Open Debate: The True Costs of Starting a Freelance Business

Over at Freelance Parent, there’s another duo taking the world by storm. It’s the Berry-Brewer gang, two girls who think we aren’t realistic about the costs of setting up shop as a freelance writer. They figure starting a freelance business doesn’t cost much and that if you have $220 bucks, you can set up operations.

I arched a skeptical eyebrow when I read that. If you’re going to get into business, be serious about it from the start – and the reality is that it costs money to make money.

Now, before I start writing, let me just say that I adore those girls. Lorna and Tamara are a pair of determined professionals that say really nice things about me and talk about me on video. (Yeah, I caught you rolling your eyes, Lorna…)

But I do think the girls see the world through rose-colored glasses and gloss over certain necessaries of freelancing, such as the set-up investment required to form a proper, credible business that earns good money in a shorter period of time.

Here’s my opinion on the true cost of starting a freelancing business. There are a few basics you need before you start:

  • Desk
  • Chair
  • Paper, pens, etc.

You can procure these items from around your home, but they do have a value and you did pay for them at one time. They have a cost. You could buy them at a garage sale or an auction. Great! You still need ’em. You still have to pay for ’em.

Now, we know many people who forego the desk and chair. We know businesspeople who work in bed, who use Internet cafés and who generally don’t really care where they work or how. That’s great for them… but if I were a client, I’d sure like to know my copywriter has some sort of an office to speak of.

A good chair is important. I work on a crappy chair that actually came from a bar I hung out at when I was young. It’s a nostalgic piece. It’s also uncomfortable and does all kinds of nasty things to my back and body.

You’ll need storage space too, so your desk should have drawers, a hutch or a filing cabinet attached. You might need a small bookcase as well.

Cost: $100 to 500 and up

Let’s move on to the needs in the electronics and computer areas of setting up shop. You’ll have to have:

  • Computer (so you can work)
  • Printer (so you can print stuff)
  • Software (the good stuff, not the crappy stuff)
  • DVDs, CDs or Flash drives (for work on the go)
  • External hard drive (for backups)
  • Laptop (optional, but really nice to have if your computer fries or you need to go out of town)

You can pick up your computer at a recycling shop, but they don’t come free and aren’t very reliable (and sometimes aren’t that cheap).

Skimping out on an old computer and outdated software isn’t really smart, and in my eyes, it doesn’t count as a low-cost setup to business. It only means that you’ve postponed an inevitable expense – usually one that occurs when your motherboard fails, your pirated software can’t be updated or your hard drive crashes and you lose all your client’s work.

There is open source software that carries no cost, but it’s not always the best software possible. There are workarounds you’ll need to figure out so that your clients aren’t stuck trying to open a file.

You can possibly make do with only a few DVDs for your work on the go and backup storage, but one scratch or a hot day in the car, and your client work is toast. Literally.

Cost: $1,000 to $3,000 and up

Onwards we go to business expenses!

Most likely, you’ll work remotely, at least for some portion of your job. That means you need an internet connection. Some people say that this doesn’t fall into start-up costs, because they would already have an internet connection for personal use.

I believe that’s a subject worthy of debate. Had I not been in business, I would have been quite happy with a dial-up connection to check my personal email. In fact, I lived with dial-up until about three years ago. Now I need a top-of-the-line ultra-high-speed T3 connection. Cost: $50 a month and up

Electricity costs also factor in. Alright, running a computer doesn’t matter a great deal to your overall utility bills, but it does count. Heating has an expense as well. If I were employed in a company, I’d turn down my heat during the day to save on electricity. Now I have to heat my home 24/7, all year round. Living in a cold area as I do, that extra heating affects my utility bill a great deal. Cost: $300 a year and up

Don’t forget the cost of telephones either. Basic telephone service is something people have regardless, so we won’t count that, but there are other perks to factor in like call waiting, call answering, call display, and long-distance plans. Cost: $50 a month and up

Because I’m a registered business, I have to pay the government each year for registration fees. If I wanted to incorporate to save myself liability, that would be an additional hefty expense. Cost: $40 to $1,000

I could do my own books (and I do a great portion of them), but I’m not an accountant and should buy great software or have my accounting verified for accuracy. That’s just smart business. Depending on the type of business or corporation I might own, the costs vary. Cost: $75 to $1,000 a year

I have a young child, and so I need to cover the expense of daycare. Some people choose to keep their kids at home while they work, and that’s okay, but children underfoot are an additional distraction from good work and hours spent on client projects. Cost: $140 a month to $400 a month

Let’s see… We’re up to a total starting at about $275 a month.

Ah, but we haven’t covered marketing expenses yet. This is another area where you can skimp a bit, but you’re postponing the inevitable. Not only that, if you can’t attract clients, how can you operate a business?

Here are a few things you shouldn’t skimp on:

  • Web presence
  • Web hosting
  • Business cards

Cheaping out to host a portfolio page or site on free locations out there isn’t smart, because that damages business credibility and could cost you clients. People come to us for moving their sites all the time because they realize free sites hurt business. A reliable web host costs about $6.95 a month.

