Is it a New Year's resolution to start your company? Here's what sort of dollar signs to factor in. Graphic by Miguel Tovar/University of Houston

The process of opening a small business is already stressful enough without even worrying about how to fund it. But it’s good to start thinking about business costs early in order to know where the money will go.

Sammi Caramela, a Business News Daily contributing writer, said in an article to “be realistic” when considering how much starting a business is going to cost. She mentions that things like office space, legal fees, payroll, business credit cards and other organizational expenses are all things that need to be taken into account before even starting.

Caramela offers five things that prospective business owners should do if they don’t know where to start when it comes to funding their company.

Keep a healthy skepticism

Caramela advises to not invest too much money too quickly. You should have a good level of skepticism to balance the optimism you have going into the process. The best thing to do is to is to “start small” and workshop your idea or product on a very small budget.

“If the test seems successful, then you can start planning your business based on what you learned,” Caramela said.

Don't underestimate expenses

Caramela goes on to note that “according to the U.S. Small Business Administration, most microbusinesses cost around $3,000 to start, while most home-based franchises cost $2,000 to $5,000.”

Obviously, every new business is different and will require different expenses. It’s estimated that a prospective entrepreneur will need about six months’ worth of their starting expenses once they open.

“When planning your costs, don’t underestimate the expenses, and remember that they can rise as the business grows…It’s easy to overlook costs when you’re thinking about the big picture, but you should be more precise when planning for your fixed expenses,” serial entrepreneur Drew Gerber told Caramela.

Don’t let your business fail just because you ran out of money. The excitement of starting a company can cause you to overestimate your revenue and underestimate costs.

Distinguish types of business costs

Caramela offers several examples of the type of costs that perspective business owners should consider.

One-time vs. ongoing costs

One-time costs are those that will only need to be paid once. These mostly occur at the beginning of the process. These expenses included things like incorporating a company and equipment purchases.

Ongoing costs are paid regularly, like utilities.

Essential vs. optional costs

“Essential costs are expenses that are absolutely necessary for the company’s growth and development. Optional purchases should be made only if the budget allows,” Caramela said.

Fixed vs. variable costs

Rent would be an example of a fixed expense because it stays the same from month to month. Variable expanses, however, “depend on the direct sale of products or services.” Expect fixed costs to consume most of the company’s revenue in the beginning. If the company grows and is successful, these fixed costs won’t make or break you.

The Most Common Expenses

Caramela composed a list of expenses new business owners will most likely experience.

  • Web hosting and other website costs
  • Rental space for an office
  • Office furniture
  • Labor
  • Basic supplies
  • Basic technology
  • Insurance, license or permit fees
  • Advertising or promotions
  • Business plan costs

She also provides examples and estimated costs.

ItemEstimated Cost
Rent$2,750
Website$2,000
Payroll$175,000
Advertising/Promo$5,000
Basic Office Supplies$80
Total (Annual)$184,830

Want more information? Here are 14 types of business startup costs to consider when launching your company from NerdWallet.

Estimate revenue

“Bill Brigham, director of the New York Small Business Development Center in Albany, advises new business owners to project their cash flows for at least the first three months of the business’s life. He said to add up not only fixed costs but also the estimated costs of goods and best- and worst-case revenues,” Caramela said.

If possible, it’s best to not borrow at all when starting a new business. “Borrowing puts a lot of pressure on any business” and it doesn’t allow for very much wiggle room in the finances.

Factor in funding

If you’re going to borrow, here are a few things you can do. “Personal savings, loans from family and friends, government and bank loans and government grants” are all sources of funding that potential business owners can utilize. Camarela said that most companies use a combination of several of these methods for funding.

Though self-funding is the best option, there’s also options like business credit cards and angel investors.

Caramela suggests to check out SCORE for trainings and workshops targeted toward small business owners and aspiring entrepreneurs. They also offer some counseling.

What's the big idea?

Starting a business is stressful in any case but now that you know how much money it’s actually going to take, don’t let lack of money stop you from making that next step and starting your business. Remember, skepticism is good but only if it’s a healthy amount. Now you know it’s an expensive process and the different types of funding you will need, but even if you aren’t able to fund it yourself, there are other options out there for you as long as your company is financially able to handle the commitment of borrowing.

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This article originally appeared on the University of Houston's The Big Idea. Cory Thaxton, the author of this piece, is the communications coordinator for The Division of Research.

