It costs WHAT?!?!

June 4, 2008 2:04 PM

Is there an easy way to estimate startup costs of a tech services company?

So a few cohorts and I are looking to start a software development services company. While not necessarily a "startup" I believe our fixed and variable costs would be on par with a small tech startup minus a few differences particular to the organization.

It also seems that there must be a huge mass of people who have gone through putting together a spreadsheet with their startup cost estimates for a business plan or at least to prove themselves sane and I don't see the reason why I can't leverage their work (or something like it). I've found checklists with info and I think it would be fairly easy to put together what these line items are, I'm just trying to avoid some of the legwork of having to track down actual costs for everything.

What I'm looking for is some sort of pre-populated spreadsheet or calculator which would help jumpstart this process. Any ideas or pointers in the right direction?

posted by bitdamaged to work & money (4 comments total)

Um.

I run a small software development services company.

This isn't that hard, unless I'm missing something crazy:

Workstation & Monitors: $1,400 (Quad-Core 2.8GHz, 4GB RAM, 512 GeForce 8800, 2x20.1" Widescreen Flat Dell LCDs)
Chair: $150
Desks: $250 (Ikea style.)
IDE License: $400
Business Cards: $250
Phone Service: $50/mo. (Cell phones; we pay $30/mo. for an 800 number, too and use Grand Central to tie it all together.)
Salary + Taxes: Whatever you set
Health Care Costs: Whatever you get

Fridge: $100
Rent: $1225
Payroll Software: $42/mo.
Servers: $150/mo.
Whiteboards & Markers: $150
Other Software: ~$300
Nerf Guns: $50
Marketing Materials: $500
Merchant Account: $20/mo.
Dr. Pepper: $50/mo.
Insurance: Whatever you get

Your recurring costs are really just people and rent. Our rent includes our internet, electricity and water so we don't have to worry about that. I don't know if you need a *spreadsheet* per se, but these are all our costs, of the top of my head. Not too complex a calculus.

Find a way to start without rent at all and it'll help a lot. Reduce your monthly overhead until you have solid revenue streams coming in. Host on-site if you can until you hit a certain capacity. Et cetera. And good luck. It's a challenge; especially balancing the capacity vs. work pipeline issue. Grow too fast and you'll find yourself with no new projects and a bunch of angry coders. Finding quality people is tough. Finding businesses willing to pay you what you're worth can be tough too. But it can be done. :-)
posted by disillusioned at 2:28 PM on June 4, 2008 [1 favorite]

(We also blog about our challenges and basically everything we do and discover on our site, if you didn't see it.)
posted by disillusioned at 2:30 PM on June 4, 2008

I don't have a spreadsheet, but for keeping down costs I recommend:

- Gmail for domains (instead of running your own mail server)
- Google Docs (as opposed to running your file server to share docs)
- GrandCentral (if you can get an account)
- Skype for employee conference calls
- Yugma for free WebEx-style presentations
- Co-working spaces for initial meeting areas (before you have an office)
posted by zippy at 3:20 PM on June 4, 2008

I'm just trying to avoid some of the legwork of having to track down actual costs for everything.

To solve the equation a + b + c = d for d, you must know the values of a, b, and c.

Why wouldn't you be willing to invest the time to research this very important consideration? Every business is different, and any template or pre-fab system will necessarily be based on a huge number of assumptions—many of which might not apply to your venture. Only you and your cohorts know what your goals are, and what you'll need to achieve those goals.

Especially at the beginning, it's important to keep overhead as low as possible. If you can work from home and use the equipment you already have, that will help a lot. If you need office space for meetings, you might be able to time-share with other companies in similar situations (I've heard of this being done). Don't buy things until you actually need them. Repurpose old hardware for low-intensity roles such as file storage and development servers.

And, yeah, Ikea is the way to go for cheap, functional, comfortable, and stylish.
posted by greenie2600 at 6:12 PM on June 4, 2008