What We Dont Consider Start-Up Costs
First of all, while we agree with James that you could include the price of your chair, computer , Internet connection, etc. into your start-up costs, we dont. (Unless were writing stuff off on our taxes. Then we might reconsider…) As it stands, we were already online with the fast connections and had computers before we started this whole freelancing thing. In fact, that was part of helped us to make the decision to start our business. If wed each needed to go out and buy a computer, desk, chair, etc, we would absolutely not be here right now. We didnt even have to buy any special software, although I can see where freelance graphic designers might need to update their stuff pretty regularly.
As for the whole electricity/heat bill/cell phone argument; its a moot point for us. In Tamaras case, she and her husband would be switching off being home with their daughter, so the bills would be almost exactly the same. We use our personal cell phones for business and use scanning and emailing in place of faxing, so those aren’t additional expenses, either.
Could these things be considered start-up costs? Absolutely. We could easily stock our home offices with the latest gadgets and ergonomic chairs, put in separate phone lines for faxing or business, or even buy expensive invoicing software. They would probably even make our jobs easier. However, they aren’t necessary, and that’s the big difference. The beauty of freelancing is that there is more than one way to get the job done.
Freelancing Saves Us Money
I have to admit that I pay a fair amount of money for childcare these days. Its still considerably less than I would pay to have an infant in daycare, but I think its totally worth it. Our mothers helper comes to the house three days a week to play with the baby while I sit with my back to them and type furiously for four hours. In the long run, I probably save about $100 a month versus what I would pay to put her in daycare. Not to mention the fact that Im here any time she needs anything. Tamara’s childcare costs are considerably less, since she thrives on finding cheap alternatives that entertain her child while allowing her to get work done.
Of course, Tamara and I save a huge amount of money by not needing to commute. In fact, I dont really even drive. We keep me insured in case of emergency, but if I need to go somewhere, I generally either walk or take the bus. I dont even know how much money this saves, but I would guess its easily a couple hundred dollars a month. In addition, Im not tempted to eat out. I can tell you my daily expenses: $1.73. Each day I take the baby for a walk and stop at the little grocer down the street and get my one Mountain Dew. (The lactation consultant says I can have one caffeinated drink a day.)
Seriously, this is my daily expenditure. Tamara used to spend that much every day on pantyhose alone.
So, when we say that we started our business for $220, we mean it.
Costs We Think are Important to Mention
As some of the commentators have mentioned, though, there are continuing costs involved with running your freelance company. If you arent interested in growing much, you can certainly continue on for little more than the ongoing need to re-up your Guru/Elance account and maybe occasionally consider replacing an obsolete computer. Really, you can do it like that.
We, on the other hand, have worked to grow our business over the last year, and it has taken some money. Still, I would say that the amount we spent is significantly less than what we would have had to put out on having a real job. By not buying lunches out and filling the gas tank, we have more than saved enough money to put into our business.
Our expenses:
A website
Business cards
Note cards
A new blog
Of those, Id say that the website and the business cards were the most important.
Other expenses…um…weve started paying a couple of writers to take on some projects, so that might count. Of course, we have a system in place to make sure the business can pay for that: Fifteen percent of every payment we receive goes into the business account. This money is used to pay for the above mentioned items.
Oh, and We’re Very Fortunate…
One of the reasons that we have been able to start and run our business for so little is because we both have spouses that work. We arent trying to say that anyone can just jump in with $220 and all of a sudden be able to pay all the bills and take vacations to Tahiti. Neither one of us needed to make enough income to pay the mortgage, buy the groceries, or (as several of you mentioned) pay for health insurance. We definitely had time on our side, and that means that weve been able to grow our business over the last 14 months without having to constantly be worried about having our electricity shut off.
As with any real opportunity, freelancing isnt a get-rich-quick scheme. It takes a lot of work and energy. And yes, it takes some money, too. Sure, things are easier if you have more money to start out. Still, youre going to need to pay your dues, and that has little to do with a dollar amount.