For thousands of years, people have founded businesses. There is no limit to the number of niches and platforms that people use to create their dream enterprises. Contrary to popular belief, the reason that businesses fail isn’t always because there isn’t a market demand for our ideas. (Though that can be part of it) Indeed, one of the greatest challenges facing potential business owners is purely financial. (E.g. The money it takes to get a business off the ground.) So maybe you’re wondering, “how much money do you need to start a business?”
The overhead costs for small businesses, in the US specifically, have never been so varied. There are business models that have minimal startup costs and others that require an astronomical investment. (Franchises are probably the most common type of startup that many people know of, yet large up-front capital is just one of the many hurdles that potential franchise owners face)
I have designed this in-depth educational resource as way for anyone to confidently understand what is needed to start a business.
What you will learn from this article:
- The average overhead costs for small businesses. (On the internet and off)
- Statistics and data about why businesses fail, and why they succeed.
- How to quickly get a business off the ground.
- Whether a business has coaching or education available.
- Important principles every small business owner must know.
- The most safe and profitable startup businesses anyone can start.
- Why 68% of businesses have outstanding debt (and how you can capitalize on that)
- And even more!
Let’s get right into this shall we?
How Much Money Do You Need To Start A Business? Is It Cheaper On The Web? (Infographic)
It is easier than ever to start a business and it doesn’t require a massive investment!
Because the internet is used so frequently, connecting billion of people together in various ways, this has become the most common business model in the United States. (And usually the most affordable!) Even “brick and mortar” businesses that operate out of a physical building are using internet-based marketing techniques to gain exposure. Furthermore, a study posted by Entrepreneur shows that 51% of Americans prefer to shop online! (And that was in 2018)
Also, a study was reposted by OptinMonster stating that 67% of internet users enjoy “window shopping” on their smartphones!
The internet has become such an instrumental tool for businesses, in fact, that it provided the perfect excuse for me to make an infographic showing statistics about why you should consider putting your business online from start.
Check this out:
How Much Money Do You Need To Start A Business On The Internet? (Spoiler: Overhead Costs Are Low)
There are several reasons that an internet based business model is the go-to for so many new enterprises. Simply put, it costs less, takes up less space, can be run with just one person, and puts your business in front of millions in targeted areas. (Personalized ads are just one example of using data-trends as a means to target specific potential customers)
To be more specific in terms of how much it would cost to start an online business, lets list a few things. There are a few factors to take into consideration so that we can calculate the startup costs:
- Website Hosting
- Advertising (if it costs money)
- Coaching/ Training (For the kind of business you want to start)
- Creating a Corporation. (If you need to) (LLC is the most common)
- If it is a Product-Based Business, developing the product/service or buying product stock could be a consideration.
- Consulting/ Employee Costs (Scaling a business doesn’t always have to happen later, many startups hire help from the start)
- Business Systems (KPI tracking, Analytics, money management, client management)
- Office related costs (Equipment, upgrades, and other required technologies)
- And other things to take into consideration.
What Are The Bare Necessities To Get Started? How Much Will That Cost?
Assuming you don’t have any products to buy or develop, you can scratch that off the checklist. Filing for the creation of a corporation is not always needed, we can take that off. You don’t have to hire help immediately, so there goes another expense.
Maybe you don’t need anything for your office? it is entirely possible to track a business with free tools, you could cut out the expense of online business tracking. And maybe you don’t even need to do paid advertising.
So here are the bare necessities of what you would need:
- Website Hosting
- An Existing Product or Service.
- Coaching/ Training
The startup costs today are practically nonexistent. It could be a few hundred dollars to several thousand.
But did you know that there are ways to get all three of these almost simultaneously now? I’ll be sharing some incredible details about brand new startup business opportunities below!
Why Do I Still Need Coaching Or Training?
BusinessInsider posted results from a survey that was conducted by Chris Hogan and Dave Ramsey (Both best selling financial book authors). It asked 10,000 millionaires what the secret was to their success. Can you guess what the first thing many of these millionaires credited for their success?
A Coach or Mentor!
The study pointed out that 86% of these millionaires had mentors who they received input from. These people had done what the millionaires wanted to do.
The terms can become a intermingled with each other. It appears that a portion of the millionaires interviewed in the survey didn’t like to admit that they had a coach, but were fine sharing that they had “mentors”.
What does this mean? It means that it is very possible that these millionaires do have coaches, they just call them by a different name. Having a mentor is just like having a coach, even if they think having a mentor makes them sound smarter than having a coach.
Having someone who know how to make your business model work is one of the safest and effective ways to make sure your businesses succeeds.
But Wait, If It’s That Simple, Why Do So Many Businesses Fail?
Although the business world can seem quite complicated, it really isn’t. Many young people going through high school are never exposed to crucial topics like competitor research, market data, or startup costs. (Did you know that 83 percent of teenagers admit they don’t know how manage money? And that 4 out of 5 parents don’t believe they are setting a good financial example for their children!?
It isn’t because people are dumb, or that they don’t have the capacity to learn about financial topics. They simply haven’t been exposed to this kind of information… And it shows.
