The Price Is Right
This story appears in the August 1999 issue of Startups. Subscribe »
So you want to start your own business, but you don't have megabucks? News flash: You don't need megabucks. All the businesses we spotlight here can be started for $10,000 or less-in most cases, a lot less. We're talking $5,000, $3,000, even $1,000-amounts you should be able to scrape up from your bank account, borrow from Mom and Dad, or put on plastic.
Now, before you get nit-picky about numbers, a few ground rules: Costs cited under "Gear Guidelines" are estimates based on interviews with experts and entrepreneurs, and may vary. For a reality check, we asked actual entrepreneurs what they spent to start. In many cases, it was substantially less than our experts' estimates. If you've already got some of the essential start-up stuff, your launch costs will be lower, too.
Pamela Rohland (prohla@aol.com) is a freelance writer whose work appears regularly in national and regional publications.
1. Specialty Travel
After years working as a finance manager for a large agricultural company, 33-year-old Allan Wright was itching for a job that would combine his love of the outdoors, athletics and international travel. After doing research and taking a bike tour, he decided in April 1997 to launch Zephyr Inline Skate Tours, a specialty travel company that leads skaters on guided vacations through New York City, the San Francisco wine country, the Pennsylvania Amish heartland, the rail trails of southern Minnesota and the Netherlands.
Wright, who works from his home in Minneapolis, believes his company is the only one in the United States to offer in-line skating tours, but he certainly isn't alone in catering to the specialized tastes of today's travelers. Tourism is the nation's third-largest retail sales industry, and specialty travel is one of its fastest-growing segments, according to Steen Hansen, publisher of Specialty Travel Index, a biannual adventure and specialty travel magazine. Last year, more than 25 million people-many of them baby boomers with unprecedented discretionary income-traveled on tours, an increase of 22 percent since 1993.
"If it's done right, any interest can become a specialty travel business," Hansen says.
Little professional training is required; Wright says one of his primary forms of research was "dating a bicycle tour guide." He also prepared by taking a trip to the Netherlands to do research. Today, Wright generates most of his clients from his Web site (http://www.skatetour.com).
With 231 customers and $254,000 in anticipated sales for 1999, Wright is rolling his way toward success. But he knows that with an estimated 30 million in-line skaters in the United States, his journey has really just begun.
Specialty Travel Tools
GEAR GUIDELINES: You'll need a standard PC, printer and basic software (Windows 98, Netscape, Microsoft Office), a phone and a business phone line. Marketing expenses and setting up your business's Web site will cost about $2,000. Total cost: $5,500 to $6,000
WHAT HE SPENT: Allan Wright spent $3,000 for a computer, a printer and software to process credit card orders. He created his own Web site for about $200 and got a business phone line ($30 a month).
FOR MORE INFORMATION: Adventure Travel Society (http://www.adventuretravel.com, 303-649-9016)
2. Computer Consultant
Michael LeBlanc, a 34-year-old computer consultant from Norwalk, Connecticut, never dreamed when he started his homebased business in 1993 that one day it would hit sales of $1.4 million. But the demand for computer consultants continues to increase as more businesses install computers or upgrade their current systems, and healthy sales exist for those with some technical savvy and an entrepreneurial drive.
As the demand for consultants intensifies, so does the competition, so independent computer consultants need to find a niche before they go out on their own. LeBlanc's business, LeBlanc Communications Group Inc., provides something none of its competitors can: In addition to installing, supporting and maintaining computers, the eight-person firm also installs phone systems and develops custom computer-telephony applications. "Computers are telephone-intensive," he says, "so it makes sense to provide both."
LeBlanc doesn't have extensive experience in the field; he's a self-taught computer whiz who worked at a software company by day and helped a few of his own clients after hours. When he was ready to fly solo, he set up shop in his living room. A year later, he moved into traditional office space.
According to the Independent Computer Consultants Association, 80 percent of computer consulting businesses operate from home. That doesn't mean stingy profits, however. Twenty-nine percent of independent computer consultants gross between $100,000 and $150,000 a year, while 16 percent report sales of $150,000 to $500,000 annually.
But money isn't the only reason LeBlanc enjoys his field: "I like the business because I help solve problems and make people happy."
