the deep end into a full time business (and that may be a very conservative time frame), you're not on very solid footing to be in business. You'll have a lot of worries about making your existing payments (mortgage, car payment, groceries, insurance, etc.) to stress you out while trying to build up a business/living cash flow.

If you go the other route, trying to start a business "part time", then you need to ... again ... honestly evaluate the potential for positive cash flow and ROI. I've seen a lot of folks start out small, and be very limited in what they could do with a business due to their time obligations ... while still having all of the same business overhead and expenses as the full time business. Essentially, they were feeding their business dream out of the existing income; they would have been dollars and time ahead to have simply invested the money into other investments.

Of course, if you've got the "bug" badly enough and want to be self-employed ... as I did, years ago ... you'll pay the price, whatever it is ... mentally, physically, and financially. Looking back on some of my business efforts ... I would have been better off if I'd have just taken the money in cash from the bank and doused it with gasoline and burned it in a quick celebration instead of dragging out the pain for many months; I would have made more ROI just putting the money in CD's than going into the businesses I started. Then, too, I did have several long term business ventures succeed beyond my wildest dreams and give me (most of) the income I'd set out to earn ... but, I'll assure you ... it came at the price, in retrospect, of not making as much money with the same tools/equipment/knowledge as if I'd gone to work for a larger, established company with the market position to charge a lot more for my services to the end user. And I had to put in a lot more time to get that reward.

I'm not trying to discourage you from going into a start-up business, but I'm trying to give you an honest assessment of the realities of what it will cost you to do so ... some of it is hard cash, some of it is your time/energy. The value of the reward(s) are up to you to judge. If you're happy with the result, and have enough money coming in to keep yourself in the manner you're happy with ... I'd call it a success. Good luck.

[aaauger]

The comments on cash flow are exactly right. It doesn't matter how much you invest or how much you earn if you can't pay your bills (and yourself) on time.

[neekah18]

Originally Posted by aaauger

The comments on cash flow are exactly right. It doesn't matter how much you invest or how much you earn if you can't pay your bills (and yourself) on time.

I so agree with you. my mom decided to retire early from her job last year to start her own business. She left a managerial position where she was making good money at one of the largest hospitals in the tristate area. Had about $25k to start it up and keep it going for a while. Fast forward to a year and a half and she is treading water to keep the bills and mortgage paid. Needless to say I was right from the beginning and getting more and more angry and frustrated as the days go by.

[elgusano]

But, that's how any business is started. Anything worth doing is worth taking a risk over.

[sablebaby]

Originally Posted by sunsprit

Of course, if you've got the "bug" badly enough and want to be self-employed ... as I did, years ago ... you'll pay the price, whatever it is ... mentally, physically, and financially. Looking back on some of my business efforts ... I would have been better off if I'd have just taken the money in cash from the bank and doused it with gasoline and burned it in a quick celebration instead of dragging out the pain for many months; I would have made more ROI just putting the money in CD's than going into the businesses I started. Then, too, I did have several long term business ventures succeed beyond my wildest dreams and give me (most of) the income I'd set out to earn ... but, I'll assure you ... it came at the price, in retrospect, of not making as much money with the same tools/equipment/knowledge as if I'd gone to work for a larger, established company with the market position to charge a lot more for my services to the end user. And I had to put in a lot more time to get that reward.

That is so funny, and true! My bestfriend just closed her clothing store after 2 1/2 yrs. She never was able to pay herself and is now $30k or more in debt. She should have just not worked and watch TV for the past 3 yrs years and she'd be in less debt. But, I guess if you don't try then you never know.

[goodturn]

All the guys above me here are spot on and on the money
I started a construction company a few years back with next to nothing though I did have and overdraft limit of $3500 and because I'm a Carpenter I did have quiet a bit of equipment so I was lucky in that sense.
Got started with one contract worth $19,000 and I was away in a hack. The next contract was $30,000 and on and on and more and more they came in, I just kept winning contracts as my reputation was quiet known for high end quality. I thought I was sorted as by year one we had a turn over of approx $750,000:00 and climbing to double by year two.
But There's always a but. I had 12 carpenters employed two G,O's, a 21ton excavator, a loadall, scaffoldings and various amounts of lifting equipment let alone all the carpentry gear.
Bad side was that all this had to be paid for as well as construction materials constantly rising in cost as oil fluctuated. Long story short K Out goings where only just about being covered by the income and a fine line that is to walk in a volatile market. So this one client stings me for $47,500 and that's it! lights out jack.. Before I knew it I was back in the red with the bank by about 12K and no capitol to commence new projects and it kinda snowballed from there.

A wise man said that "why do we fall" and when no one answered he said "so that we can pick ourselves up again but with a little something gained"
I for one fell hard and fast but where there's light there's hope,
and for all we know you could be a feckn genius
So if you think you've got the maths right and your biz plan and your hunger and desire to make a success of your self then you have my support.
Think of this,
IMPERFECT ACTION BEATS PERFECT INACTION EVERY TIME!!
Remember It
goodturn..