Web presence is a little easier. There are templates and free themes that let you set up your own site without paying anything. That’s perfectly fine, but branding your site is important for credibility and reaching your target market as well. If you use a job auction site, you’ll need a banner to represent your company at the very least. Let’s be really cheap and put $100 for design and branding.

If you want to have presence on job auction sites to give your business a jump start, the good sites cost money. Some have no upfront cost, but they’ll gouge you on earnings. Let’s estimate $15 per month.

Business cards are something I consider a must. You should have cards that save you the trouble of telling a potential client, “I’m sorry; I don’t have a pen.” (Not only has this happened to me in the past, but I’ve had people I might hire tell me this frequently.) Printing is cheap, around $30 for 500 cards.

Last on my list is the physical and emotional cost of starting up a freelance business.

It’s stressful to be the sole person responsible for success. It’s tiring, too. Operating your own business also means that you may need to put in long hours at first to get it running smoothly, and these hours don’t bring in any money. They don’t cost any money either, but they are a physiological tax on your health.

Family life takes a back burner and so does playtime – not always, but frequently. You may need more emotional support from them, and you worry about job security or being able to provide a decent income. Your marriage might strain, your kids might complain and you may have to fight to keep a smile on. That’s an emotional tax you have to pay.

I’ll be the first to admit that you can start a freelance business with next to nothing. The Berry-Brewer girls are living proof of that. I even write on various blogs on ways to save money when starting up.

But as I mentioned, I don’t think it’s smart and I don’t think it’s realistic to open a business on a shoestring. You’re only hurting your potential to earn money, possibly turning clients away and conveying your business as one that isn’t credible.

What’s your opinion? Do you think my views of business start-up costs are way out of line? Did cheaping out on your investments cost you money? Are you on the Berry-Brewer side of the debate, or do you think we’re right? Let us know!

Even better, stay tuned. The girls over at Freelance Parent have thrown down the gauntlet and challenged us to a debate. Keep an eye out for their reply to this post – and our reply to theirs.

Post by James Chartrand

James Chartrand is an expert copywriter and the owner of Men with Pens and Damn Fine Words, the game-changing writing course for business owners. She loves the color blue, her kids, Nike sneakers and ice skating.

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  1. I just started trying to (slowly but surely) build up a freelance business. Originally, I was in the Berry-Brewer camp – hello, optimism! I am starting to be a little more realistic. With everything in life, there are the unexpected extras that creep in. But still, I’d like to hope for the better end of the cost spectrum right now.

    Erin Mahers last blog post..The Rat-Race Sucks; Be Wealthy Now

  2. From a marketing perspective, I’d say this is a great move. You’ve adopted the Microsoft vs Apple strategy. My personal opinion however is that it’s in bad taste.

    Do we really need a debate over this? You’re asking your readers who read your blog for guidance to make a choice. I realize guidance is a big word but that’s why I started reading Menwithpens and Freelance Parent when I decided to start freelancing a couple of months ago. Instead of bringing into question the way your competition does business, you could have used them as an example on how different approaches seem to work for different people.

    I think your views on business start-up costs are realistic if you have that much money saved up. But if you have a shoe string to start your business from, then that shoe string is enough to start a business.

    Bottom line: Make the best of what you’ve got and move forward from there.

    Samar Owaiss last blog post..The ‘X’ Factor.

  3. I have to agree with you guys without needing to read the other side of the argument. Even just my laptop and web hosting already cost me more than a grand. And there are still those other factors that you mentioned.

    Word of advice: if you want to cut costs, live with your folks. Heehee.

    Cedrics last blog post..Information Overload? Compartmentalize!

  4. @ Erin – I think the theory goes something like this: Hope for the better, plan for the worse. Sound advice!

    @ Cedric – You know, if I lived with my mom, I’d eat very, very well… hmmm…

    @ Samar – I’m not quite sure why you feel discussing start-up costs in a debate style between blogs is in bad taste, so I’d really like to know more on your thoughts.

    Bad taste in itself is subjective. I think someone wearing a garter belt and corset to a dinner party for the Queen to be in bad taste. I’m not sure where bad taste comes into having a debate.

    Maybe it’s the perception of the term debate. Where I’m from, debate basically means an open-minded quiet discussion amongst peers to look at all sorts of views and opinions so that people can make informed choices. It’s calm, and it’s educational. That’s exactly what we’d like to do.

    Maybe your perspective of debate is a screaming match where two people try to rip down each other’s arguments and someone comes out the bloody winner. I’ve seen those kinds of “debates” too. They’re ugly, and they’re not what we’re doing here.

    We’re not asking people for guidance, Samar. Not by any means. (Anyone who knows me knows that my asking for guidance is… well, not something I do.) The FP team and our team has already been through starting a business many times, and we all have our opinions firmly formed.

    We’re asking that people read both posts and think the costs of starting up over. They’ll then form their own opinion of what it costs to start up a business, and maybe even have an easier time launching their own because they’ve listened, thought and shared their views.

