Hi Tanner: Thanks for your question. And, it all depends. My wife is an entrepreneur who has started and operated two entirely different businesses during her 25+ years of being a business owner. She owned a Dental X-Ray Laboratory from 1993 - 2013. And, she currently owns a home staging company that furnishes and decorates homes for realtors.
Both of these business took a lot of money to get started. And, in both businesses, she did not start to make her money back (-- the start up costs that she invested to get these businesses going -- ) until her third year in business. I hope you hear from others on the Career Village forum so you can learn from their perspectives, too.
The key to starting and operating a business is not to take on too much too quickly.
- Start small and keep it small (Capital /Expenses) until you just can't do more, then grow (add more capital/take on more expenses). Example: Go month to month on expenses - don't take on 5 year contracts for services your need.
- Don't add people until you can't meet demand and you are about to lose business. It's important to take things to the limit (and yourself).
- Think of businesses that you saw expand too much at the wrong time. (phone / cable services / cable channels)
- Think of businesses that didn't see the signs and didn't downsize their business in time. (k-mart/sears)
- Think about businesses that didn't make an innovation leap and then went under while their competition seized the moment and took them out.(Amazon versus Book Stores or Blockbuster versus streaming services or local coffee shops versus Starbucks)
Cindy recommends the following next steps:
Hello. Here's a tip. If you want to start a business it will be much easier and usually less risky to start a business that is a service, rather than a business that sells a product. Here's why. Basically no inventory costs with a service biz. With a product based firm you have the original start up inventory costs to cover. These can be notable. I started a small marketing firm many years ago, and ran it for a long time. It was service based.
That said, if you have read that it takes 5 years to get a start up running smoothly that's about right. Usually your first year is the most challenging. You really need to be prepared to cover your own personal expenses for most of that first year. Here's why. Most income you generate while growing a business will simply cover your costs...inventory, rent, employees, etc. Your 'paycheck' comes at the end, if their are sufficient funds.
One of the best ways to start a business is to work at some company in your area of interest, study what else their customers need and prepare a plan to fill that need on your own. So when you are ready you quit the first company and found yours. Happens a lot. The benefit is that if you are correct in your assessment of needs, you will have a pretty good ready made audience for your new and unique product. Good luck.
Everyone on this string is spot on. To really understand and get an answer to your question, you need to find someone who owns a company much like you are dreaming about. Ask them questions. Shadow them. If your dream is a big company that already exists, find some one who works there.
I also suggest reading books by entrepreneurs who started a business in a sector you are interested in. Reading their experiences will give you a sense of what it costs, the sweat equity (that's your personal time and passion) and how they did it. Good luck!
Jennifer recommends the following next steps:
It depends on a number of factors - whether you are looking at a Product or a service, Your budget, your team, the timeline, time to market, demand in market. Running the company depends on the success of your first product/ service, your client base, the revenue, profit and the team. Overall Passion, Commitment are the key.