Did you know that people do more research about the kind of cars that they buy than the businesses they want to start? V12Data posted a lengthy study conducted showing the percentage of people who will research a car before buying it, and the percentage of people who will look up specific things.
Since the study didn’t include a graph for this, I decided to make one for your viewing pleasure!
Did you get that? Businesses are failing largely in part due to their lack of market research! Furthermore, people are generally doing more research for a car that they are interested in buying than a startup business model. They aren’t wondering how much money do you need to start a business, they are more concerned with their cars!
“No research without action, no action without research”
Quote by Kurt Lewin (Famous German-American social psychologist)
How Much Money Do You Need To Start A Business That Is Safe, Cheap, And Highly Lucrative? What Industry?
Remember how I previously mentioned that market research is so important? (Being one of the biggest reasons that businesses fail) Because others have gone before us, we have virtually no limit to the number of viable business models today. What was once a speculative opportunity has become an established opportunity.
You don’t have to be a rocket scientist to know that if something is working, don’t fix it. Basically, adopt a business model that you already know people want.
Furthermore, there are now business models that come packaged with everything you need to get started for minimal costs. (I will be covering both online and physical options for a startup, but first I’ll cover the internet-based ones)
You Need A Recession Proof Business Model (9.4 Million+ Businesses Closed In 2020)
Anyone old enough to speak will tell you that 2020 was a roller coaster of chaos. The political and social difficulties that arose weren’t the only things to sweep people off their feet.
SBECouncil posted a study and found that at least 29.7% of small businesses closed in the United States alone. At the start of 2020, there were 31.7 million small businesses.
29.7% of 31.7 million = 9.4 million small businesses closed.
Did you get that? Maybe you recently heard that the economy wasn’t suffering or that unemployment was low? Yeah, they lied. (Or they don’t know what they’re talking about)
Oberlo posted an extensive study revealing that over 90% of the business population is composed of small and medium businesses. Small business creates at least 64% of the jobs in America. (With an estimated 1.5 million jobs created annually by these small businesses)
Oh yeah, and Oberlo believes that 31% of small businesses closed, not 29.7%!
Calculations of How Much Money Do You Need To Start A Business
If we are being conservative in our calculations, (using the percentages that SBECouncil posted) this means that at a minimum the US lost at least 435,000 jobs… in one year. (29.7% of 1.5 million)
So if you’ve been feeling like it was getting harder to land a job, or you weren’t able to find that small sandwich shop you used to go to all the time, you aren’t going crazy! The US really is experiencing economic problems!
But what if there was a business model that could capitalize on a receding (bad) marketing, and a rising (good) market? Putting your business in the perfect place no matter what happens around you? (Geo-politically, socially or otherwise)
So maybe you’re still wondering exactly how much money do you need to start a business that isn’t affected by these numbers? Well, check out my comparison below.
How Much Money Do You Need To Start A Business That Isn’t Affected By The Economy?
Startup Business Model Comparison (Pros & Cons):
1. Become A Business Lending Broker (Makes Profits Usually Within 60 days) (The Recession Proof Business Model)
Business lending brokering is easily one of the most underrated models for a startup business. Because brokering a deal doesn’t require a license, (or require you to have personal funds to lend out) we can become the middleman, connecting a business with the funds that they need. We make a commission, and we repeat the process. (It is that simple)
Why become a business lending broker? Well, there are a number of reasons why this particular startup business model is the best option right now. (And it isn’t just because you can make a lot of money with this method)
Why We Recommend Becoming A Business Lending Broker
- A study was posted (updated 2021) stating that at least 68% of small businesses have an outstanding debt. This means around 14,900,000 small businesses have taken out a loan of some kind. (68% of 22 Million) (31.7 million minus 9.4 million = Around 22 Million small businesses still in the US based off the numbers previously mentioned)
Debt consolidation is highly popular right now, so is getting a loan in general after last year! This business model is greatly in demand.
- The cost to get started as a business lending broker is extremely low. You actually don’t even need a website to do this, but it is nice to refer people to your website when you want.
- Because businesses are often looking for funds quickly, deals can be closed faster than a Real Estate transaction. This means any kind of startup costs (overhead) you incur can be made back relatively fast.
- As I mentioned before, this process is very simple and easy to learn. You don’t have to be a superstar CEO or something like that.
- There are complete startup packages available. (Which include coaching, business systems, strategies, resources, lending options, and more)
- This method carried startup entrepreneurs through 2020. It made it possible for people to take a bad situation and make it profitable. It also helped struggling businesses get the money they needed that year.
Tried & Proven In Any Market
- There are thousands of testimonials about how this business model is one of the best ways to create a recession proof startup.
- No matter whether the market is good or bad, this business model will always thrive. There will always be a business looking to get extra funds, and 24% of all loans are from online lenders! (At least 3,576,000 businesses use online lenders) (24% of 14.900,000 businesses)
That number is growing now. (Online lenders have an estimated loan approval rate of 75%. Why do you think so many businesses are using them instead of banks?)