    Anyways, I really am interested in your thoughts, so please feel free to let me know.

  5. I already read the girls’ post. I personally don’t think anything’s wrong between these two blogs having a debate over this topic. At least we see both sides of the fence this way. Besides, both camps said that they’re good friends so I don’t think there’s anything hostile about this.

    Oh working in the folks’ house costs a lot too, errands-wise that is.

    Cedric Solidon at Write Like a Rock Stars last blog post..Information Overload? Compartmentalize!

  6. Oh, you can START it for a few hundred (as I did), but in order to GROW it, you have to invest in it. I took out a line of credit for $5K and spent about $3K on my first (and last) professional marketing brochure.

    Most of us have the basic electronics (which we have to include the value of into our costs because hey, these things eventually need replacing). An all-in-one printer and a dedicated fax line add up, as does the money you’re putting aside for your quarterly estimated tax payments to the IRS. Not to mention the domain, the web hosting, and the web design service for your new site.

    There’s no doubt you can run a business on a shoestring, but you have to be aware that doing it right means a bit more investment up front than any of us really expect.

    Loris last blog post..Baghdad Burning

  7. If you want to be really realistic, you should also plan on being able to feed yourself (and your family) and pay the bills.

    Your business probably isn’t going to take off from day one, it’s going to take some time for you to grow it. The amount of time it takes will most likely be directly proportional to the investment you can make in it, from both a time and financial standpoint. The less you have to start with the longer it will take.

    So I would add a couple of additional pieces of advise, before you ‘quit your day job’:
    1) Eliminate up ALL short term and credit card debt.
    2) Have a minimum of 3 months expenses set aside to pay the bills.
    3) If you haven’t already done so, put yourself and your family on a tightly controlled budget.

    You could argue that these are not direct costs associated with starting your own business, but I’ve been there and I can tell you that having this planned for in advance will greatly affect your likelihood of success.

    Failing to plan is equivalent to planning on failure. If you have these things clear in your mind you will be able to set aside some of the worry and focus on the goal.

  8. I didn’t explain myself well. I didn’t mean you’re asking for guidance. I meant I, as a reader come to your blog (and Freelance Parent) for guidance. As far as the debate is concerned, I’m all for it. I realized that ‘bad taste’ was too strong a phrase to use – I take it back. What didn’t sit well with me was the whole ‘Our camp or their’s’ aspect. A debate is about convincing your audience. For some reason, I felt that part of the debate is missing.

    I understand that you guys get along great, and apologize if I came across hostile. That was not my intention.

    I hope I did a better job of explaining myself this time.

    On a side note, where I’m from, we don’t have debates. We have martial law =)

  9. @ Cedric – Let’s see. Food and errands on one hand, self-reliance on the other. Now you’re just making it tough.

    @ Samar – Martial law is Harry’s camp. We Canadians prefer to conquer through politness. Probably explains why we don’t get very far… 😉

    @ Lori – Hmm… I’d disagree on the part where you mention most people have the basic equipment already. I believe that the stats are that only 1 in 3 households have computer access, so that leaves 2/3rds of people without that basic equipment. I could be wrong, though!

    @ DavidC – Any accountant will say that both direct and indirect costs of business are equally important. For example, the cost of labor is an indirect cost, and most people would say, “It’s just your free time.” That time has a dollar value to it, so it’s not free in the first place.

    I agree with you on the low/no debt and having padding. Way, WAY too many new entrepreneurs and freelancers live hand to mouth.

  10. Jean Gogolin says:

    I’d add an ENewsletter to stay in touch with your clients, to which you link (along with your blog) on your website. They’re not too expensive, but I consider my Enewsletter indispensible. Without it, clients you’ve worked with in the past can forget you exist.

    Jean Gogolins last blog post..Revealed: How the Financial Bailout Really Works

  11. Of course you are correct, though often (as you also noted) many of us already own the things we need or close to it.. or close enough 🙂

    As to living expenses, well, that depends. I had no reserves at all when I started my business, but I did have plenty of work lined up so that wasn’t a problem. Other folks, with less clients stacked up or with longer lead times, might need a lot more cash in the bank.

    I think the oft-heard “3 months living expenses in the bank” is silly: EVERYBODY should have that much or more, whether you are starting a business or not.

    But desperate times can call for desperate gambles. As I said, I had nothing in 1983, but I had nothing to lose either: I couldn’t be worse of self employed than I already was, so I dove in, paddled like mad, and made it.

    On the other hand, if you have 36 months expenses tucked away and no skills to run a business, you’ll just burn through three years of your money and fail anyway. So when I’m talking to someone who wants to take the plunge, I worry more about their skills and their drive than I do about their expenses.

    Anthony Lawrences last blog post..Windows 7 learning experience by Anthony Lawrence

  12. James,

    I’m glad you’ve highlighted this topic. I’ve gone the route of building a freelance business into a marketing consultancy, and I now coach freelancers to help them get more freedom (both time and money) as a result of operating their businesses.