Computer Consultant Tools
GEAR GUIDELINES: Get a "no-name" computer (64MB RAM, 350 MHz) and a 17-inch monitor ($1,250 total). Add a fax machine or combination fax/scanner/printer, plus basic software (Office 97 Standard, Windows 98, Quicken Deluxe). Association memberships and subscriptions to professional publications will set you back about $1,100. Increase credibility via training certifications ($3,600 to $9,000 for three courses). Typical office expenses (business phone line, stationery, business cards) and advertising in the Yellow Pages round out the list. Total cost: $7,150 to $13,000
WHAT HE SPENT: Michael LeBlanc bought a Gateway computer, a monitor and software for $3,000, and spent $500 on a desktop copier and a fax machine. A desk, chair and two-line business phone completed his equipment needs ($1,000). Creating a logo, letterhead and business cards cost $750.
FOR MORE INFORMATION: Independent Computer Consultants Association (http://www.icca.org, 800-774-4222)
3. Personal Chef
For many of America's 50 million working men and women, dinner often means hastily gulping a prepackaged frozen meal from a plastic tray. If only someone could prepare tasty, nutritious, home-cooked meals like Mom used to. If only . . .
Well, professional personal chefs might not prepare the food with as much TLC as Mom-but they come pretty darn close. And they don't remind you to sit up straight while you're eating.
For about $300, entrepreneurs like Nadine and Tom Manning-the 31- and 34-year-old co-owners of Truly Unique Personal Chef Service in Medford, New Jersey-shop for groceries, come to clients' homes and (using their own equipment) prepare nine or 10 restaurant-quality meals of their clients' choice. All clients need to do is take the food out of the freezer, heat and enjoy.
The 10-year-old industry may be considered new, but it's growing fast, says David MacKay, founder of the United States Personal Chef Association and owner of Personally Yours Personal Chef Service in Albuquerque, New Mexico. By next year, MacKay estimates there will be about 4,000 personal chefs nationwide.
While having worked professionally as a chef isn't required, you do need excellent cooking skills, lots of energy and a desire to please. The Mannings, who started in 1992 and now earn sales of $90,000 a year, say although their schedule is hectic, there's nothing else they'd rather be doing.
"We have enough recipes to make clients a different meal every night of the year," Nadine says. "They're so appreciative because they're bored with frozen dinners."
Personal Chef Tools
GEAR GUIDELINES: You'll need standard kitchen equipment (like pots, pans and spatulas). A batch of 550 recipes is available from the United States Personal Chef Association as part of its $1,700 training package. Budget $2,000 for marketing efforts, and don't forget a business phone line. A PC and printer are nice, but not essential. Total cost: $4,000
WHAT THEY SPENT: $2,000 for marketing, stationery and a phone line
FOR MORE INFORMATION: United States Personal Chef Association (http://www.uspca.com, 800-995-2135)
4. Concierge Services
"Can you imagine, every day, feeling like everything you do is to help somebody? It's rewarding," says entrepreneur Andrea Arena. In more ways than one: The corporate concierge service she founded in 1991 rang up sales of nearly $3 million last year. Today, Atlanta-based 2 Places At 1 Time Inc. boasts 119 employees in 66 locations in the United States and Canada.
2 Places' early days were simple enough, says Arena, 32, who worked as a hotel concierge in college. "I didn't have any equipment," she recalls. The good news was, she didn't need any. She rented computer time and printed advertising fliers at Kinko's, then fliered church parking lots on Sundays and uptown corporate parking lots during the week.
Arena labored solo, running errands for entrepreneurs from her home, until the big score in 1992: She landed a contract with Arthur Andersen Consulting, which provided her with an on-site office.
Today, all 2 Places' corporate clients, including Motorola and 3Com, provide on-site offices for the company's concierges, who provide services ranging from errand-running and buying clothes to dealing with home-repair people. The company no longer relies on fliers-or any other type of advertising. "Typically, companies call us," Arena says. "[Corporations are] finally recognizing the importance of a work-life balance."
The hottest markets for concierge services right now are individuals and corporations, followed by office buildings, says Holly Stiel, author of the self-published Ultimate Service: The Complete Handbook of the World of the Concierge ($40, 800-78-HOLLY). Stiel, founder of Mill Valley, California, concierge services firm Holly Speaks, says the concierge industry appeals to so many entrepreneurs because start-up costs are low and the combination of services you can offer is entirely up to you. She says the essential qualities for success in this business include a willingness to serve, creativity and the ability to multitask. Says Stiel, "[You can't be] easily riled when clients demand everything be done at once."
Concierge Service Tools
GEAR GUIDELINES: Standard office equipment, including a computer (with database software to track client projects and vendors), a printer, a fax machine and basic office supplies will get you started. Total cost: $2,500
WHAT SHE SPENT: Andrea Arena's initial $5,000 investment went for attention-grabbing marketing packages designed to entice local newspapers to write about her. Although she used a manual tracking system for clients at the start, she recommends start-ups buy off-the-shelf accounting and project management software.
