How to Start a Business Support Service

Startup Costs

One of the most appealing aspects of the business support services industry is its relatively low startup costs. If you have a decent credit rating, you can be ready to start serving clients with virtually no cash out of pocket--although you'll certainly be on firmer ground if you have some startup capital.

Most of the business support services entrepreneurs we talked with used their own personal savings and equipment they already owned to start their businesses. Because the startup costs are relatively low, you'll find traditional financing difficult to obtain--banks and other lenders would much rather lend amounts much larger than you'll need and are likely to be able to qualify for.

Many operators start their businesses on the side while working full-time jobs, so their personal living expenses are covered. But if you plan to plunge into your new business full time from the start, be sure you have enough cash on hand to cover your expenses until the revenue starts coming in. At a minimum, you should have the equivalent of three months' expenses in a savings account to tap if you need it; you'll probably sleep better if you have six to 12 months of expenses socked away.

Charlene D. in Winter Park, Florida, decided to invest in a new computer and printer and says she spent about $3,500 on equipment and supplies to get started. Perrysburg, Ohio's Rachelle Y. used her old 486 PC to develop her business plan and brochure but decided to purchase a new system before she actually began her operation. "I wanted to be able to offer everything I could," she says. "In this field, your computer is your best friend. So I bought a new computer and printer, paper, and some other odds and ends. I probably spent between $3,000 and $4,000 on startup."

Irvine, California's Cindy P. paid $10,000 to buy an existing business; that fee included the client list and the lease on the office, but no furniture or equipment. She spent another $4,000 on initial equipment purchases and has added more over the years.

Joann V. in Chicago started her business before the days of PCs. "Originally, all I needed was a typewriter," she says. "I bought an electronic typewriter for $500 and some paper, and someone loaned me a transcription unit. That was it--that was all I needed to start." In Edmond, Oklahoma, Janet S. says that because she already owned a computer, printer and answering machine, her startup costs were "virtually zero."

As you consider your own situation, don't pull a startup number out of the air; use your business plan to calculate how much you need to start your ideal operation, and then figure out how much you have. If you have all the cash you need, you're very fortunate. If you don't, you need to start playing with the numbers and deciding what you can do without.

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