Calculate Expenses of Startup

[Maksym Shostak]

Several times I heard that about $5K ~ $6K is enough to make a startup.
Can you suggest a spreadsheet or a list containing typical expenses
for starting software business?

I want to calculate (estimate) how much money should I have before
starting my Micro ISV. It is a desktop or rich-client software application,
that I will develop myself or with a partner.

Here is my list of expenses (would like to buy or delegate to other people):

- Domain experts consulting
- Marketing, analytics
- Public relations
- Sales

- Web and Graphics design
- QA and Testing
- Software tools and components

- Copyright registration
- Accounting

Thank you.

[Bob Walsh]

Hi Maksym,

There is no set list - and on each of the items you mention, it could be $0->. Re desktop apps, if Windows, google BizSpark and then email me if you qualify.

Cheers,
Bob

[Maksym Shostak]

I'm asking about types of expenses, not the amount of money for each.
Also, on what calculations the amount of $5K ~ $6K is based?

It is for Windows but I use Java technologies. Should I still try BizSpark?

[yadu tekale]

how would you compensate yourself? or wouldnt you consider that an expense incurred by the business?

[Maksym Shostak]

Not sure that I understand you correctly.

I just want to calculate the amount of money
I need for launch and until some revenue will come :)

[David Filip]

If you need domain experts and sales consultants and things like this, do not do it. Build something you need and want to use, so you will have enough experience to do this by yourself. I recommend you to read http://steve-yegge.blogspot.com/2008/08/business-requirements-are-b... first.

Expenses will vary. You will need some hosting, say $20/month for start. Graphical design could be afforded for say $300 - 500 from some freelancer.

For java development you will not necessary need to buy anything special, most of the tools are free.

Do not forget to some kind of legal help: you will probably need to write some kind of eula, privacy and these kind of things.

I think that $5 - 6k will be enough to start a business, in fact you can start this kind of business for almost nothing.

[Sohail Somani]

Since there is no typical software business, you need to change your question first. What kind of business are you thinking of starting?

What scares me the most is that you want to hire someone else who knows the domain. Howcome you don't know it?

[Maksym Shostak]

Thanks everybody for help.

I need domain experts because the application's domain is sayings.
Thus it would be useful to have a languages expert help, articles, voice, etc.

Most of free Java tools are in poor quality. Prices for such tools as License Manager
for Java is 5 times higher for the same good feature set as for C++/C# one. Much
more developer tools (and not only) for Microsoft C++/C# technologies compared to
Java Sun.

So, I still asking about additional categories (types) of expenses, not listed above,
one may have when launching a desktop software application. Typical, because
such expenses as web and graphical design, hosting, marketing, sales and etc.
are common to majority of desktop app startups. :)

[Hendro]

Hi Maksym,

I think, for startup level, the most important is, your own living expenses.

From my own experience, when we started out, i was preparing about 12 months of my living expenses (ideally 18 months) + $2000 (Australian Dollar) for all other things + 15% error rate. That comes down to around $20k - $30k Australian Dollar.

That $2000 is mostly preparation for accountant (register business), copyright etc.

For software tools, we are using mostly free open-source like Rails / Django / CakePHP. We were thinking about .NET too, but, we found all things are more expensive in .NET. Include, development machine, hosting server etc. Unless, you are really good at .NET and not at all other tools, then... go with it.

Domain expert consulting. I agree with David Filip. It's probably not the best starting idea if you need someone to consult when u just started out. It adds another level of complexity.

I think, for sales, public relations etc. That is more mature stage concern. At startup level, i believe, it's most important is to be "ramen profitable" and you can achieve that without a lot of budgets for PR, Sales, Marketing etc. Get some traction and proof that your concept works. Then, engage with angel investors if u think you need more money to keep it growing.

Hope that helps.

[Matt Richards]

Hi Maksym,

My business partner likes to say "The good thing about doing a startup is that you get to do so many things. The bad thing about a startup is that you have to do so many things." I think you should be prepared to do a lot of these things yourself. You won't do them as well as an expert, but you don't have to.

I think you should plan on money for advertising (web, trade publications) and perhaps trade shows.

I think you should buy something like QuickBooks and do your own accounting. You should also do your own legal work initially (incorporation, trademark, etc.). We develop desktop software, and I think you need to increase your estimate by a factor of 10, but maybe your situation is different.

[Maksym Shostak]

I got some confidence that my concept works, earlier.

What domains software developer could be comprehend in, except IT?
Thus the best idea is to develop software development tools?

What is your domain?

[Joe Schmelzer]

I've done some start ups and other businesses. No offense at all, but you sound pretty green (in business terms)... That being the case, I would recommend a book to you. High Tech Start Up, by John L. Nesheim. It's great for answering the exact questions you have -- perfect for a person skilled in technology but without much experience in business. Even having some experience, it's a nice reference and I keep it in my office...

Good luck.

Joe

[Larry Miner]

I might also recommended this book. It's specific to the software development business.

http://www.amazon.com/Operation-Management-Software-Company-Entrepr...