Understanding how to run a business starts with understanding business start up costs. If you start a business the right way from the beginning, then you'll appreciate the ongoing cost and processes required to be successful.

Easy & Hard

The easy part is delivering the product or service you're already very good at producing. For example, architects who produce great drawings and restaurants that cook great meals. The hard part is getting the right business infrastructure in place including people, technology, processes, accounting, bookkeeping, tax, compliance, insurance, financing and so on. 

Business Wisdom

Entrepreneurs and would be business owners fail to understand the basic costs of operating a business. They end up making choices against getting something needed in favor of saying we can’t afford it or thinking it's too expensive. Henry Ford sums it up perfectly, "If you need something and don't buy it, you'll find you've paid for it and don't have it." Ford's quote is really the golden rule of all things business. 

Starting with $300

We've all heard stories about someone starting a business with $300 like we're supposed to be wowed by the amazing accomplishment. While I'm not discounting those stories, every business in history including all the failed ones can make the same claim. Every business spends it's first $300 on something, therefore every business started with $300. The real trick is understanding business start up costs and ongoing operating costs just to "keep the doors open and the lights on."

Minimum Viable Expenses

When you choose to start a business you have chosen to start in the negative. Your business now requires minimum viable expenses™ in order to sell your stuff. Everyone knows the concept of minimum viable product when adapted to running a business results in minimum viable expenses™. These are must have expenses not nice-to-have expenses. Entrepreneurs jump in without understanding these costs and later chose to avoid minimum viable expenses™ which start creating invisible expenses™ right off the bat. 

Getting Past Zero

Shift your mindset to starting in the negative. This creates an empowering context because you know "the what's so" rather than fooling yourself along the way. Your newfound urgency to sell will get your business past zero more quickly on the way to reaching your goals. Most people think they start at zero and hope they never go negative. 

Business Start Up Costs Simplified

Read the 9 Insider Tricks on How to Start a Business. It reveals the how while this blog tells you the how much. The expenses are rounded to the nearest $25 therefore the minimum expense is $25. Expenses come in two categories, one time start up costs and ongoing operating costs. Some expenses are monthly and some are annual. Some expenses like licenses or advertising the corporate name may not apply based on your state, municipality or industry. If they do apply then you must have them, therefore they are included in this example. Enterprise level software is assumed with a team of 1-5 people even although scaling may not significantly increase costs. 

Conservatism

It's a conservative approach by over estimating yet still representing the definition of minimum viable expenses™. Justifying the basis of the categories and amounts is beyond the scope of this blog. Anyone could argue away almost any one of the expenses items. The intention of the exercise is to illustrate, define and demonstrate not to get into an argument. If you think you'd win an argument, you're really losing in the long run from invisible expenses™.

Minimum viable expenses™ are comprised of start up costs and operating costs:

10 Start Up Costs

1. Legal advice $1,000
2. CPA advice $1,000
3. Logos $750
4. Corporation filing fees $250
5. Advertising the corporate name $250
6. Business cards etc. $100
7. Website design $1,000
8. Other registration fees $250
9. Computer & equipment $2,500
10. Misc. start up cost $500

Total start up costs: $7,600

 26 Operating Costs

1. Virtual registered agent $125/year
2. Virtual mailbox $100/month
3. Virtual office $125/month
4. Bank account/fees $25/month
5. Electronic document signing $50/month
6. Accounting software $50/month
7. Bill management $50/month
8. Receipts management $50/month
9. Document Storage $75/month
10. Password Manager $50/year 
11. Domain name $25/year
12. Web hosting $50/month
13. Email hosting $25/month
14. Virtual phone system $25/month
15. Mobile phone $125/month
16. Internet service $75/month
17. Other office software $100/month
18. Virtual accounting services $500/month
19. Annual tax preparation $1000/year
20. Payroll solution $50/month (varies per employee)
21. Time tracking solution $50/month
22. Licenses $250/year 
23. Business insurance (liability) $750/year
24. Business insurance (errors & omissions) $1000/year
25. Worker's comp $500/year (varies depending on the business)
26. Misc. expense/month $50

Total monthly operating expenses: $1,925

Do you see what I mean about starting in the negative? 

Empowering

Who said starting in the negative is disempowering? I didn't and neither should you. Stop wasting money in your personal life and you've magically funded some of the minimum viable expenses. Give up cable TV for a business virtual address. (I did it and I'd never go back. I specifcally chose these clashing expenses because I knew they would get the most resistance.)

Be Intentional 

If you already own a business you have many of these expenses but probably don't think about the whole list all at once. Could you start and operate a business for less? Of course you could. If you're focusing on avoiding something you need your energy is automatically diverted away from most important activities like generating revenue. Be intentional about your business by setting up your business infrastructure for success. The Ultimate Paperless Back Office™ by invizibiz is the best overnight back office and virtual bookkeeping services available.

Possibility

Just state what your business is the possibility of and the universe will start generating revenue for you. For example, invizibiz.biz is the possibility of providing peace of mind to 1,000,000 entrepreneurs.