    All of your points resonate. I am firm in the assertion that the most important tools in the business–the ones that facilitate delivery of services–must be up to date enough to save time rather than expend time. A hand me down computer and open source software will slow down projects and lead to slippage in delivery deadlines as system issues must be dealt. with. Over time, this can erode client confidence and lose business.

    Time, in fact, is a resource that needs to figure into the equation of dollars spent. Too many freelancers are willing to work 18 hour days in exchange for low spend. Though this may work in the beginning, it is not workable in the long term.

    Shoestring startups, if they maintain the shoestring strategy after the startup phase, remain jobs. The owner owns a JOB not a BUSINESS, and the lion’s share of the revenues finds its way to the owner’s personal bank account. A business has to grow and change over time; it requires investment for growth and multiple revenue streams in order to ensure its survival. As already mentioned, there also needs to be a reserve fund to deal with unexpected market downturns or expansion opportunities. Making just enough money to pay the bills doesn’t cover these needs.

    Finally, the “low startup cost” conversation, in my book, fans the flames of the “poverty mindset” that grips so many freelancers. The starving artist metaphor may be dripping in drama and romance, but it’s definitely not one on which to build a successful business.

    I think the conversation about freelancing should be more around how much less money it takes to operate as a viable service business today than it once did, and how a freelancer can very successfully compete with “fancy” companies with a far simpler cost structure.

    Thanks for a great post!

    Trish Lambert
    Success in Sweatpants

    Trish Lamberts last blog post..Something’s Happening Here

  13. Interesting discussion. I think it’s especially relevant for young people coming out of college who may not have most of these things or folks who may be wanting to start a business as a way to re-enter the workforce.

    However, when you compare the costs of working with the costs of freelancing (or having your own business) – I think that the freelancer will win every time. (Remember too, the costs of working are not tax-deductible. Many of the costs of starting a business are.)

    Here’s an example of my costs of working 8 years ago before I started:

    Gasoline $200 per month – I drove 1 hour each way to work, 2 hours of driving per day
    Wear and tear on car – at least $50 a month
    Parking – $100 a month
    Business dinners or lunches – $100 a month
    Professional wardrobe – $1000 a year.

    I could go on, but I think that you get the picture.

    (BTW, where did you get the statistic that only one in three has a computer? Could be right, but it seems a little low to me.)

    Great discussion – and well worth reading for those who are considering starting their business.

  14. I should have said working for someone else. We freelancers do work. 🙂 Yikes!

  15. I think the math is simple. Getting started on $220 is possible. Getting started with $1000 is more realistic. Having $5000 or more for promotion and as a cushion is ideal.

  16. @ Laura – Here’s one source:

    Nearly 97% of the highest income households had a computer, and 93% had internet access from home. In comparison, 45% of households in the lowest income group had a computer, and one-third had home access to the internet.

    I think you’ll agree that most people are not in the highest-income household bracket.

  17. I’m not sure but I think computers and everything else that you use for your business are considered capital. So if we talk about a start up capital, it may indeed cost a lot of money.

  18. Brian Killian says:


    What do you need a T3 for? What’s wrong with a plain old cable modem or DSL?

  19. @ Brian – The amount of files that whip around throughout a day here, from docs to emails to huge photoshop files, cable and DSL weren’t cutting it. There’s a notable difference in speed and more speed equals better efficiency, leaving me with more time to do the things that earn income.

  20. “speed equals better efficiency, leaving me with more time to do the things that earn income.”

    A VERY important point that is often overlooked in this type of discussion.

    Any time spent on things that don’t directly generate revenues is time that needs to be streamlined as much as possible. And the return on money spent on that streamlining will exceed the expense if the tools are being used effectively.


    Trish Lamberts last blog post..Something’s Happening Here

  21. @Brian: I have to agree with James, having a T3 is very important, especially if you’re dealing with graphics files. Many of them are huge and anything but a high speed connection is going to have you uploading (or downloading) for hours.

    Also make sure your internet package doesn’t limit you on the amount of uploads you can do either. On a typical day with all the sites we design and install for clients, we’re uploading and downloading hundreds of files several times a day.

  22. Urban Panther says:

    PLUS you are self-employed so do not have a) a pension plan b) benefits, c) any company paid life insurance and c) half your CPP paid for you. I believe you need to factor those in as well.

    Urban Panthers last blog post..Jumping to the Island of Conclusions

  23. Entertaining, engaging, informative, and spot on post.
    It took you about 5 – 10 minutes to write this post, right ? *arching a skeptical eyebrow*
    I have to agree with you and the other people commenting here about making the distinction of start-up, maintenance, and growth costs. Do start-up costs encompass costs over let’s say the first month, three months, or six months or the costs from the day you hang your shingle? I like the cost per month breakdown as well as the initial costs for breaking ground. I also live in a cold climate here in upstate NY and can differentiate between the cost and maintenance of the furnace itself and the cost of the natural gas that fuels it. The cost of the natural gas will easily be much more than the cost of the furnace over it’s lifetime (most cases – no lemon here hopefully!). I guess what I’m saying here is it’s necessary to look at electric, maintenance, and upgrade costs for computer hardware and software. I think I’m just repeating what you say above but I think it’s worth repeating.
    OK, now I want to know more about this bar chair – anything else we should know about it or you would care to share with us about it? 🙂

  24. @ Mark – I think the whole post plus editing took me max 20 minutes. When I hit something I know like the back of my hand, feel passionate about and coffee’s fueling me nicely, I can rip ’em out.

