It's a saying older than our grandparents. And as an entrepreneur, you've likely heard it over and over and over again. But is it really true that it takes money to make money?
In a word: Yes. I believe it does take some money to launch any business venture.
Most of the time, though, the upfront costs of starting a business aren't as high as entrepreneurs would expect. And even more frequently, first time business owners without a clear budget in hand spend a lot more money starting their business than is necessary, and more than they'll ever get back.
Ultimately, the cost of making a buck depends heavily on a number of factors. But there are several ways you can predict expenses and keep operational costs from spiraling out of control.
Evaluate Typical Industry Costs
First and foremost, the costs associated with launching your business will be heavily dependent on your industry. Are you manufacturing a product, or providing a service? Does your company operate mostly online, or do you need a brick and mortar storefront? How dependent will you be on hired labor? What kind of equipment will you need to purchase? In general, the more physical resources are required to produce your offering, the more startup costs you will incur.
The most costly expenses starting entrepreneurs typically incur include lease payments on retail, manufacturing, or office space; purchase of equipment or machinery; human resources (hiring employees); and marketing. But how much you spend in each category will vary widely depending on the product or service your business will provide.