Costs of business startup - InspectionNews

Jason Wright · #1 (**permalink**) 11-22-2007, 06:35 PM

What is an average range of costs for the following:

1. insurance
2. basic tools/equipment
3. training course
4. state exam
5. marketing/advertising
6. misc legal fees

I was guessing somewhere between $4,000 and $6,000 to do this right. Does this sound close at all??

Bruce Ramsey · #2 (**permalink**) 11-22-2007, 07:28 PM

1. insurance E&O $3600/year, General Liability $500/yr
2. basic tools/equipment $500-$1500
- Ladder $300
- 2nd Ladder $250
- Digital camera $200
- Tool belt $50
- Hand tools $80-$100
3. training course $2500
4. state exam $150
5. marketing/advertising ???
- Domain and Hosting $80/yr, Website generation $1500
- Yellow Pages $1000-$5000/yr depending on size of ad
- Business cards $100
- Trying different avenues with no ROI $3000-$10,000
6. misc legal fees $1000

7. Laptop $1000-$1500
8. Printer $300
9. Software $100-$3000
10. Local HI Association Dues $150
11. National HI Association Dues $300
12. BBB Membership $500/yr
13. Company Logo design $300-$500
14. Silk Screen Setup $80
15. Embroadry logo setup $50-$100
16. Company shirts, jacket, hat with logo
17. Coveralls, shoe covers $200
18. Magnetic signs for truck $150
19. GPS unit for vehicle $200
20. Everything else I forgot

Billy Stephens · #3 (**permalink**) 11-22-2007, 08:09 PM

21. Vehicle
22. Vehicle Insurance
23.Vehicle Expenses,Gas,Tires ect
24. Cell Phone
25.Fax
26.State License
27Business License
28.Taxes/Accountant
29.Mics Expenses/office supplies,ink,toner,filing,paper,Pads,Pens,Stapler, Paper cutter,ect
30.Living Expenses(Gotta Eat)

Nolan Kienitz · #4 (**permalink**) 11-23-2007, 09:09 AM

Quote:

Originally Posted by Jason Wright

... Does this sound close at all??

Jason - Get Brian's "Cost of Business" (http://www.costofbusiness.com/) ... enter in the adjustable values and you will get a much better picture of what it takes to start and run your inspection business. I can't think of anything that is missed in the spreadsheet.

Rick Hurst · #5 (**permalink**) 11-23-2007, 10:30 AM

31. Don't forget the cost of doughnuts to all the realtor offices that all the new HI's seem to think is so important. (Maybe thats been figured in to the marketing)

I actually had to walk in a realtor office last week to drop off a WDI report because they have a mortgage rep. who offices out of the same place. Anyway I had to make a trip to the restroom and as I walked by the little kitchen / breakroom area there had to be about 4-5 boxes of doughnuts with HI cards attached to the boxes. I couldn't help but laugh as I was grabbing a few of those doughnuts as I walked out the door.

RICK

Rick Bunzel · #6 (**permalink**) 11-23-2007, 05:24 PM

Bruce did a great job of laying out the costs. The number that comes to mind for me is $10,000. That doesn't include paying yourself something as you startup.

One area that many startups short themselves is marketing costs. Your first year it should be at least 20% of your intended income. Read everything marketing related on this board and build a plan.

//Rick

Jack Feldmann · #7 (**permalink**) 11-24-2007, 08:10 AM

May be a good idea to put a little away to pay for the stuff missed on those first inspections (return fees).

Bruce Ramsey · #8 (**permalink**) 11-25-2007, 08:22 PM

Told my wife about this thread. Her response?

Did you list the lack of an income for the first couple of years as part of the startup cost?

Nolan Kienitz · #9 (**permalink**) 11-25-2007, 09:19 PM

Quote:

Originally Posted by Bruce Ramsey

Told my wife about this thread. Her response?

Did you list the lack of an income for the first couple of years as part of the startup cost?

Don't believe that is a legit tax deduction.

Doesn't mean you can't track it in your own Excel spreadsheet.

Rick Hurst · #10 (**permalink**) 11-26-2007, 06:59 AM

Sounds like the wife is not all right with the idea of the start-up. If she's not backing you a 100%, your in for headaches.

Scott Patterson · #11 (**permalink**) 11-26-2007, 07:59 AM

I would say that the cost for start up will depend on a number of things. The first would be what your state requires. As Jason is in Indiana, he will need to meet the state requirements of education($1,500 to $2,500), passing the NHIE($225) and insurance to meet the state requirements. Tools, IMO are way overstated and over done by new inspectors. I look at what I use now and it consist of my Ultra-Stinger, camera, moisture meters, Sure-test, Voltage sniffer, screwdrivers, a 4' level and a few other items as needed. I would say that my tools that I now use amount to around $500 and I bet I have $4,000 sitting on a shelf.

Radon training and testing would be a consideration for an inspector in IN.

I would say that you could accomplish this for around $8,000. You will then need a spouse with a good job or a nest egg set aside to live on, until your business starts to turn a profit. This could be 1-3 years, and that depends on you and the area your live and work in.

John Ghent · #12 (**permalink**) 11-26-2007, 05:40 PM

Well, it stands to reason that if you leave a job paying x$ a year for a profession in Home Inspection you have to count that as a cost of startup. Before today you had x$ after today you have - zip? This business has two parts Gozotta and Gozinta. What Gozinta your pocket has to be higher than what Gozotta you checking account.

For you young guys, that is old math.

Jerry Peck · #13 (**permalink**) 11-26-2007, 06:01 PM

I agree with John and Bruce's wife ... tax deductible or not, unless you are "unemployed", your loss of current income is most definitely a "start up cost" ... with the possible exception if you 'start up' on a part time basis and it does not reduce (in anyway, shape, or form) your current earnings from your current 'day job'. Of course, then, your double expenditure of effort, time, sleep deprivation, lose of free time, etc., is a "start up cost".

Rick Bunzel · #14 (**permalink**) 11-27-2007, 09:02 AM

I agree with Scott on tools. If I look at the tools I use everyone week I would only add a few to his list: Digital Camera, Disposable Coveralls, Head Lamp (everyone has a crawl in Washington), Little Giant 17' ladder and your favorite flavor of inspection software.

Like Scott, I have another $2,000 of gas detectors, moisture meters and assorted doodads that only occasionally make it out of the bag. Not needed for a startup.

I am always amazed at the newbies who try to start out in this business with a few bucks and lots of enthusiasm. Most don't make it through their first winter...

//Rick