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Houston hospital performs first fully robotic heart transplant in the U.S.

robotic surgery

A team at Baylor St. Luke’s Medical Center, led by Dr. Kenneth Liao, successfully performed the first fully robotic heart transplant in the United States earlier this year, the Houston hospital recently shared.

Liao, a professor and chief of cardiothoracic transplantation and circulatory support at Baylor College of Medicine and chief of cardiothoracic transplantation and mechanical circulatory support at Baylor St. Luke’s Medical Center, used a surgical robot to implant a new heart in a 45-year-old male patient through preperitoneal space in the abdomen by making small incisions.

The robotic technology allowed the medical team to avoid opening the chest and breaking the breast bone, which reduces the risk of infection, blood transfusions and excessive bleeding. It also leads to an easier recovery, according to Liao.

"Opening the chest and spreading the breastbone can affect wound healing and delay rehabilitation and prolong the patient's recovery, especially in heart transplant patients who take immunosuppressants," Liao said in a news release. "With the robotic approach, we preserve the integrity of the chest wall, which reduces the risk of infection and helps with early mobility, respiratory function and overall recovery."

The patient received the heart transplant in March, after spending about four months in the hospital due to advanced heart failure. According to Baylor, he was discharged home after recovering from the surgery in the hospital for a month without complications.

"This transplant shows what is possible when innovation and surgical experience come together to improve patient care," Liao added in the release. "Our goal is to offer patients the safest, most effective and least invasive procedures, and robotic technology allows us to do that in extraordinary ways."

7 can't miss Houston business and innovation events for July

where to be

Editor's note: While many Houstonians are flocking to vacation destinations, there are still plenty of opportunities to network and learn at tech and business events for those sticking close to home this month. From an inaugural biotech summit to the 12th edition of a local pitch showcase, here are the Houston business and innovation events you can't miss in July and how to register. Please note: this article might be updated to add more events.

July 10 - Out in Tech Mixer 

Out in Tech Houston provides an inclusive networking space for LGBTQ+ people and allies working in tech. Check out this relaxed, social-mixer event, hosted on the second Thursday of every month.

This event is Thursday, July 10, from 7 to 8:30 p.m. at Second Draught. Register here.

July 14 – Latinas in Tech Coworking Day 

Connect with fellow Latinas in the industry at Sesh Coworking. Network or work alongside peers, board members and community leaders in a shared office environment.

This event is Monday, July 14, from 9-11:30 a.m. at Sesh Coworking. Find more information here.

July 17 – UTMB Innovation VentureX Summit

Attend the inaugural UTMB Innovation VentureX Summit, where innovators, entrepreneurs, researchers and investors will dive into the future of biotech. Expect panel discussions, fireside chats, a technology showcase and networking opportunities.

This event is Thursday, July 17, from 7:30 a.m.-4 p.m. at The University of Texas Medical Branch at Galveston. Find more information here.

July 17 – Open Project Night 

Collaborate on solutions for some of Houston’s most pressing issues at this month’s Open Project Night at Impact Hub Houston. Hear from guest speakers and listen to open mic pitches. July’s theme is Decent Work & Economic Growth.

This event is Thursday, July 17, from 5:30-7:30 p.m at Impact Hub Houston. Register here.

July 24 – NASA Tech Talks

Every fourth Thursday of the month, NASA experts, including longtime engineer Montgomery Goforth, present on technology development challenges NASA’s Johnson Space Center and the larger aerospace community are facing and how they can be leveraged by Houston’s innovation community. Stick around after for drinks and networking at Second Draught.

This event is Thursday, July 24, from 6-7 p.m. at the Ion. Register here.

July 30 – Ion Bike Club

Join Bike Houston at the Ion for a 45-minute guided cruise through the Ion District and Midtown. Afterward, enjoy a complimentary beer and network with like-minded riders at Second Draught.

This event is Wednesday, July 30, from 5:30-7:30 p.m. at the Ion. Register here.

July 31 – Bayou Startup Showcase

Hear pitches from startups and small businesses from Rice University’s OwlSpark and the University of Houston’s RED Labs accelerators at the 12th annual Bayou Startup Showcase. Read more about this year’s teams here.

This event is Thursday, July 31, from 3:30-7 p.m. at the Ion. Register here.