FOR MORE INFORMATION: National Concierge Association (http://www.conciergeassoc.org, 312-782-6710)
5. Public Relations
When it comes to public relations, finding a niche that's low on competition may be the quickest route to success. Just ask Erica Swerdlow, 34, and her husband, Brian, 35, co-founders of EBS Public Relations in Chicago. Erica's quest to become an educator after college took a detour when she took an entry-level position at a public relations agency while waiting to land a teaching job. "I loved it, and there was no turning back," she says.
Eventually, Erica established a high-tech division of the agency, a developing niche no other agency in the area had filled. "[High-tech PR] was [just starting to become] a booming market," she says.
In 1993, Erica left her six-figure salary and company car behind to start a high-tech public relations agency from home. Soon after, Brian left his position as a stock trader and came on board full time. First-year sales of $250,000 were all the proof the couple needed to know they were on the right track. "We were profitable the first month," says Erica. EBS moved into its first commercial space in 1995.
Finding an area of specialization is crucial to a PR company's success, says Alan Caruba, founder of The Caruba Organization, a PR firm in New York City. His business touts entertainment, high-tech, investor relations and pharmaceuticals as the hottest growth areas. "However, the mere fact that [PR] is a growth industry suggests there's enormous competition," he warns.
"Specializing in high-tech has made our success," says Erica, whose firm grossed $2 million last year. "We hear over and over, 'We like you guys because you understand what we do.' "
Public Relations Tools
GEAR GUIDELINES: A high-powered PC with MS Office is recommended, as well as software that lists media contacts, such as Bacon's Media Software (Bacon's, 800-621-0561). Invest in a copier (about $900) and a solid postage processor for bulk mailing. Add a fax machine, two or three phone lines, business cards and letterhead. Total cost: $5,000
WHAT THEY SPENT: Total start-up funds of $10,000 bought three 486 desktop "clones" and hired a networking consultant to streamline information exchange in the office. Erica and Brian Swerdlow also bought contact management software and acquired access to Lexis-Nexis, an online news and business information service. They leased a copy machine.
FOR MORE INFORMATION: Public Relations Society of America (http://www.prsa.org, 212-995-2230)
6. Web Site Consultant
When Patrick McQuown, 28, and Timothy Shey, 24, got their start as Web site designers three years ago, they met potential clients in their not-always-tidy dorm rooms at George Washington University in Washington, DC, sometimes with their hair uncombed and a bit of stray shaving cream still resting on their cheek.
But today, that kid stuff is behind them. The co-owners of Proteus Inc. now have 12 employees, respectable office digs in downtown DC, and a client list that includes Newsweek, TheWashington Post and Sony. They have grown-up sales, too, expected to hit $1.5 million this year.
Proteus is part of an explosion of Web site design companies and, like many, also provides related services such as building intranet and extranet systems and creating online banner ads. Industry experts say the boom will continue because a Web site is now almost mandatory for companies of all sizes.
Andrew Kraft, executive director of the Association of Internet Professionals, says it's hard today for self-taught beginners to gain a foothold in the industry. "In 1994, anyone could pick up a book on HTML, read some journals and be OK," he says. "Now, design is too complicated for nontechnical people to pick up on their own." Still, those with some technical experience could launch a homebased Web design firm for under $5,000, experts say.
"Beginning entrepreneurs should get a technical education, then get business experience," says Barbara C. Coll, founder of webmama inc. in Menlo Park, California. "A Web site has to reflect an entire business, and you won't be an effective designer if you can't understand how business works."
Web Site Consultants
GEAR GUIDELINES: Start with a computer with at least 8GB hard-drive space, a 17-inch monitor and a minimum 350 MHz processor with a graphics accelerator ($1,500 to $2,000). Add a scanner and laser printer, a 56 Kbps modem, graphics software, a Web management tool and file transfer software such as CuteFTP (available as shareware). You'll also need a variety of browsers (these are free), a reliable ISP (about $30 per month), a dedicated phone line for Net connections, a digital camera and space for your own Web site. Toss in a handbook on HTML, XML and Javascripting. Total cost: $3,500 to $4,500
WHAT THEY SPENT: Patrick McQuown and Timothy Shey already had a Mac and used their dorm room phone. They spent $200 on a Sprint Spectrum wireless phone.
