Gotta Have It!

How to build a business on a $3,000 budget (and yes, that includes a computer)

Magazine Contributor

March 1, 1999 12 min read

This story appears in the March 1999 issue of . Subscribe »

Sure, it takes money to make money, but not so much money anymore when it comes to equipping yourself with the software and hardware necessary to get started in business. What equipment do you absolutely need, and how much should you spend? Those are tough questions.

After all, you don't want to squander your cash on equipment you won't use, but neither do you want stuff that's woefully underpowered.

"If you do your homework, I think you'll find you can outfit your business for less than $3,000 from scratch," says Braj Agarwal, a small-business consultant in Seaford, New York.

Sounds great. Let's spend it.

Eric J. Adams (ejadams2@aol.com) is a freelance writer who has contributed to a wide range of computer, business and general-interest publications, including PC World, Macworld and The New York Times.

Computer: $1,500

The heart and soul of every business is, of course, the computer. Prices for desktop systems have fallen ridiculously low, many to less than $700. But your business computer is no place to pinch pennies. Christine Whyte went looking for a new computer when she started MediaBank Custom Publishing in San Francisco in 1996. "I thought about upgrading my old 486, but instead I decided to go for a laptop, because I want to [work in] Spain next year [and take the computer]," she says.

Your plans may not include Spain, but laptops give you the flexibility to take your company wherever you want to go. "You can take them to client sites or work at home. They free you from a desk," says Agarwal. Plus, he notes, many are so powerful they can replace a desktop computer.

Laptops today can be had for $1,000 to $5,000. Plunk down $1,500*, and you'll get a more-than-adequate Pentium model from the likes of IBM, NEC or even Sony, with a 3GB hard drive, CD-ROM drive, 32MB RAM, a built-in 56K modem and an active-matrix screen for easy viewing. (Mac users will have to pay slightly more for a comparable PowerBook). If you're lucky, your computer will come with a bunch of software, saving you money down the line.

Before you buy, check for warranties and customer support. Don't settle for less than a one-year warranty and 12 hours a day of available phone support.

Printer: $500

If you're price-conscious, buying a printer will be a gleeful experience. Prices have dropped tremendously over the past few years, even though quality and performance have improved.

Inkjet printers for $200 or less are ideal for color printing, but they can be slow and the ink has a tendency to smudge. "Among the different types of printers, laser printers remain the fastest and most efficient way to reproduce text and images, offering high resolution and quick speeds at a relatively low cost," says Mie-Yun Lee, editorial director of Buyerszone, a Web site that evaluates and recommends a wide variety of office products (http://www.buyerszone.com). So when it comes to regular business printing, by far the most popular business choice is a laser printer. Lasers offer excellent printing at speeds from six to 20 pages per minute (ppm) and resolutions from 300 to 1,200 dpi.

Prices for desktop lasers can range from $250 to more than $1,000, depending on print speed, document-handling features, resolution, ability to serve many users, duplex (double-sided) printing, built-in fonts, memory (for quicker printing) and enhanced graphics capabilities. The best way to determine the printer speed you need: Do an inventory of your monthly printing. If you print fewer than 1,000 pages a month, a print speed of four to eight pages per minute should do, says Lee.

Hewlett-Packard remains the laser king with its LaserJet models, available from $399 to $2,100, but don't overlook models like the $799 Minolta PageWorks 20 Laser, the $349 NEC SuperScript 870, and the incredibly inexpensive $149 OkiPage 4W.

Fax Machine: $300

Even in this era of e-mail, you gotta have a fax machine. Stay away from those that require waxy, curly thermal paper. The choice today is the plain paper fax machine. And even though plain paper fax machines cost more than thermal ones, you'll save money in the long run when you consider that labor, phone time and supplies account for 85 percent of the machine's cost over three years, according to the Buyers Laboratory Inc., a business products research firm in Hackensack, New Jersey. Besides, why sweat prices when for less than $200 you can get the BrotherFAX 1270 or Sharp UX-500 standalone units, among others?

