Ok, I'm wanting to start an on-line retail business. I've done tons of research ,will be designing my own website, etc. Well, I will still be working my full-time job but I'm actually changing jobs and making more money, yay! Well, when I leave my current job I'm going to be using my retirement money for start up costs. I don't have much in this retirement, and I will be starting a 401k at my new job.

Well, after all this rambling this is my question. How much money did you start your business with? Where did you spend the money and where did you decide to hold off?

I'm very excited about this and actually won't receive the money for a couple of months but I'm very interested in hearing from all of you.

Thank you!!

How much money did I start GlamourPuss Shop with.....0$

I was a high school student when I started my website. With no start up cash flow Ive learned to improvise. For instance I would say 80% of the stuff on my site is consignment. Ive learned to network and exchange services instead of cash. I used to pay a graphic designer in free products and Im currently getting PR in exchange for advertisement.

I think I will borrow money in the future. Im going to need cash when I open a store which will hopefully be in two years when I graduate college. Im kinda glad I dont have any debts to repay for the business now. I have excellent credit and if I were ever in a jam I know I could get a loan.

Well, I can't exactly go that route. I don't know people to do that. how much does stuff cost such as having a website? Can someone give me advise as going with certain places for a website,etc?

I didn't really start with a set amount, just sort of spent whatever extra I had for supplies and everything.

Here are the general categories of my expenses thusfar:
-Taxes/Business License (I recommend starting legit from the very beginning and spending whatever you need to on licensure)
-Site Hosting (I use surpasshosting.com -- way cheaper and better than my previous host Interland)
-Shipping (Of products which is paid by customers, but also of promo items, press kits, etc)
-Office/computer supplies (i.e. CD-Rs and a flash drive for backup)
-Craft supplies (about 2/3 of the items I sell are made by me, the rest consignment, so this cost is rather high for me right now)
-Promo items and advertising (this is where you can really get pricey or keep it cheap depending on your goals)

I thankfully don't have to pay for Web/graphic design since I've got a background in it and can do it myself. If you need someone to do this for you, pay extra to get a good designer -- this is totally key to your sales.

Finally -- if you can avoid it, don't cash out your retirement savings (roll them into your new 401k)! A very large part of this (around a third or more) will go right back to the government in taxes if you cash out.

Thanks for all the great information. I hate to cash out the retirement (not a 401k, will be starting one of those at my new job) but I won't ever have the money to start this if I don't.

On the press kit/promo item deal, how does that work? I'm going to be selling handmade items by me as well as items I've purchased wholesale (not homemade).

I agree with plainmabel - I think it's best to avoid cashing out any retirement money, because the return you would earn on it is exponentially more than it's worth now (particularly with the market being as bad as it is). The whole compounding interest thing really does hold true, so it will be hard to make that up later. I hope you decide to investigate small business loans instead.

I started my business shortly after I was laid off, 2 years ago next week, for about $100. Some things that may help you tap into great resources that are low cost or free:

- join a local small business women's network and go to their monthly meetings to network and get advice. (free)
- get a reseller's license through your state board of equalization, which allows you to buy and sell wholesale ($25 or so)
- sign up for web hosting and a domain name for $7.95 plus $5.95 per month at aplus.net - please mention I sent you (happyhomedesigns.com)
- ensure visitors to your site can buy the product immediately with an online shopping cart. I suggest using the paypal shopping cart (free, plus a small % of your sales, which is standard for credit card retail sales)
- for graphic/logo design services, do a trade and offer a referral link on your site. I made pillows for a designer friend's couch in exchange for some graphic design.
- business cards are cheap at vistaprint.com - about $5.
- use mailermailer.com or constant contact some other email management tool to create and develop a mailing list. offer an exclusive discount or free shipping for those who sign up. Send out monthly emails with specials and/or news on new products and services.
- For my site design, I taught myself basic HTML by looking at other sites I liked and copying the code and applying it to my website. (free)
- use free search engine submission services to get yourself in search engines. Read submit-it.com (link on my 2nd links page of my website) for tips on how to optimize your site for search engines.
- trade links with other, non competitive like-businesses. I get 30-40% of my traffic from other crafty gals' sites (many of whom are on glitter!)
- spending money on advertising should be low on your list right now, focus on free promotion.
- wear your creations whenever possible. If someone compliments you on your bag, hand them your business card with your web address on it. Offer them free shipping or delivery of they're local.
- learn and understand the basics of retailing and starting a crafts business by reading some books from the library (free). a big ah-ha I had was realizing you can't deduct on your taxes what you paid for items (inventory) unless you have sold them or written them off as damage/unsaleable by the end of the year.

