4 ms·

This is actually a significant milestone for any entrepreneur. 200 * $10/mo == enough to pay your rent. $2k/month is the tipping point where you're no longer

This is actually a significant milestone for any entrepreneur. 200 * $10/mo == enough to pay your rent. $2k/month is the tipping point where you're no longer bleeding money and eating into savings. Sure, you're not getting richer and you might still need to take the odd freelance job for spending money, but it's a great place be, no longer watching your bank account on its slow & steady march toward zero. From here, it's all profit!

etm117 16y ago
Remember, not everyone lives in the Bay Area. ;-) Depending on where you live and if you have roommates, the $2k per month may be enough to pay rent, bills, college loans and leave some left over for spending money.
- patio11 16y ago
  When my business first made $2k profit two months in a row (late March 2009), I did some math in my project notebook and wrote down a thought I had literally never had before: "Could quit the day job!?!" It took almost twelve months to the day from there.
  - cageface 16y ago
    $2k is plenty for a thrifty, healthy single, but what about kids or health insurance or retirement money? I guess ideally $2k is just a starting point.
    - patio11 16y ago
      Yeah, I wasn't quite intending on putting the business into park and then going fishing for the next forty years.
- jasonkester 16y ago
  Don't you mean "not everybody lives in Honduras"? There aren't many places in the US where you can live for $2k/month all in, and the Bay Area would be the last place I'd expect to do so. I meant "pays your rent" quite literally. As in, taking the biggest of your financial worries away and leaving you only needing to deal with the spending money part. So you still can't live on your income, but you can coast along for an entire year on $10k savings. Up to that point, $10k in the bank meant you'd better start scrambling to pick up a contract in the next couple months before you run out of money.
  - patio11 16y ago
    There aren't many places in the US where you can live for $2k/month all in $2,000 / 160 = $12.50, which is substantially higher than the minimum wage in all fifty states of the Union, so I'm guessing that there exist at least a few people who are somehow making do...
    - bkmartin 16y ago
      I'm guessing you've never tried to live on $12.50/hr. And if you take that as a gross number not a net number its even worse. Sure, people are "making it work" but if you aren't single without kids and have zero college debt then you aren't doing it without some sort of assistance. Just because the minimum wage is $7.25 or up to $8.55 (depending on the state you live in), doesn't mean you can live on it.
      - patio11 16y ago
        I'm guessing you've never tried to live on $12.50/hr. Please don't make me do division with regards to my last salary, it would just depress me.
      - Retric 16y ago
        10 years ago, a friend worked his way through school making 7.50$ an hour working as a cook at Shonies, by the time he graduated he had a stay at home wife, two kids and almost zero debt. In the summer he worked 80 hours a week and during school he worked 40. PS: He did get an internship that played 13.50 his senior year, but he did not quit Shonies until he graduated.
        bkmartin 16y ago
        80 hours a week plus 40 hours a week during school is ridiculous. I'm truly surprised he had time for a wife and kids. Kuddos for him if it all worked out and the family unit is still together, but I'm just pointing out that under the vast majority of situations its not feasible. There are exceptions to every rule, but lets not make this sound like the norm.
- Stwerner 16y ago
  Yeah, really, here in Pittsburgh $2k/month is enough to live pretty comfortably.
  - etm117 16y ago
    Also, if you are married (or committed to your SO) and you have 2 incomes in the household, then $2k/month is actually a good amount of dough. It is probably getting in the zone of quit your day job money if you have further plans for your startup that require more focus and time.
  - steveklabnik 16y ago
    Yep. When my salary bumped up to $2k/month, I was ecstatic; I could finally start putting some money in the bank. It's the most I've ever made, in my last 5 years of financial independence.
- absconditus 16y ago
  Several of you seem to be confusing profit with revenue.
- dgroatdrex 16y ago
  Doesn't anyone pay taxes? $2k in revenue, minus expenses, then shave off 40% for taxes since this is self-employment income, and you're not going to be paying much with what's left.
  - SHOwnsYou 16y ago
    I couldn't have said it better... and that assuming either no corporation or a pass-through entity. There is no way I'd leave a job for 2k/month startup when virtually any job I can get employing the skills I used to build the startup would easily get me 3-5x my startup income (and health insurance too).
fookyong 16y ago
don't fall foul to the "SaaS is pure profit!" syndrome. I wrote a little bit about this here: http://yongfook.com/saas-is-not-pure-profit http://yongfook.com/saas-is-not-pure-profit In a nutshell, to get to 200 members you are not going to be operating on 100% profit margins unless you happen to be extremely fortunate. The reality is more likely that a decent chunk of that $2k per month is being spent on customer acquisition costs. You won't get 200 customers just by existing. You need to advertise.
- paraschopra 16y ago
  Initially, the major cost for customer acquisition should be founders' own time. Writing articles, pitching to blogs and news, promoting on social media, SEO and all other organic means should be the methods to get initial customers until you hit significant revenue (or get funding) to start using paid acquisition methods. The cost of customer acquisition can be very high for a bootstrapped startup to afford. For example, Constant Contact (for $20/mo subscription) spends $375 as cost to acquire one customer. Spending a major chunk of $2k to acquire just a few paying customers may or may not be a viable strategy (depends on numerous variables, of course). Source of data: http://investor.constantcontact.com/annuals.cfm http://investor.constantcontact.com/annuals.cfm
- rubeng 16y ago
  You need to advertise. This is simply not true. You need to be found but that doesn't mean spending money on advertising. I hit this mark without spending a dime on advertising. A large amount of my traffic comes from owning the most important keywords for my niche. The rest from WOM and blog posts from others about my product (reviews, interviews, CSS galleries, etc.)
- barmstrong 16y ago
  In this case it was mostly profit. $85 for web hosting. And I spent about $300 on Adwords last month, but this was optional (didn't even convert very well, most of the traffic is from SEO). Those costs will be largely fixed as the site grows. I may experiment with other advertising to see what if anything converts, but I think the site would do fine without it.