    The bar chair, interestingly enough… was a gift from my mother when I moved. “You can have that extra kitchen table and chairs I have,” she offered.

    I took one look and said, “Um… Yeah, these look familiar.”

    She didn’t skip a beat. “Oh, yes. I think you brought them home one night long ago…”

  25. “PLUS you are self-employed so do not have a) a pension plan b) benefits, c) any company paid life insurance and c) half your CPP paid for you. I believe you need to factor those in as well.”

    Many employees don’t have pension plans or company paid health insurance, benefits..

    Health insurance, benefits, etc. are just a cost of your self employment. If you aren’t making more than enough money to pay for those expenses, you simply don’t have a business – you have an indulgent hobby. I happen to have written about all that recently and put it in the link under my name if you care to read it.

    I’ll just repeat a few things I said there:

    If your projections are so tight that this will make a difference in your success or failure, you shouldn’t be starting the business at all. This is a minor expense, and if you can put the “I was paying just $40.00 a week!” nonsense out of your mind and just get on with it, you’ll be far better off

    The cost of health insurance should be one of your most minor concerns in self employment; a parenthetical afterthought that really does not have the great significance so many attach to it.

  26. @ Anthony –

    Many employees don’t have pension plans or company paid health insurance, benefits..

    That depends where you live. Certainly the United States may not have these perks, but in Canada, they are often standard or even enforced by law. Other countries in Europe have the same as well.

  27. Urban Panther says:

    @Anthony – yes, there are a lot of companies that do not have a health plan. That being the case, whether you work for such a company, or are self-employed, at some point you will need to pay for dental work. And it is either through a self-purchased plan, or directly out of pocket. If you are single, you can make this a low priority. If you have kids, are you going to leave that cavity in their tooth, or are you going to pay to have it fixed? It is an expense that must be accounted for.

  28. Graham Strong says:

    Laura beat me to it!

    Yes, there are many costs to consider when you are working for someone else, including gas, clothes, parking, daycare, lunches, etc. And as you point out James, you would likely have a computer, desk, chair and all those other things already. (Yes, they cost money somewhere along the way, but usually you don’t need to buy special equipment — though sometimes its a good excuse…!)

    The emotional toll though is certainly different. I always say its great, because I’m always there for the kids. On the other hand, I’m always there for the kids…

    Getting into any business costs money. But freelancers surely have it great: low overhead (if you work at home), low startup costs, and less travel to and from work. Plus you get to kick the soccer ball around in the yard with the wee’uns almost anytime you want…


  29. “It is an expense that must be accounted for”

    Of course it is. And it’s (relatively) small potatoes. As I said above, if your business plan is so tight that you can’t imagine paying for insurance, you aren’t looking at a business.

    If you expect to be scraping by at a substinence level, what’s the point?

  30. “usually you don’t need to buy special equipment — though sometimes its a good excuse”

    And it’s deductible once your business is up and running.

    But as we are fond of saying around here, “Necessity is a mother”.

    You CAN start a business with a second hand, near junk computer. After all, the computer that nobody wants in 2008 was creme de la creme in 2002.

    You CAN start with dial-up if you have to. You can run down to the coffee shop and connect wirelessly when you need that bigger file or maybe get a friend to download it for you.

    You CAN start on a shoe-string if you have to. Should that be your business plan? Of course not. But when the going gets tough, survivors find ways to get by.

    I’m not one to encourage penny pinching. I absolutely agree that you should have what you need to have and you should look at compromises very suspiciously.

    But necessity can be a mother effer, can’t it?

  31. Near junk computer (that may or may not accomodate a wifi card), dial-up with coffee shop back up…sounds like a person who bids $5 to write an original 1,000 word article on Elance.

    If someone wants to start up at that level, I strongly suggest keeping the day job for the time being. Run it as a “hobby” or moonlighting gig, and when (actually, IF) there’s enough traction, first priority is to create an infrastructure that supports a full time business.

    Trish Lamberts last blog post..Something’s Happening Here

  32. ‘Run it as a “hobby” or moonlighting gig’

    Sure. And then when a client wants to talk to you about a $150 per hour oppurtunity, well gosh, you can’t because you have to be at your $25 an hour job.

    So you call in sick and you get the gig. Except now you can’t do the work except nights and weekends ‘cuz, well, you know why.. and when the client calls and says “I really need to meet with you to discuss changes”, oops, you need to call in sick again and your boss is getting ticked..

    Piss or get off the pot. Either give the thing the time it deserves or forget it.

