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

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

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

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

Sounds great. Let's spend it.

Eric J. Adams (ejadams2@aol.com) is a freelancewriter who has contributed to a wide range of computer, businessand 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, thecomputer. Prices for desktop systems have fallen ridiculously low,many to less than $700. But your business computer is no place topinch pennies. Christine Whyte went looking for a new computer whenshe started MediaBank Custom Publishing in San Francisco in 1996."I thought about upgrading my old 486, but instead I decidedto 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 theflexibility to take your company wherever you want to go. "Youcan take them to client sites or work at home. They free you from adesk," says Agarwal. Plus, he notes, many are so powerful theycan 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 fromthe likes of IBM, NEC or even Sony, with a 3GB hard drive, CD-ROMdrive, 32MB RAM, a built-in 56K modem and an active-matrix screenfor easy viewing. (Mac users will have to pay slightly more for acomparable PowerBook). If you're lucky, your computer will comewith 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 aday of available phone support.

Printer: $500

If you're price-conscious, buying a printer will be agleeful experience. Prices have dropped tremendously over the pastfew 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 remainthe fastest and most efficient way to reproduce text and images,offering high resolution and quick speeds at a relatively lowcost," says Mie-Yun Lee, editorial director of Buyerszone, aWeb site that evaluates and recommends a wide variety of officeproducts (http://www.buyerszone.com). So whenit comes to regular business printing, by far the most popularbusiness choice is a laser printer. Lasers offer excellent printingat speeds from six to 20 pages per minute (ppm) and resolutionsfrom 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) andenhanced graphics capabilities. The best way to determine theprinter speed you need: Do an inventory of your monthly printing.If you print fewer than 1,000 pages a month, a print speed of fourto 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 likethe $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. Stayaway from those that require waxy, curly thermal paper. The choicetoday is the plain paper fax machine. And even though plain paperfax machines cost more than thermal ones, you'll save money inthe long run when you consider that labor, phone time and suppliesaccount for 85 percent of the machine's cost over three years,according to the Buyers Laboratory Inc., a business productsresearch firm in Hackensack, New Jersey. Besides, why sweat priceswhen for less than $200 you can get the BrotherFAX 1270 or SharpUX-500 standalone units, among others?

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

Telephone/Answering Machine: $200

Don't scrimp here. Business is all about communication, andthe telephone is still the king of the business world. A two-lineor even three-line phone lets you add lines as your business grows.And if you find yourself online quite a bit, two lines areessential from the start. "You can't have clients gettinga busy signal," says Whyte, who uses one line for voice callsand 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, $159Panasonic Easa-Phone or the four-line, $179 AT&T 854 model.

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

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

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

Don't want to bother with machines? Check with your localphone 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 notmore.
• 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 colorinks.
• Consider paper-handling capabilities such as envelope printingand paper-tray capacity.

Fax Machines

• Look for multifunction capabilities, such as scanning, printingand faxing directly from your PC.
• Forgo maintenance agreements; fax machines are extremelyreliable.
• Use advanced features, such as delayed sending and broadcastfaxing, for cost savings.
• Check the cost of consumables such as inkjet and filmcartridges.

Phones

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

Shop 'Til You Drop

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

• Copy machine. Yes, your fax machine can double asa copier, but it doesn't have a platen--that flat piece ofglass that allows you to make copies from books and magazines. Forthat, you'll need a copier.

  Of all the pieces of office equipment, copiers are perhaps thetrickiest buy. You can purchase a home office model for less than$600, but you'll be stung by the high cost of consumables ifyou use it for more than the recommended volume. The cost ofconsumables drops dramatically when you purchase a low-volume ormid-volume copier, but get ready for a higher purchaseprice--between $1,000 and $2,000.

• Digital camera. These nifty devices don't usefilm; instead, photos are stored digitally and then transferred toyour computer via a cable, card or floppy disk. There's no costfor developing, and if you don't like a photo, you simply eraseit. Digital cameras are great for adding photos to Web sites,newsletters, business reports and fliers. You can use software (itusually comes with the camera) to crop, edit and size the photo inways 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 ascanner. The first is to transfer text from a page to yourcomputer, where the text can be read with optical characterrecognition (OCR) software. The second is to be able to transferphotos and graphics to your computer for use in Web sites anddocument layouts. If you expect (as most people do) to do a littleof both, then take a look at the many low-cost flatbed colorscanners on the market. For as little as $150, you can have theability to scan in both text and graphics at speeds and resolutionsadequate for most jobs.

The Software Shuffle

With $2,250 spent, we've got $750 left for software. Nosweat. When it comes down to the business of doing business, thereare really only a handful of software categories you need to worryabout:

• 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. Butwhat do you do with a spreadsheet program? Spreadsheets help youformulate and make financial management decisions. For example, youcan 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 includeall your customers, their purchasing histories, a mailing addressor telephone listing, and more. With a few simple keystrokes,database management software can search for any particular piece ofinformation, or any combination of information (such as allcustomers named Smith who have ordered men's shirts from you inthe past year).

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

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

Accounting Software: $75

Typically not part of a software suite, accounting softwarehelps you handle the tedious, time-consuming, error- prone workinvolved in ordinary accounting. Scores of computer programs areavailable for dozens of different types and sizes of computersystems. Basically, they all do the same thing: keep track of moneyowed, money paid and money received under a more or less complexchart of accounts. The most popular programs for small business areIntuit's Quicken and QuickBooks and Bestware's M.Y.O.B.(Mind Your Own Business).

Suggests Sharon Miranda, a small-business consultant inPortland, "More than any other category, make sure youdon't buy an accounting program that's toocomplex."

Web Browser/Site Designer: $150

Nobody pays for today's most important piece of software, aWeb browser. You either get it free when you subscribe to anInternet service provider, or you can download copies from the Websites of Microsoft and Netscape, the makers of Explorer andNavigator, respectively.

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

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

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

• Determine your goals. Do you want a word processorsimply for correspondence, or are you looking for a program tocreate newsletters and catalogs? How often will you use yourprinter? Think task-specific.
• Determine the limits of your PC. Find out if asoftware program will run--and run fast--on your computer beforebuying it.
• Determine your limits (and those of anyemployees). Not everyone is computer-literate or evencomputer-trainable. Choose tools that match your skill level orlearning curve.
• Balance power and manageability. A powerfulprogram does you no good if it's too complicated to use to itsfull potential. It's better to get a lot from a basic tool thana little from a complex one.
• Focus on the big picture. Think in terms of anentire computer system, as oddball programs or pieces of hardwarecan cause all sorts of headaches. Whatever you buy, make sureit's compatible with what you already use.

Contact Sources

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

Sharon Miranda, slm@e-z.net