etm117 16y ago

Remember, not everyone lives in the Bay Area. ;-) Depending on where you live and if you have roommates, the $2k per month may be enough to pay rent, bills, college loans and leave some left over for spending money.

patio11 16y ago
When my business first made $2k profit two months in a row (late March 2009), I did some math in my project notebook and wrote down a thought I had literally never had before: "Could quit the day job!?!" It took almost twelve months to the day from there.
- cageface 16y ago
  $2k is plenty for a thrifty, healthy single, but what about kids or health insurance or retirement money? I guess ideally $2k is just a starting point.
  - patio11 16y ago
    Yeah, I wasn't quite intending on putting the business into park and then going fishing for the next forty years.
jasonkester 16y ago
Don't you mean "not everybody lives in Honduras"? There aren't many places in the US where you can live for $2k/month all in, and the Bay Area would be the last place I'd expect to do so. I meant "pays your rent" quite literally. As in, taking the biggest of your financial worries away and leaving you only needing to deal with the spending money part. So you still can't live on your income, but you can coast along for an entire year on $10k savings. Up to that point, $10k in the bank meant you'd better start scrambling to pick up a contract in the next couple months before you run out of money.
- patio11 16y ago
  There aren't many places in the US where you can live for $2k/month all in $2,000 / 160 = $12.50, which is substantially higher than the minimum wage in all fifty states of the Union, so I'm guessing that there exist at least a few people who are somehow making do...
  - bkmartin 16y ago
    I'm guessing you've never tried to live on $12.50/hr. And if you take that as a gross number not a net number its even worse. Sure, people are "making it work" but if you aren't single without kids and have zero college debt then you aren't doing it without some sort of assistance. Just because the minimum wage is $7.25 or up to $8.55 (depending on the state you live in), doesn't mean you can live on it.
    - patio11 16y ago
      I'm guessing you've never tried to live on $12.50/hr. Please don't make me do division with regards to my last salary, it would just depress me.
    - Retric 16y ago
      10 years ago, a friend worked his way through school making 7.50$ an hour working as a cook at Shonies, by the time he graduated he had a stay at home wife, two kids and almost zero debt. In the summer he worked 80 hours a week and during school he worked 40. PS: He did get an internship that played 13.50 his senior year, but he did not quit Shonies until he graduated.
      - bkmartin 16y ago
        80 hours a week plus 40 hours a week during school is ridiculous. I'm truly surprised he had time for a wife and kids. Kuddos for him if it all worked out and the family unit is still together, but I'm just pointing out that under the vast majority of situations its not feasible. There are exceptions to every rule, but lets not make this sound like the norm.
Stwerner 16y ago
Yeah, really, here in Pittsburgh $2k/month is enough to live pretty comfortably.
- etm117 16y ago
  Also, if you are married (or committed to your SO) and you have 2 incomes in the household, then $2k/month is actually a good amount of dough. It is probably getting in the zone of quit your day job money if you have further plans for your startup that require more focus and time.
- steveklabnik 16y ago
  Yep. When my salary bumped up to $2k/month, I was ecstatic; I could finally start putting some money in the bank. It's the most I've ever made, in my last 5 years of financial independence.
absconditus 16y ago
Several of you seem to be confusing profit with revenue.
dgroatdrex 16y ago
Doesn't anyone pay taxes? $2k in revenue, minus expenses, then shave off 40% for taxes since this is self-employment income, and you're not going to be paying much with what's left.
- SHOwnsYou 16y ago
  I couldn't have said it better... and that assuming either no corporation or a pass-through entity. There is no way I'd leave a job for 2k/month startup when virtually any job I can get employing the skills I used to build the startup would easily get me 3-5x my startup income (and health insurance too).

fookyong 16y ago

don't fall foul to the "SaaS is pure profit!" syndrome. I wrote a little bit about this here: http://yongfook.com/saas-is-not-pure-profit http://yongfook.com/saas-is-not-pure-profit In a nutshell, to get to 200 members you are not going to be operating on 100% profit margins unless you happen to be extremely fortunate. The reality is more likely that a decent chunk of that $2k per month is being spent on customer acquisition costs. You won't get 200 customers just by existing. You need to advertise.

paraschopra 16y ago
Initially, the major cost for customer acquisition should be founders' own time. Writing articles, pitching to blogs and news, promoting on social media, SEO and all other organic means should be the methods to get initial customers until you hit significant revenue (or get funding) to start using paid acquisition methods. The cost of customer acquisition can be very high for a bootstrapped startup to afford. For example, Constant Contact (for $20/mo subscription) spends $375 as cost to acquire one customer. Spending a major chunk of $2k to acquire just a few paying customers may or may not be a viable strategy (depends on numerous variables, of course). Source of data: http://investor.constantcontact.com/annuals.cfm http://investor.constantcontact.com/annuals.cfm
rubeng 16y ago
You need to advertise. This is simply not true. You need to be found but that doesn't mean spending money on advertising. I hit this mark without spending a dime on advertising. A large amount of my traffic comes from owning the most important keywords for my niche. The rest from WOM and blog posts from others about my product (reviews, interviews, CSS galleries, etc.)
barmstrong 16y ago
In this case it was mostly profit. $85 for web hosting. And I spent about $300 on Adwords last month, but this was optional (didn't even convert very well, most of the traffic is from SEO). Those costs will be largely fixed as the site grows. I may experiment with other advertising to see what if anything converts, but I think the site would do fine without it.