    “Near junk computer (that may or may not accomodate a wifi card), dial-up with coffee shop back up…sounds like a person who bids $5 to write an original 1,000 word article on Elance.”

    Not quite 🙂

    I’m writing this on a $2,400.00 system and there are more computers scattered about my office. Thousands and thousands of dollars worth of reference books line my walls.. I don’t pay for that stuff with $5.00 gigs 🙂

    But that’s now. When I started in 1983, I didn’t have much. I did own a decent computer then, but that was about it. Now truthfully, I didn’t have much choice: my income from my job had dropped precipitously so striking out really looked better than sinking farther, but I could have instead found a better job. I didn’t go that route because I WANTED to work for myself.

    It’s nice if you have everything you need and don’t have to compromise when starting out on your own. But not everyone does. And as I said before, having plenty of cash to start out doesn’t guarantee success at all. I’d rather put my bets behind the person with fire in their belly and not much else than a well funded dud.

  33. James,

    You and your readers have had some great ideas here today. Of course, we don’t agree with them all, because where’s the fun in that?! We’ll see you over at Freelance Parent on Friday!

  34. @Anthony, I with you. Piss or get off the pot. If you’re freelancing on an old computer or dial up, call it what it is–a hobby, or a labor of love.

    I work on a high end laptop with built in WiFi and can and do work anywhere in the world. I started my business (4R Markeitng) in 2005, broke into 6-figure revenues before the end of 2006 and haven’t looked back. Started the coaching practice this year to help other freelancers do the same.

    “I’d rather put my bets behind the person with fire in their belly and not much else than a well funded dud.”

    As a buyer of freelancing services, I don’t put my bets on either. I wantthe well funded person with fire in their belly. This tells me that, in addition to passion, they have the savvy and realistic eye to understand what it’s going to take to deliver the goods on time and for the price they’ve quoted.

    Trish Lamberts last blog post..Something’s Happening Here

  35. @ Anthony – I’m with you that if you’re going to do it, do it. Even if you have $20 and nothing in it.

    On the other hand, I see business owners actually brag about writing in bed because they have no desk or justifying how a crowded, noisy cafe is the perfect place to work on their client projects…

    Um… no. Sorry. That’s just not business. That’s the type of freelancing with pajama pants and bunny slippers. And it ain’t for me.

  36. Well to be honest with everyone, I started from nothing. All I had was the MacBook I got a gift and some public wifi hotspots. Luckily I knew enough already about coding, and web developments just by spending time at the library and building up projects for my own needs.

    Not to say that within the past 14 months of doing all this hasn’t been a struggle but its been good enough to keep bootstrapping my efforts, and if you figure in the time between flipping burgers and answering annoying customers then its really been long and hard. But, all in all, if you know what your doing both career and business wise, can prove that you do with the right portfolio and have a great support system, with good web presence, in play then it doesn’t mater if you only start out with a budget that would only be enough for a lemonade stand.

    Just one last piece of advice, make sure you get your articles of incorperation in order so your on the up and up. Keep that enthusiastic will to self improve so you always have a usable skill set and what not. Network, network, network… And, finally use open source software like OpenOfficeOrg, Blender, Gimp/Inkscape, Firefox, and Linux since they’re free and have a great community of users backing them these software titles are better than the ones you have to pay hundreds of dollars for. Now keep these in mind and your golden.

    Dwight Spencers last blog post..Are Cost Cutting Strategies Cutting Our Own Heads Off?

  37. Why do you have to pay to re-register your business every year? I only registered once. You are Canadian, no?

  38. I had been interested in starting a freelance copywriting / SEO business for a while, and when a windfall came my way, I jumped on the chance. I’ve invested at least $1000 in my enterprise, (mostly by way of a really functioning computer). At the moment I’ve still got a regular day-job, and I’m trying to keep the costs of running my business very low. I agree, however, that some costs have to be met up front — if you’re serious about attracting customers, for example, you need to have a decent logo and branded presence online. I’m still working on mine, and I haven’t taken that leap of $500 or so for a good logo, but that’s the next big thing on my list.

    Heidi @ Punctuating Reality

  39. @ Nancy – Canadian or not, you have to pay to keep your registration alive each year. In my case, my accountant pays it in the process of various tax payments throughout the year.

    But if you don’t pay, your registration becomes nul and void.

  40. Thanks for the reply on the bar chair history James.
    I just read for the first time your post titled “How to Keep More Money in Your Pocket” referenced by a link above in this post. Very well written and advice I definitely agree with. Now if we could only keep our government representatives responsible for budgeting our tax money after school and have them write those principles you posted about on the blackboard … maybe, just maybe we could experience something like businesses are required to do to stay in business!

  41. I didn’t think much about the start up costs to starting my business because I had a lot of the equipment to begin with. However, much of it has needed to be replaced and upgraded. I also became keenly aware of the costs during those lean months of trying to make sure nothing got shut off.

    But you really hit the nail on the head when you talk about the emotional costs. That’s real. My business is going through some growing pains right now, and I’m feeling a lot of what you mention more than ever.