Houston researchers: Here's what it takes to spot a great new idea

houston voices

Having a “promotion focus” really does create a mental lens through which new ideas are more visible.

Key findings:

  • New ideas can be crucially important to businesses, driving innovation and preventing stagnation.
  • Recognizing those ideas, though, isn’t always easy.
  • Nurturing what is known as “promotion focus” can help managers spot fresh ideas.

Whenever the late surgeon Michael DeBakey opened a human chest, he drew on a lifetime of resources: the conviction that heart surgery could and should be vastly improved, the skill to venture beyond medicine’s known horizons and the vision to recognize new ideas in everyone around him, no matter how little formal training they had.

Appreciating new ideas is the heartbeat of business as well as medicine. But innovation is surprisingly hard to recognize. In a pioneering 2017 article, Rice Business Professor Jing Zhou and her colleagues published their findings on the first-ever study of the traits and environments that allow leaders to recognize new ideas.

Recent decades have produced a surge of research looking at how and when employees generate fresh ideas. But almost nothing has been written on another crucial part of workplace creativity: a leader’s ability to appreciate new thinking when she sees it.

Novelty, after all, is what drives company differentiation and competitiveness. Work that springs from new concepts sparks more investigation than work based on worn, already established thought. Companies invest millions to recruit and pay star creatives.

Yet not every leader can spot a fresh idea, and not every workplace brings out that kind of discernment. In four separate studies, Zhou and her coauthors examined exactly what it takes to see a glittering new idea wherever it appears. Their work sets the stage for an entirely new field of future research.

First, though, the team had to define their key terms. “Novelty recognition” is the ability to spot a new idea when someone else presents it. “Promotion focus,” previous research has shown, is a comfort level with new experiences that evokes feelings of adventure and excitement. “Prevention focus” is the opposite trait: the tendency to associate new ideas with danger, and respond to them with caution.

But does having “promotion focus” as opposed to “prevention focus” color the ability to see novelty? To find out, Zhou’s team came up with an ingenious test, artificially inducing these two perspectives through a series of exercises. First, they told 92 undergraduate participants that they would be asked to perform a set of unrelated tasks. Then the subjects guided a fictional mouse through two pencil and paper maze exercises.

While one exercise showed a piece of cheese awaiting the mouse at the end of the maze (the promise of a reward), the other maze depicted a menacing owl nearby (motivation to flee).

Once the participants had traced their way through the mazes with pencils, they were asked to rate the novelty of 33 pictures — nine drawings of space aliens and 24 unrelated images. The students who were prepped to feel an adventurous promotion focus by seeking a reward were much better at spotting the new or different details among these images than the students who’d been cued to have a prevention focus by fleeing a threat.

The conclusion: a promotion focus really does create a mental lens through which new ideas are more visible.

Zhou’s team followed this study with three additional studies, including one that surveyed 44 human resource managers from a variety of companies. For this study, independent coders rated the mission statements of each firm, assessing their cultures as “innovative” or “not innovative.” The HR managers then evaluated a set of written practices — three that had been in use for years, and three new ones that relied on recent technology. The managers from the innovative companies were much better at rating the new HR practices for novelty and creativity. To recognize novelty, in other words, both interior and external environments make a difference.

The implications of the research are groundbreaking. The first ever done on this subject, it opens up a completely new research field with profound questions. Can promotion focus be created? How much of this trait is genetic, and how much based on natural temperament, culture, environment and life experience? Should promotion focus be cultivated in education? If so, what would be the impact? After all, there are important uses for prevention focus, such as corporate security and compliance. Meanwhile, how can workplaces be organized to bring out the best in both kinds of focus?

Leaders eager to put Zhou’s findings to use right away, meanwhile, might look to the real-world model of Michael DeBakey. Practice viewing new ideas as adventures, seek workplaces that actively push innovation and, above all, cultivate the view that every coworker, high or low, is a potential source of glittering new ideas.

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This article originally appeared on Rice Business Wisdom.

Jing Zhou is the Mary Gibbs Jones Professor of Management and Psychology in Organizational Behavior at the Jones Graduate School of Business of Rice University. Zhou, J., Wang, X., Song, J., & Wu, J. (2017). "Is it new? Personal and contextual influences on perceptions of novelty and creativity." Journal of Applied Psychology, 102(2): 180-202.