Sometimes I feel like I should write a book on this stuff! :)

Allison

thanks a lot for the info you guys. You are really helping me out. Allison, I met you at the Renegade craft fair. You had great stuff.

OK, here's another question, promo kits? What are they, how do they work? Anyone with any links, books, or helpful advise on this matter?

Also, anyone use Yahoo for Web-hosting?

From advertising to web space hosting to office supplies to get me organized, I've spent quite a bit of money already. Ads to bust are $250US and my web hosting space cost a little over $300CDN for the year. You can get way cheaper hosting than that, it's just I needed certain features that not a lot of people had.

My stuff is consigned, a lot of it being from word of mouth and from the glitter crew but for returning unsold items I end up paying shipping for that which gets to you if items aren't selling.

I think it's great that you're starting your own business!

i use godaddy.com for my domain registration--it was something lik e$10 for a year or two. a fan of mine offered me hosting space on her server--look around and inquire about someone providing you some megs of space in exchange for some of you products.

i had little money too; and the first month or so i was just barely breaking even. your initial costs will be greater than in a year or two. initial costs include licensing, bulk supplies (buy big boxes of biz cards so you won't run out, buy bulk of anything you'll use a lot of because even though it's more at first you'll have it for a while). perhaps invest in a decent quality digital camera too--this will be *essential* for posting pics of your stuff online!

go into some local shops that feel right for your product and pitch some consignment or wholesale. if you get into displaying at local shops, only do one or two styles of your products and give them lots of biz cards/brochures to display with the stuff. that way people can see your stuff, go online and find more like it. perhaps price your online stuff cheaper than the in-store products--people will feel like they're getting a deal online and impulse buyers at the store will still be giving you profit.

if you have friends in high places, give them some of your products as presents. then they'll wear them around, and word-of-mouth advertising will be born. :) nothing beats a recommendation!

good luck!

great advice so far! I sure wish I had this info 2yrs ago when I started.

some other things to consider:

your office and/or studio: If your going to be setting up at home its important to have designated areas, and for me Its important for my sanity to be able to close the door. so I can be able to be not "at" work all the time.

bank accounts: I don't know if they have been mentioned but you should open an account just for your business.

get your license:if you go legit (get a license /sellers permit) you can deduct some or all your starting costs on your taxes. I of course didn't learn this until recently but it's worth doing a little research to find out the details.the other major benefit of going legit is wholesale. you'll save a ton on everything if you buy wholesale.

good luck!
hiatus

Also see if you can work with another business.

My Dad liscensed the family's business's under the large name of tribal enterprises.

Mom's and mine are subsidiaries.

I'm going to use some insurance settlement money for my business...

Allison,

Please see my message under your's. For some reason it ran my reply directly under your response.

Help everybody, new questions.

Great advise so far.

Thanks for the compliments! :)

I have used yahoo stores in the past and had such a horrible experience with them, so I will never go back. They are SLOW to return emails and did/do not have an 800 number. If you go on their Store plan, you pay about $40 per month, but that does not include credit card processing - that's another $30 or so. Plus, Yahoo takes a % of each item you sell.

I let them have it when I cancelled my store. On a more positive note, I set up my own store for $6/month on aplus.net and with a paypal shopping cart. It's been great!