  42. I agree with both sides of the argument. Most people I know already have a computer or laptop of some sort, already have internet, already have a desk, already have a chair, already have basic software (microsoft office), already have USB Devices and CDs, and more…

    …with that said, it cost me almost nothing to get started last year. In fact, my costs went DOWN when I started my freelance business since I stopped driving so much and eating out at restaurants.

    Nonetheless, I wanted to add more things over time such as a 2nd monitor, a printer, an extra computer, faster internet, training programs, and more. I’ve probably spent $5000+ on my business in the past 6 months.

    So yes, there are major expenses for starting a Freelance Business (since I consider the first 2 years “starting”). But when you want to literally get it going in the first few weeks you shouldn’t have to spend too much money to get things going.

  43. Oh hell, I’m late to the party—

    I _somewhat_ agree with you fellows. I’ve been able to save myself thousands using my hippie commune connections. Example: I built my own gaming computer out of spare parts. The only gripe I have about it is that the video card can’t run Direct X 10 games. I spent a grand total of $10, because I needed to buy a couple extra case fans.

    I get web hosting for free, because my friend has a server. I use open source software as well, or bake cookies for programmers if I need something special done. Same efficiency as the brand names, except the most I pay is some delicious homecooking 😀 (which is about $4 worth of ingredients)

    University connections might get me free business cards, but I’m still checking up on that.

    Family plan cell phone: $20 for my line (a group of us pitch in).

    I realize that not everyone has the same situation as me, but I’m just saying that there is a way around costs. Now, I don’t have a lot to say about the other costs, being that I get (some) perks through my college tuition and that I actually haven’t launched a business yet. Still, I was able to save myself a lot of money on some of the small stuff by bartering services with friends 🙂

    Now obviously this isn’t the road to instant success, but some of us only have literally $1500 in our bank accounts. That’s not a whole lot to build a dream on, but hey, a girl can try her best, right? 😀

    Now to find a graphic artist to help me with branding… 😉

  44. Heike Miller says:

    I’m in the process of setting up my business as a virtual assistant. I’ve always heard from other VAs that it’s so CHEAP to set up this business, but I’m already in the several thousands. And that’s ok as I feel it’s an investment in my future.

    For a business like that you need to have the best and newest IT and you also need to upskill constantly. I have postgraduate management qualifications and worked as an executive assistant for large organisations, but working online and for yourself is a whole different ball game.

    In the past I’d call the IT department when something was wrong with my computer and some of the guys would come up to my office and fix things without me being bothered – or billed. Nowadays I’m sitting here on my own trying to figure things out or need to find someone who can help.

    The software and hardware I used to have in my office at work and which used to be updated regularly is now my own investment. Have you ever checked how much the Adobe suite or Photoshop, for example, cost?

    You need to learn a lot when you change from corporate employee to small online business owner and this costs time as well. The internet changes so rapidly and you need to invest in upgrading your skills constantly.

    Additionally, you need to get your Constant Contact newsletter and autoresponder subscriptions, your Fresh Books invoicing packages, your Smart Sheets project management software, the 1shopping cart set up, photos from the stock agencies for your websites, etc. etc. It is NOT cheap to do things professionally.

    I’ve just ordered postcards to send to clients, have done my logo and stationary, bought a new laptop, opened a new business account, got my website hosted. Now I have to pay big bucks to become a BNI member. I go to speed biz events, joined the Chamber of Commerce and am a member of two womens’ networks. Do you think those associations are free?

    No, unfortunately they are not.

    I think this “debate” is necessary to let people know that it’s often not that easy and cheap in most cases than anticipated. You need to be prepared, otherwise you will get disappointed and run out of money quickly.

    This is just my 2c worth. 😉

  45. @RL: Are you saying you’re going to make me cookies now?

    @Heike: I hear you on the software. To upgrade to CS4 costs as much as buying a new computer. You’re right, you do need to be prepared once you’ve moved past the shoestring stage. If you want to grow and keep growing you’re going to have to make some wise investments in your business.

  46. Patrick Vuleta - Pandelaw says:

    I agree with you guys and it applies to many things that seem free on the net.

    Only semi-relevant, but when I first started legal blogging, it was free. But I think I hurt myself more than helped cause image is everything in this work. By the end I had to spend a substantial amount of time and money fixing up my first false start, and have even more budgeted.

    You have to consider if you are actually hurting yourself by going cheaply, it’s quite possible to do.

  47. I’ve noticed something about projects I approach with my wife. I start by thinking “This may cost us as much as…” (It never does) She starts by thinking “We may get out paying only….” (We never do).

    Bryan E Patricks last blog post..Heating It Up with a Wood Stove

  48. @ Bryan – Dude. You two are so in trouble… 😉

  49. @James – That’s hilarious, I was thinking Bryan and his wife have a perfect system.

    All that is required is a simple average and they will always know the exact cost of any project…

  50. @ DavidC – Hm. Yes. You might be onto something there… but where does impulse buying fall into the system?

