In any form of business, understanding the costs of setting up the business and the costs of running it is of great importance. You have to fully understand the costs your startup costs- tools, space, time, etc.- this is your initial investment.
Your total startup costs will entirely depend on the type of project you’re diving into. Your best guarantee at getting a good ROI (return on investment) is to ensure that your product is A: in demand and B: doesn’t have overwhelming competition. How popular your product may be won’t help very much if everyone else is doing the same thing you are.
When it comes to tools, make sure that you only go for the best- this means durable, high quality tools that are guaranteed to last you a long time (some of them may even come with warranties or money-back guarantees). Compare prices and shop around a little; search brick and mortar and online stores. You need to find a shop that will offer you with the best prices for quality products.
Next, nail down exactly what materials you’ll need right away (lumber, plywood, sandpaper, etc.). Make a list of things you need right away and things you can buy a little later on; this will help spread the costs around a little so you aren’t dropping all your money at once. Follow the same procedure as with the tools and shop around for the best deal. We highly recommend settling on one supplier, one for tools and one for materials or the same one for both, and form a relationship. Relationships are extremely important in business. Being friends with the owner brings perks like discounted prices and preferential treatment to the table.
Sit down with a calculator and your lists and come up with a number, as precise as possible, so you know exactly what to expect. If the number is too high, buckle down and see where you can shave off unnecessary expenses. If it’s lower than you expected, you can consider picking up some of the supplies on your ‘not-so-necessary’ list. The most important rule is to always operate within your budget. Spending beyond your means is never a good way to launch a new project, and if you can’t be responsible now, it doesn’t bode well for your business further down the road.