For an extra $50 or $100, you can purchase a multifunctional fax machine, like the Canon Color MultiPass C-3000 at $349, and get scanning and printing capabilities as well. But don't depend on a multifunction device to replace your printer and copier. Think of it this way: For the small price of an upgrade, it's nice to have these capabilities on hand should your other equipment break down, for occasional scanning or as a stepping-stone while you're growing your business. "Until I can afford a laser printer, my multifunction fax machine is going to be my primary printer," says Whyte. One step at a time--nothing wrong with that.

Telephone/Answering Machine: $200

Don't scrimp here. Business is all about communication, and the telephone is still the king of the business world. A two-line or even three-line phone lets you add lines as your business grows. And if you find yourself online quite a bit, two lines are essential from the start. "You can't have clients getting a busy signal," says Whyte, who uses one line for voice calls and the second for her fax machine and Internet connection.

You'll also need a phone with the essentials: speed dial, speakerphone and a hold button. Check out the two-line, $159 Panasonic Easa-Phone or the four-line, $179 AT&T 854 model.

An answering machine is imperative as well. Your biggest choice here is tape vs. digital recording. Tape sounds better, but, as everyone knows, tapes can break, warp or simply not work. Plus it's impossible to save selected messages with tape.

Digital machines give you more options, such as selective save and delete, and multiple mailboxes and greetings. But beware: Digital recordings can sound garbled, and recording time may be limited. Check out the AT&T 1772, which offers 24 minutes of recording time and can be had for under $70.

If you want tape, consider the Lucent 7610 combination phone/answering machine ($79) or the White-Westinghouse WINTAD-480 (under $20).

Don't want to bother with machines? Check with your local phone company for voice-mail availability; costs vary.

Buy Wise

Computers

Project your needs two years ahead when purchasing today.
Never scrimp on the hard drive. Get at least a 3GB, if not more.
A modem is an absolute must in this age of the Internet.

Printers

Get maximum speed within your budget.
Check the price of consumables, such as toner or color inks.
Consider paper-handling capabilities such as envelope printing and paper-tray capacity.

Fax Machines

Look for multifunction capabilities, such as scanning, printing and faxing directly from your PC.
Forgo maintenance agreements; fax machines are extremely reliable.
Use advanced features, such as delayed sending and broadcast faxing, for cost savings.
Check the cost of consumables such as inkjet and film cartridges.

Phones

Seek quality above all. There's nothing worse than trying to sound important on a cheap phone.
Look for multiline capability if you're expecting lots of calls.
Get plenty of features, like conference calling, for flexiblity.
Check recording time on digital answering machines.

Shop 'Til You Drop

If you want to plunk down more than the requisite $3,000, spend away. Here's what to splurge on:

Copy machine. Yes, your fax machine can double as a copier, but it doesn't have a platen--that flat piece of glass that allows you to make copies from books and magazines. For that, you'll need a copier.
Of all the pieces of office equipment, copiers are perhaps the trickiest buy. You can purchase a home office model for less than $600, but you'll be stung by the high cost of consumables if you use it for more than the recommended volume. The cost of consumables drops dramatically when you purchase a low-volume or mid-volume copier, but get ready for a higher purchase price--between $1,000 and $2,000.
Digital camera. These nifty devices don't use film; instead, photos are stored digitally and then transferred to your computer via a cable, card or floppy disk. There's no cost for developing, and if you don't like a photo, you simply erase it. Digital cameras are great for adding photos to Web sites, newsletters, business reports and fliers. You can use software (it usually comes with the camera) to crop, edit and size the photo in ways never before possible without expensive lab equipment. You'll pay $300 to $600 for a good "megapixel" camera, but you'll never spend a dime on film again.
Scanner. There are two reasons to purchase a scanner. The first is to transfer text from a page to your computer, where the text can be read with optical character recognition (OCR) software. The second is to be able to transfer photos and graphics to your computer for use in Web sites and document layouts. If you expect (as most people do) to do a little of both, then take a look at the many low-cost flatbed color scanners on the market. For as little as $150, you can have the ability to scan in both text and graphics at speeds and resolutions adequate for most jobs.

