4 ms·

Actually I didn't say I did it for $10K, I said I'd DO it for 10 dollars. I get you. I'm talking about the difference between calling something a company and b

Actually I didn't say I did it for $10K, I said I'd DO it for 10 dollars. I get you. I'm talking about the difference between calling something a company and building a sustainable company from zero. $250K is arbitrary because any number would be arbitrary, as you note, but it's also a good minimum baseline to shoot for. Any one of the caveats I discuss in the article could change the number or how that money is aggregated or how long it takes to spend it.

icedchai 8y ago
You can't say 250k is a baseline unless you know what sort of company you're building. For a services / consulting company where you're getting revenue upfront, it is probably more than enough... For a product company, it may be way too little.
- scarface74 8y ago
  For a consulting company where you get revenue up front, what would you need besides: - legal fees - an accountant - setting up a domain with a WordPress landing page and an email provider. - computer equipment (which you probably already have)?
  - mgkimsal 8y ago
    insurance.
    - icedchai 8y ago
      To be fair, you don't really need that. I did software consulting without any insurance for almost 20 years. At one point, I had a client who required it as terms of a subcontract, so I had to get it.
  - icedchai 8y ago
    Yes, I should've said definitely more than enough!
  - AstralStorm 8y ago
    You missed the black hole called marketing or an agent. Landing page alone will get you nowhere real quick. You might get a lucky client or a few by posting samples. Maybe. But would that even be sustainable? It would you just end up hired and not really a consultant? Network effects are also unreliable on a small scale. Plus networks need a bit of care that takes time and work.
    - scarface74 8y ago
      I could see myself outsourcing that. I’ve worked with plenty of local recruiting companies from both the hiring side and looking for a job. I would probably setup a win/win partnership with them. I can guarantee them qualified developers, and they can find clients and get a cut. Recruiting companies usually will do either 1099 Corp to Corp contracts. Of course as you build your own clientele, you hope you lessen your need for external recruiters.
    - tluyben2 8y ago
      I would recommend (as I fell for that once and never again) never starting a consultancy/services company unless you already have the network to give you a 3 year runway and growth path. Starting this and going out to market your services without having a good pipeline set up before your start (for instance from your previous job / company) can be an extremely painful way to burn out your money and possibly yourself. If you have no network and only $250k and skills you think that are marketable, you'll have a good chance of that 250k being gone and you having done nothing but talking with 'potential clients' which end up in your pipeline at 30-60%. With your runway gone, you have no time to close these prospects and no money coming in. I see it happen so often...
  - tluyben2 8y ago
    > - legal fees In the US or countries like it. We grew (a few times I might add with different companies) to a substantial size (millions euros of profit / year) without any lawyer interaction at all. And you can easily (again, I speak for where I am from, so YMMV) grow to millions of revenue without an accountant. You probably wouldn't because it's cheap until you get to many employees and larger amounts of rev or unknown business territory, but you can and people do.
    - scarface74 8y ago
      Legal fees doesn’t necessary mean a lawyer. It could be as simple as using nolo.com to file incorporation papers.
      - tluyben2 8y ago
        Yeah, I kind of meant without any of that. The only thing I spend money on related to legal these days (used not to) is legal insurance which is cheap anyway so why not.
rmah 8y ago
In between Automated Insights and my current startup Spiffy, I built Teaching Startup with $10,000 out of my own pocket, 60 hours a week of sweat equity [...] Past tense implies that you did it (and it's awesome that you did)... More to the point, if "$250k is arbitrary because any number would be arbitrary" then it's not a good minimum baseline to shoot for, it's just a random number. Better to actually think through how the business will work, what resources you can draw upon, what your expenses will be, how your revenues will come in, etc. And then estimate your financing requirements based on the specifics of the business.
- jprocopio 8y ago
  Ah. I see the distinction now. That company failed though, so $10K was not enough, that was stuck in my mind. Thanks for the tip.

icedchai 8y ago

You can't say 250k is a baseline unless you know what sort of company you're building. For a services / consulting company where you're getting revenue upfront, it is probably more than enough... For a product company, it may be way too little.

scarface74 8y ago
For a consulting company where you get revenue up front, what would you need besides: - legal fees - an accountant - setting up a domain with a WordPress landing page and an email provider. - computer equipment (which you probably already have)?
- mgkimsal 8y ago
  insurance.
  - icedchai 8y ago
    To be fair, you don't really need that. I did software consulting without any insurance for almost 20 years. At one point, I had a client who required it as terms of a subcontract, so I had to get it.
- icedchai 8y ago
  Yes, I should've said definitely more than enough!
- AstralStorm 8y ago
  You missed the black hole called marketing or an agent. Landing page alone will get you nowhere real quick. You might get a lucky client or a few by posting samples. Maybe. But would that even be sustainable? It would you just end up hired and not really a consultant? Network effects are also unreliable on a small scale. Plus networks need a bit of care that takes time and work.
  - scarface74 8y ago
    I could see myself outsourcing that. I’ve worked with plenty of local recruiting companies from both the hiring side and looking for a job. I would probably setup a win/win partnership with them. I can guarantee them qualified developers, and they can find clients and get a cut. Recruiting companies usually will do either 1099 Corp to Corp contracts. Of course as you build your own clientele, you hope you lessen your need for external recruiters.
  - tluyben2 8y ago
    I would recommend (as I fell for that once and never again) never starting a consultancy/services company unless you already have the network to give you a 3 year runway and growth path. Starting this and going out to market your services without having a good pipeline set up before your start (for instance from your previous job / company) can be an extremely painful way to burn out your money and possibly yourself. If you have no network and only $250k and skills you think that are marketable, you'll have a good chance of that 250k being gone and you having done nothing but talking with 'potential clients' which end up in your pipeline at 30-60%. With your runway gone, you have no time to close these prospects and no money coming in. I see it happen so often...
- tluyben2 8y ago
  > - legal fees In the US or countries like it. We grew (a few times I might add with different companies) to a substantial size (millions euros of profit / year) without any lawyer interaction at all. And you can easily (again, I speak for where I am from, so YMMV) grow to millions of revenue without an accountant. You probably wouldn't because it's cheap until you get to many employees and larger amounts of rev or unknown business territory, but you can and people do.
  - scarface74 8y ago
    Legal fees doesn’t necessary mean a lawyer. It could be as simple as using nolo.com to file incorporation papers.
    - tluyben2 8y ago
      Yeah, I kind of meant without any of that. The only thing I spend money on related to legal these days (used not to) is legal insurance which is cheap anyway so why not.

rmah 8y ago

In between Automated Insights and my current startup Spiffy, I built Teaching Startup with $10,000 out of my own pocket, 60 hours a week of sweat equity [...] Past tense implies that you did it (and it's awesome that you did)... More to the point, if "$250k is arbitrary because any number would be arbitrary" then it's not a good minimum baseline to shoot for, it's just a random number. Better to actually think through how the business will work, what resources you can draw upon, what your expenses will be, how your revenues will come in, etc. And then estimate your financing requirements based on the specifics of the business.

jprocopio 8y ago
Ah. I see the distinction now. That company failed though, so $10K was not enough, that was stuck in my mind. Thanks for the tip.