FOR MORE INFORMATION: Association of Internet Professionals (http://www.association.org, 800-JOIN-AIP)
7. Event Planner
Silicon Valley entrepreneur S. Sidney Young wants to make one thing perfectly clear: She's not a party planner. "My goal is to make the work force at a company more of a team," explains the 28-year-old event planner, who specializes in corporate parties. "[My job is] to help employers communicate that [sense of connection]."
After earning a degree in public relations and working in the PR industry for five years, Young realized her experience had positioned her well to go it on her own. She found her target market when she noticed a trend in the high-tech Mecca: runaway employee attrition. "The turnover rate [in Silicon Valley] is phenomenal," says Young. "It's the-grass-is-always-greener syndrome. One of my key messages to employers is, 'We can make the grass green here.' "
Earlier this year, Young launched her business, dedicated to detail, from her Burlingame, California, home. Off and running with six clients on the books, she looks at every client as having repeat potential: "My goal is to become completely integrated into [my clients'] internal communications programs," she says.
Creative enthusiasm like Young's is key to successful event planning, says industry expert Brenda Rezak, president of Affairs To Remember in New York City. "Event planning is extremely competitive, so you have to make yourself stand out," says Rezak, who suggests active involvement in community affairs (such as board directorships) to create a "gets-the-job-done" reputation. The fastest-growing niche on the event planning horizon, says Rezak, is fund-raising events for nonprofit organizations.
Leaving a high PR salary behind to become an entrepreneur means it isn't about the money. Says Young, "It's about freedom."
Event Planner Tools
GEAR GUIDELINES: You'll need a computer with e-mail capabilities, a fax machine and dedicated phone lines. Contact management software, such as FileMaker, and accounting software, such as Quicken, are essential; if you plan to produce your own graphics for marketing materials, you'll need software for that, too. Marketing and networking are likely to be your biggest expenses (think meeting dues and meal costs), so budget $500 per month. Total cost: $10,000
WHAT SHE SPENT: S. Sidney Young already had a PC with word processing and spreadsheet software. Start-up costs of less than $2,000 paid for an initial insurance premium, phone lines, sales tools (business cards, letterhead, direct-mail literature) and a consultation with an accountant.
FOR MORE INFORMATION: International Special Events Society (http://www.ises.com, 317-571-5601)
8. Cart & Kiosk Business
A high school hobby collecting pro wrestling videos turned into a $1 million business for Rob Feinstein, owner of five Philadelphia-area mall kiosks that sell pro wrestling videotapes, T-shirts, posters, books and key chains.
The 27-year-old entrepreneur promotes his business, The Pro Wrestling Shop, by inviting World Wrestling Federation celebrities like The Rock, Cactus Jack and Bam Bam Bigelow to sign autographs for customers-mostly guys who range in age from prepubescent to middle-aged. He also has a newsletter and a Web site (http://www.rfvideo.com) where wrestling fans can get information on upcoming events and buy merchandise. Business is so good, Feinstein is planning to open kiosks around the country.
Like many young entrepreneurs, Feinstein had a great idea but not enough cash to open a retail store, so he opted for a less-expensive kiosk. Nancy Tanker, managing editor of Specialty Retail Report, a quarterly trade publication, says kiosk businesses are relatively easy to launch and don't require a great deal of merchandise. Entrepreneurs can highlight a few pieces of merchandise and easily change the look of their kiosk. The hottest kiosks today offer interaction, such as demonstrations or celebrity appearances.
But research retailing before you set up shop. "Because of the low start-up costs," Tanker says, "a lot of people aren't prepared to navigate the choppy waters of retailing. [Before choosing a site,] go to [malls] and ask store managers about the sales histories of kiosks at that location."
Cart & Kiosk Tools
GEAR GUIDELINES: Buying your own cart costs about $3,000; renting one from a mall costs less upfront. You'll also need a cash register, about $1,000 for initial advertising and about $4,000 in inventory to get started. Total cost: $7,100
WHAT HE SPENT: Rob Feinstein's start-up inventory and first month's rent at a mall cost $5,000.
FOR MORE INFORMATION: Read Specialty Retail Report. For a one-year subscription (4 issues, $49.95), call 800-936-6297 or e-mail SRREPORT@aol.com
9. Translation Services
"It's a big world: Get out there and translate." That could be the motto of business partners Elizabeth Elting, 33, and Phil Shawe, 29. The pair, who met while studying for their MBAs, has worked together to grow a 1992 dorm-room start-up into a $15 million business.