The Software Shuffle

With $2,250 spent, we've got $750 left for software. No sweat. When it comes down to the business of doing business, there are really only a handful of software categories you need to worry about:

Word processing
Spreadsheets
Database management
Accounting
Web browsing and design

Software Suite: $275

The need for word processing is obvious: writing letters, memos, business proposals, newsletters, press releases--you name it. But what do you do with a spreadsheet program? Spreadsheets help you formulate and make financial management decisions. For example, you can use a spreadsheet to compare loan amortization schedules, figure rates of return and analyze price/volume parameters.

A database is simply a collection of information. It can include all your customers, their purchasing histories, a mailing address or telephone listing, and more. With a few simple keystrokes, database management software can search for any particular piece of information, or any combination of information (such as all customers named Smith who have ordered men's shirts from you in the past year).

If you need to buy software, buy a suite of programs that contains as many of the five software categories above as possible. "Suites make it easier to share data across applications, and they cost far less than if you purchased the applications alone," says Agarwal.

Whether you're a Mac or PC user, you'd be well advised to stick with the bestselling programs, such as Microsoft Office, Lotus SmartSuite and Corel WordPerfect Suite. "Unless you have specific needs," says Agarwal, "there are too many advantages to the top-selling programs to buy much else."

Accounting Software: $75

Typically not part of a software suite, accounting software helps you handle the tedious, time-consuming, error- prone work involved in ordinary accounting. Scores of computer programs are available for dozens of different types and sizes of computer systems. Basically, they all do the same thing: keep track of money owed, money paid and money received under a more or less complex chart of accounts. The most popular programs for small business are Intuit's Quicken and QuickBooks and Bestware's M.Y.O.B. (Mind Your Own Business).

Suggests Sharon Miranda, a small-business consultant in Portland, "More than any other category, make sure you don't buy an accounting program that's too complex."

Web Browser/Site Designer: $150

Nobody pays for today's most important piece of software, a Web browser. You either get it free when you subscribe to an Internet service provider, or you can download copies from the Web sites of Microsoft and Netscape, the makers of Explorer and Navigator, respectively.

But if you're developing your own Web site, you'll want a good Web site development tool--one that looks and feels like a desktop publishing package. Look for a program that's easy to use and has templates for quick page design, but allows you to place pieces of text and graphics anywhere on your page, nudging each item a bit here and there, until everything looks just right. The program will then write the HTML code and send the files to your Web site. Agarwal says programs like Microsoft FrontPage and NetFusion's Objects will do the trick.

As you can see, it doesn't take long to blow $3,000. But now you have everything you need to get your business off the ground--and, with $3,000 to pay back, good reason to get cranking.

Only you can determine the right mix of features and manageability. Here's a step-by-step method for selecting the right level of software and hardware for your business:

Determine your goals. Do you want a word processor simply for correspondence, or are you looking for a program to create newsletters and catalogs? How often will you use your printer? Think task-specific.
Determine the limits of your PC. Find out if a software program will run--and run fast--on your computer before buying it.
Determine your limits (and those of any employees). Not everyone is computer-literate or even computer-trainable. Choose tools that match your skill level or learning curve.
Balance power and manageability. A powerful program does you no good if it's too complicated to use to its full potential. It's better to get a lot from a basic tool than a little from a complex one.
Focus on the big picture. Think in terms of an entire computer system, as oddball programs or pieces of hardware can cause all sorts of headaches. Whatever you buy, make sure it's compatible with what you already use.

Contact Sources

MediaBank Custom Publishing, (415) 821-4279, mbank2000@aol.com

Sharon Miranda, slm@e-z.net