  51. @James – Well, can’t speak for Bryan, but impulse buys pretty much break the system in my house 😉

  52. Many MANY of my clients require a degree- do I get to add the cost of that in?

    Also,- here’s one reason I hate local clients- business wardrobe. Blech.

    Allenas last blog post..How Do You Job Search?

  53. I definitely think that the more money invested in a business, the easier it will be to make money….but I am really hoping that it is possible to successfully start a freelance business on a small budget since that is all I have right now. (Keeping my fingers crossed…and moving forward, 🙂

    Sarahs last blog post..Internet: Friend or Foe

  54. @Sarah, You have a good viewpoint…I do think a freelance practice can be started on a shoestring, so no worries. The problem comes in when the freelancer doesn’t move off the shoestring mentality, but continues to run the practice in scarcity mode. Include investment expansion as revenues grow as part of the plan, and you’ll do great!


    Trish Lamberts last blog post..My First BlogTalkRadio Segment

  55. Interesting debate! Now, I`m pretty good friends with Tamara and Lorna, but I can see points on both sides here. However, I`m going to go with their take because I did start with absolutely nothing. I literally spent a dollar a day to go to the internet cafe down the street (we didn`t have internet at home) and spent that hour looking for jobs. Then I came home, wrote application letters and articles and submitted them off a diskette the next day during my hour online.

    Eventually, I started getting steady work and after about a year, I did get internet, so yes, that was an investment, but I was already working for some time at that point.

    You talk about office furniture . . . I wouldn`t count things you already have in your home as an investment. Even now, several years into this freelancing thing, I work off a scrounged metal table that I use as a desk. I have invested in a decent computer chair, though, since my last one broke and dumped me on my butt when I was 9 months pregnant. 😀

    So, my take? You CAN start with virtually nothing. But if you want to grow, you`ll have to invest . . . but only once you are earning the money to put back into the business.

  56. @Sarah: although it costs real money to start a business, it doesn’t mean you have to spend tons on it. Some businesses with big budgets bombed big time. So I believe you can start with a small budget. 🙂 And Trish is right about moving away from that shoestring mentality. 🙂

    Cedric Solidon at Write Like a Rock Stars last blog post..Information Overload? Compartmentalize!

  57. good article, but FYI you don’t have a T3, and if you do, it’s because it’s shared with an entire office, or all your neighbors. You might even have a T1, but if you are only paying $50 for your T1 you are in the wrong business: quit your current job and start reselling them for $300. you will be the walmart of T1s….

    seriously: you might have verizon FIOS or ATT U-verse at T3 equivalent speeds, but you definitely don’t have a T3 nor even a T1 for $50.

  58. @ Eddie – Actually, my connection type has some convoluted French name that I’ve never bothered to figure out. All I do know is that when other companies try to get me to switch and ask me what speed I’m working at, they literally blink and tell me to stay where I am. I also have a price package that I seriously negotiated down from its original price because… well, because I’m good at that.

    And I live in Quebec, in Canada. We don’t have Verizon or ATT here 🙂

  59. This is a fantastic post, James. I especially relate to the emotional cost of running your own business. Some days it would be nice to hand over the responsibility for a while, but you can’t.

    Sharon Hurley Halls last blog post..Writing Talk – Rates Rant

  60. I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


    Kaylee’s last blog post…Laptops for Professionals

  61. I’m trying to starting a freelance service myself, basically i’m trying to build some freelancer provider so that people didn’t have to try hard to find one from them.

    didn’t count any cost for starting it , we just use what we already have,laptop and such,promotion are still done from mouth to mouth though :d

    my business and marketing resources
    .-= soffu´s last blog ..How to be a successfull entrepreneur part I =-.

  62. What exactly I wanted, seems to be 2 hours at this point!


  1. 10/29/2008 Writing Jobs and Links | PoeWar says:

    […] Open Debate: The True Costs of Starting a Freelance Business: The more money you have, the easier it will be to thrive quickly. […]

  2. […] can read James’ response to our first post on the topic by checking out Men with Pens and “The True Cost of Starting a Freelance Business”. Feel free to leave him and Harry a comment over there to say why you think Tamara and I have the […]

  3. […] they?re going to tell you why the Freelance Parent ladies are all washed up with their post “The True Cost of Freelancing.” Feel free to beat add your two-cents’ worth by sharing your thoughts in the comments section. […]

  4. […] fact that after we named our post “The Cost of Freelancing,” James went ahead and named his “The True Cost of Freelancing.” Competitive […]

  5. […] to apply for a line of credit or a business loan. There’s an open debate raging between the Men with Pens blog and the Berry-Brewer Freelance Agency over the cost associated with starting your small […]

  6. […] Men with Pens have a slew of Better Business articles including their latest Open Debate: The True Costs of Starting a Freelance Business. […]

  7. […] They began their debate with the stance that less than $500 gets you started off in freelancing. In fact, Lorna and Tamara’s start-up costs rang in at much less than that amount. We responded by listing most of the start-up costs that we feel freelancers leave out of the picture. […]

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