With 90 full-time staffers, 11 offices in the United States and four sites overseas, their New York City-based company, TransPerfect Translation Inc., is one of the power players in a hot new field fueled by the growth of international business. The company, with the help of 3,000 freelance linguists, translates a wide variety of technical, educational, business and marketing materials for Fortune 500 companies such as Upjohn, Dun & Bradstreet, American Express, J.C. Penney and AT&T. Not bad for a pair of post-grad students who financed their first full year in business with just $5,000 in credit card advances and, for nearly an entire year, ate four-for-a-dollar Ramen Fried Noodles for every meal.
You don't need to go on a crash diet for your translation business to survive, but, like Elting and Shawe, you still can get into the field with relatively little start-up capital, according to Walter Bacak, executive director of the American Translators Association. Of the 3,000 translation companies in the United States, most are small operations started with a few thousand dollars, often launched as part-time businesses.
It's essential, of course, to have good foreign language skills; Elting studied modern languages and spent her childhood and early adulthood living and working in Portugal, Spain and Venezuela. Beyond that, successful translators need to develop a niche: You could combine language skills with an engineering background, for example, to translate technical manuals. One of the best parts about owning a translation business, Bacak says, is that although your work is international in scope, you can do the translations right from your home computer.
Translation Service Tools
GEAR GUIDELINES: Start with a basic computer, plus modem and printer ($1,500 to $2,000). Add basic office software ($450) and online dictionaries. You'll also need a fax machine and a business phone line, plus business cards and stationery. Total cost: $2,600 to $3,100
WHAT THEY SPENT: Elizabeth Elting and Phil Shawe leased a computer, a printer and a fax machine for approximately $100 per month and used their home phone line for their business (about $50 per month).
FOR MORE INFORMATION: American Translators Association (http://www.atanet.org, 703-683-6100)
10. Mobile Massage
When Carolyn Hayde, 31, and Joanne Atkinson, 35, roll their mobile massage chairs through the streets of Boston, they're met with curious stares. When they roll into an office building filled with stressed-out executives, the co-founders of Backbeat are greeted with sighs of relief. "We have regular customers who get insane if they don't get their massage," says Atkins, whose company charges $15 for a 15-minute rub.
A growing number of people are recognizing the benefits of massage therapy. Consumers visit massage therapists 75 million times each year and spend nearly $4 billion annually on what has become America's third most popular form of alternative therapy, according to the American Massage Therapy Association. Entrepreneurs are recognizing that if consumers are too busy to visit the masseuse, the masseuse can come to them.
Before getting started as a mobile massage therapist, check the licensing requirements of your state and local municipality, as regulations vary.
Hayde and Atkinson, who met in massage school, started Backbeat almost two years ago with a single massage chair. Today, the partners have six chairs, four employees and projected 1999 sales of $150,000.
Businesses are beginning to view on-site massage as a way to prevent stress. "[After] we worked on the employees of one company," reports Atkinson, "the next day was the most productive in the company's history."
Mobile Massage Tools
GEAR GUIDELINES: A massage table or chair ($400 to $700), linens, portable CD player and CDs, stationery, business cards and a phone line. Total cost: $1,000 to $2,000
WHAT THEY SPENT: Carolyn Hayde and Joanne Atkinson spent less than $5,000 for a portable chair, first month's rent, office supplies and fliers.
FOR MORE INFORMATION: American Massage Therapy Association (http://www.amtamassage.org); Massage: A Career at your Fingertips by Martin Ashley (Enterprise Publishing, $22, 847-864-0123)
Contact Sources
2 Places At 1 Time Inc., (404) 815-9980, fax: (404) 815-9277
Affairs To Remember, (212) 986-3966, nyevents@aol.com
Backbeat, (617) 424-1313, fax: (617) 424-1970
The Caruba Organization, (973) 763-6392, acaruba@aol.com
dedicated to detail, (650) 568-1360, d2devents@usa.net
EBS Public Relations,erica@ebspr.com, http://www.ebspr.com
Holly Speaks,http://www.hollyspeaks.com
LeBlanc Communications Group Inc., (800) 899-8642, http://www.leblanc.com
Proteus Inc., (202) 452-6800, http://proteus.com
The Pro Wrestling Shop, (215) 891-9404
Specialty Travel Index, (800) 442-4922, http://www.specialtytravel.com
TransPerfect Translation Inc.,lelting@transperfect.com, http://www.transperfect.com
Truly Unique Personal Chef Service, 54 Watsons Wy., Medford, NJ 08055, (609) 810-9631
webmama inc.,bcoll@webmama.com
