Self-Employment From Home – Crunching The Numbers
My boyfriend Erick just recently launched his own computer and office equipment repair business after being fed up with the job hunt. He’s been unemployed for a few years since the company he worked for began to go under. He had taken the time initially to go back to school, but graduation and many interviews later, still found himself collecting a paltry sum from the state each week. Computers and office equipment are what he does best, so it only made sense to start up on his own and try to make more than what unemployment can provide.
Of course I built his site, and ran some facebook ads, and he’s getting calls, but there’s lots of room for much more. It’s still new, but I wanted to take this opportunity to share some of the numbers I’ve come up with along the way.
Let’s look at some basic costs he had, living alone (before I came along):
Rent: $400 (renting from his folks – most people would have rent much higher than this, averaging about $700 in this area)
Car insurance: $125
Electric/Gas: $175 (avg)
All together, you’re looking at $950 for just these basic needs each month. I’m sure he probably could’ve found a cheaper phone plan, and I’m sure there were many times where he lived off canned soup and crackers, but this list doesn’t account for clothing, fuel, grooming/products, or any of the other day-to-day expenses of your average, educated, qualified-for-work human being.
This also doesn’t account for medical visits or prescriptions, emergencies, or anything else. Mind you, this is a man with lifelong migraines and back pain from two injuries in his past, so it’s not like he didn’t have a need for insurance or medical attention and prescriptions. Now you can see why he decided that unemployment and competing with hundreds of people for full-time work was no longer appealing!
Never mind the negative feelings that come from being unemployed, with everything from depression and despair to anger and frustration. This is what 9.2% of America is going through right now, and many don’t even receive the benefits he was getting each week. His previous job paid above minimum wage so he got “lucky”. If that word could ever be applied.
Okay, now that I’ve thoroughly depressed you, let’s crunch some numbers, based on reality, and you’ll see why I encourage everyone to consider starting their own business. Whatever it is that you can do well, someone will be willing to pay you to do it for them. (It’s a fact.) So let’s see how this could work, using the computer repair business as a base model…
Basic Costs To Start Up
There are certain things you need to have in order to start a business. Any business. These are the basics, and don’t include supplies or stock parts.
Website and Internet
- Hosting and domain name: $80/year
- Web design and development: If you can’t do this yourself, don’t just go for cheap. You get what you pay for. Expect to spend anywhere from $400 – $1500 to get your first (very basic) website design done. DIY is an option, but you need to focus on many other things in your business.
- Facebook: FREE
- Twitter: FREE
- LinkedIn: FREE
- Total: $480 and up
If you want to spread the word, you need to have several hundred of these to pass out to friends, family, and anyone you meet. You’ve got three good options:
- Buy the business card stock paper from an office supply store, and the ink for your printer, and make your own: $10/250 cards + ink usage
- Head over to a site like VistaPrint and buy some basic, professional cards: $10/500 + shipping
- Use Staples business card design tool online and head into the store to pick them up: $36/200 basic design cards + fuel to get to the store
Clearly, the best option here is VistaPrint. Your total cost: Around $15 for 500 custom, professional business cards.
Don’t Forget The Government!
Many states and local governments have requirements and permits you need to pay for in order to start your own business. For some, it may be as simple as a DBA (“Doing Business As”) certificate for around $30, and others may require legal permits to do business from your home, or even in your city at all. Depending on what you’re doing for a business, you may need a sales tax ID number, or a resale certificate. Check your state and local websites for more information, and make sure you file for the proper permits and tax papers.
Total: Varies, but plan on around $50 – $100
What’s The Grand Total?
So all together, we’re looking at $545 and up. I know, it sounds like a lot, especially given the unemployment numbers I gave you earlier. But I have a solution!
Erick charges $65/hr as his “starting” rate for computer repair. Assuming he only ever charged that minimum rate, and got in an hour and a half per project, after 6 projects he’d have all the money. But even better, he used a combination of free services and had a little help from family and friends.
- He happens to be dating a web developer, so I built his site for him, which saved him at least $400. See who you know, do some searches for web designers in your area, see what they charge, and it can’t hurt to offer them some kind of barter or trade of services. I’ve had this happen before, and it’s worked out very well for both parties. Just don’t go the whole, “I’ll pay you as I make money,” route, because web developers know that’s a gamble they’re not willing to take, and it’s unfair of you to ask for something like that. It’ll only serve to piss them off, trust me. ;)
- Sell some stuff on eBay or craigslist. Erick had some old computer parts laying around, so he photographed them all, boxed them up, and listed them on eBay. If you have larger items, you can use craigslist for local buyers. EVERYONE has stuff in their home they could do without. Gently used clothing, jewelry, stereos, electronics, old cell phones, stuff without sentimental value that could easily turn you a nice, small chunk of change. If you’re the creative type, spend a few bucks on some supplies (could even be nice paper and some paint or special pens, some clay, beads and wire, anything really) and make some art. Sell it on eBay and make that cash!
- Save up. Don’t go out to eat, don’t buy lattes, quit smoking or drinking (if that’s you), don’t drive unless you have to, slash your cell phone bill by finding a cheaper rate, cut your cable and internet down to the basics (or get rid of the cable all together and use Hulu and Netflix for movies and TV), just stop spending whatever you can.
- Spread the word for free. Use your facebook network, twitter followers, and LinkedIn to get the word out there that you’re starting a business. Tell everyone you know what you’re doing, and what your rates are, immediately. Beg and plead with your friends to share the info to their networks, too. By doing just this, Erick had three paying gigs before his site was up or business cards were printed!
- Borrow. But keep it small. If you’re less than $100 short on the cash you need, finding someone you can borrow the money from might be feasible. Make sure you explain how and when you’ll pay them back, and let them know all you’re doing to drum up business for your new venture. Don’t borrow too much, and don’t borrow from more than one or two people. Offer to pay them with a little interest, even, and as soon as you make some sales, take 50% of that money and apply it to the loan/s you took out with family and friends.
Using all of these methods will surely get you the money you need to get started. Make sure you get your permits and licenses first, then the business cards and website. Also, don’t forget to cancel your unemployment before doing ANY of this stuff, or you may just find yourself being indicted for fraud. Not good.
Now, For A Little Fun With Numbers
I decided that I wanted to see what Erick’s earning potential was. This is excluding any costs for supplies like cleaning fluids, replacement parts (which the customer pays for anyway) or equipment, as he already has enough of that to get started, but just to see what it would take to really turn this into a viable, successful business.
Let’s assume his rate of $65/hr as an absolute standard minimum. Forget the higher rates for a moment.
- In order to make $250/week, Erick would have to complete 3.85 hours of work per week. That’s about three projects.
- In order to double his money, and make $500/week, he’d have to work for 7.7 hours per week, or about 6 projects.
- In order to make $1000/week, which is $52,000/year, a nice salary (!), he would have to work for 15.4 hours per week. That’s about 8-10 projects, including driving time.
- For the ultimate goal of $100,000/year, which is $1923/week, he would have to complete about 18 projects per week, at 29.5 hours. NOT EVEN FULL TIME!
Realistically of course, there’s no guarantees that he’ll get 18 projects per week, and then you have to account for income taxes on the state and federal levels, which would account for about 27% of his income, but the bottom line is this:
Why isn’t everyone starting their own business?
I suggest it’s something everyone consider. Take into account any trade/skill, experience, knowledge, craft, or hobby and come up with a business you could even run locally. (I know, I know… I’m a social media chick with a bajillion connections to people who help you with online business strategies, but seriously. There’s more choices in life, find the one that fits you.)