Click the link in the headline above to check out Business Lending Blueprint. They help their students make money in 30-60 days from enrollment. The cost is affordable, and they offer free training about this topic!
2. Blogging (Affiliate Marketing, Site Ads, Email Lists, etc)
Blogging is considered the entry-level business model for online startups. There a few reasons why this is:
- It is easy to learn. (Write a post, publish it, optimize it)
- The costs are close to none if you don’t want to put a lot of money into it.
- There is coaching available for this topic.
- Recent statistics show that 77% of internet users regularly read blog posts. (You are reading one right now)
- Affiliate marketing is a common way that blogs make money.
- Email list building is also common on blogs. (Popup prompts have been around for decades almost)
- You can create your own free website with website builders and start today
The reason this particular option takes second place to business loan brokering, is because it doesn’t always meet a market demand. To put this in perspective, TechJury posted a lengthy statistics update which stated that 4 years ago in 2017, 77% of companies had already incorporated online learning resources. It also noted that 98% of companies intended to incorporate online learning methods by 2020!
Corporations Aren’t Demanding/Buying Blog Posts
Blogging is not an online learning method that businesses pay money for. The study notes that only 1% of the work week is set-aside for training. Thus, companies are looking for fast and effective ways to educate their workforce. This does not mean that they are going to compile a list of blog posts, it means they are providing targeted learning resources for their staff. (Examples would be courses, E-books, and videos)
Blogging is used regularly today, but it could disappear tomorrow, and companies wouldn’t bat an eye. The same goes for your average internet goer. They aren’t paying anything to read your content, and why would they? There are billions of webpages, and unless you are providing something unique and interesting, they won’t even read your post!
This method is easy to learn, but difficult to master to see how much money to start a business. (Ask me how I know) It also requires a good business plan if you intend to make a lot of money with it. (It may also require a large amount of startup capital if you are going to turn a blog into an enterprising content business)
3. Digital Services/ Products (Online Store, Product Creation, Drop Shipping)
Ever created a product that you successfully sold online? Have you ever invested a lot of money into developing a product that you researched? No? Didn’t think so.
The reason this takes 3rd place is because this particular business model is ever in demand and has become a pillar stone of common business strategy. Creating a product, selling it, and building a brand, is highly popular and profitable.
I don’t think I need to make a bullet-point breakdown of this one, it speaks for itself. If you have a product or service that people want, they will buy it.
The issue is that this isn’t an entry level business model. It isn’t easy to learn how to do and it can cost a lot of money to start. That being said, there are many coaching programs to do this, and the ROI time can be very quick if your product sells well.
4. Wholesale (Buying Low, Selling High) (E.g. Ebay)
Oberlo published another fascinating study, showing that there were at least 182 million Ebay users worldwide in 2019. It is safe to say that plenty of people have at least heard of this wholesale platform.
There are certainly others, Cqout, iOffer, and Bonanza are a few that come to mind to understand how much money we need to start a business.
Regardless of the platform, wholesale buying and selling is certainly a viable business method. If you have ever wondered why some stores on Ebay are full of random items (big and small alike) it is because they are wholesale profiteers.
Because of how many different items we can buy or sell, the costs to get started with this business model are minimal. This kind of business is also very simple to learn.
But because of the extra fees that many of these online wholesale platforms charge, making a significant amount of money or even seeing a return on your initial investment (ROI) can be difficult.
There also isn’t a demand for this business model. No one requires a wholesaler, it is just nice to find an item you are looking for. Wholesalers don’t produce anything. People can live without this. Business loans or specific products and services are among the world’s support pillars. (Can you imagine if WordPress or Verizon stopped offering their services and products? Suddenly the world is impacted. That’s the difference)
It does rank higher than standard physical businesses though. This is because you don’t have to actually have a product to start making money with this business model. (And there are coaches who teach about this)
5. Retail/ Franchise (Brick And Mortar Businesses)
Probably the most well-understood business model on this list for most readers. The concept of opening a restaurant, a department store, a salon, or something as historical as a butchery, is well-known. But there is a difference between reading about something and actually doing it.
The profits of a retail business can be enormous. Because these kinds of businesses take up physical space (in a building) there is a tangible part of this business model that customers like. Who hasn’t eaten at a pizzeria or shopped for clothing downtown before?
A growing trend, however, has given rise to many difficulties for physical retailers. This includes the biggest brands of the last several decades. (A study showed that in 2020, it was estimated that 25,000 retail stores would close in the US because people were shopping more online)
This business model also requires a hefty amount of money to start. If you are going to buy a franchise (like McDonald’s or Walmart), be prepared to dish out some serious cash, and stick to this business model for the long haul. Even though a physical franchise is still in demand, it can take years to see a return on your investment!
Like the other business models mentioned before, there are educational resources and coaching available.
How Much to Start a Business Conclusion (Sharing Is Caring)
What did you think of my post? Leave me a comment below with your thoughts. Did it answer your question of how much money do you need to start a business?
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If you have questions, feel free to ask them and we’ll get back to you asap!