Unemployed? Why Not Start a Software Company?

The challenge of financing by glinden · 2004-01-27 06:36 · Score: 5, Insightful

I'm not sure it's that easy.

The biggest problem for unemployed software engineers getting together and forming a company is financing. If you're unemployed, you probably don't have a lot of cash around to provide seed capital for your business. If you do scrape together enough seed capital or find an angel investor, you're usually stuck with not drawing a salary and having no health insurance for about a year as you try to ramp up your business. And you're doing all of this for a high risk venture where only 1 in 10 businesses actually succeed.

Nevertheless, I'm building a startup right now, Findory.com. But I wouldn't underestimate the obstacles here. It isn't something that can be done lightly.

Re:The challenge of financing by Anonymous Coward · 2004-01-27 06:43 · Score: 2, Informative

Nice.. you made first post on a Slashdot and you get to plug your startup. I tried to check it out, but the link doesn't work!!
This looks like it though.
Re:The challenge of financing by sane? · 2004-01-27 06:46 · Score: 5, Insightful

Sorry, your confusing me.
We've talking software here, the same stuff that many of you do for free with Linux. You have a computer, you have the skills, your marketing and selling might not be great, but at least one of you will be street smart and presentable enough to talk to customers.
So why do you NEED lots of finance?
Find a niche, find a need, create a demo of a solution and sell it. Deliver and find more of the same.
You can be faster, smarter and cheaper than the competition, and if it doesn't work, it need not cost you much at all.
Its one of the advantages of knowledge based industries - the barriers to entry are skill based, not fixed costs.
Re:The challenge of financing by eln · 2004-01-27 06:49 · Score: 2, Insightful

It's not just about finding financing, it's about figuring out what to do with that financing once you have it, and how to turn it around so it turns into a net gain for your backers and yourself.

Most programmers make poor business people. It's a totally different mind set. It's not just about making the next killer app, it's being able to effectively market and sell that app in such a way that you are producing a net profit.

You also have to be able to set reasonable deadlines for yourself and stick to initial specs, despite the strong urge to over-engineer. Any killer app you can conceive is not going to be worth squat if it takes more than a year or so to get the initial version out the door. Chances are that if you take any longer than that, someone will have released a program to do the same thing, or whatever your program was designed to do will have fallen out of fashion. The concept of writing a piece of software quickly but "good enough" is something a lot of programmers have a hard time getting their head around.

Writing programs is easy. Writing programs and also running a business in any direction other than straight into the ground is hard, and a lot of times the pressure of it will suck the fun out of programming for a lot of people.
Re:The challenge of financing by glinden · 2004-01-27 06:55 · Score: 3, Insightful

There's a lot of expenses for a startup. At a minimum, there's legal costs from incorporating with your partners, but there's a bunch of small administrative costs as well, especially if meeting with those customers involves any travel.

But the biggest challenge is not drawing a salary for a long period of time. Most people don't have enough savings to live for 12 months without any income.
Re:The challenge of financing by ComputerSlicer23 · 2004-01-27 06:56 · Score: 4, Insightful

Uhhh, creating Linux took years. Creating a viable piece of software that someone will pay for takes a lot of effort, and a lot of time.
Without some form of savings/income to draw upon, one can't develop software on their own (Free or not). You don't get a net connection for free. You don't get parts for free. You don't get to live rent free. If you do, you probably didn't need the job you so unluckly lost.
People work for a variety of reasons. Most of them are because they need income to barter for other goods and services.
Software that takes 6 months for one guy to slap together, isn't going to impress anybody who has an IT background. They'll see it's obviously only 6 man months of work... ;-)
Most people I know don't have 6 months worth of income available to them as cash they can easily spend. Getting 6 months of time together while working full time at a job is difficult at best. Especially if you work a time demanding IT job.
Kirby
Re:The challenge of financing by Trillan · 2004-01-27 07:05 · Score: 4, Insightful

As someone who's been working on this for the last eighteen months, let me tell you the sad truth: Being faster, better and cheaper... and even first to market... isn't nearly enough. What you'll need is the business deals that your competition already has set up. And they're most likely exclusive.

Why did I say competition if you're first to market? Well, your competition won't offer the product you're working on... but they will have similiar products, and they'll happily tell users and business partners that they're working on a product that'll stomp yours.

It costs a LOT. I'd estimate at least 70% of our costs go towards trying to get business deals, and that's the sort of thing you just can't do cheaply.
Re:The challenge of financing by XorNand · 2004-01-27 07:07 · Score: 5, Informative

Don't incorporate! There is no reason you need to endure that expense and headache. Plus you're double-taxed: first on corporate income and then when you draw personal income from the corp. Look into forming a Limited Liability Company. Buy a $50 book, fill out a form half the length of 1040EZ and pay the state registeration fee ($50 in Michigan, $125 in Ohio YMMV).

Don't let all the business or legal jargon scare you, it's easy and legally-binding. You'll have to draw up your own Articles of Organization, but once again, it's easy. It's pretty cool because you get to establish your bylaws and you can write it in plain English, not legal speak. There's plenty of examples on the 'net and in books.

--
Entrepreneur : (noun), French for "unemployed"
Re:The challenge of financing by Safety+Cap · 2004-01-27 07:08 · Score: 4, Informative
So why do you NEED lots of finance?
Think about what you will need:
1. Customer Service/Tech Support
  - No large company will buy software that doesn't come with support. That means you'll have to have someone man the phone. That means you have to have an office with at least a phone.
2. Sales
  - You'll need a web page at a minimum, and a place for your sales force to live when they're not on the road, meeting rooms, etc.
  - Don't forget phones for your sales force - mobile/office/whatever. Business rates for phones are more than the $30/month you pay for that extra line in your parent's house, Timmy.
3. Distribution/packaging
  - How are you going to deliver your software? Shrinkwrap, via internet (see the part about the web page), as a bundled solution? All those things need cash to get going. Don't THINK you'll get your stuff into CompUSA without having some way of delivering CDs
4. HR/Payroll/Accounting
  - Someone's gotta keep track of the pay for your employees and send them their W-2s at the end of the year for taxes. There's that whole paying-taxes-quarterly-thing that the government seems to be real sticklers about, too.
5. Lawyers
  - If you make it a habit of signing contracts without vetting them through a lawyer, eventually you will lose big $$$, or even kill the business. They will also make sure that your employment agreements and business deals are on the level.
6. Office space/equipment
  - Gotta have development, test, and production servers, if you want to do it right (and ultimately, save money)
  - You'll need a network that gets backed up properly (i.e., every day and tapes stored off-site in a secure location---not under the mattress in your parents' house, Timmy!) because you're storing your CVS db there, right?
  - You'll need legitimate copies of purchased software, so if you're doing .NET, you'll need a real copy of Visual Studio for every developer.
  - Printers eat paper and toner.
  - So do copiers
  - So do fax machines
7. Receptionist
  - Think prospective clients are going to be impressed by your sloppy self greeting them at the door? Better at least buy a suit or some nice khakis and a clean golf shirt.
--
Yeah, right.
Re:The challenge of financing by wwest4 · 2004-01-27 07:09 · Score: 4, Funny

why settle for pizza tips? fuck that - if you can swallow your pride and deliver pizza, you could just as easily swallow someone else's pride and do gay porn. it pays ~$300 a scene. come on, for $300, you'd take a shot in the jaw, right?
Re:The challenge of financing by sane? · 2004-01-27 07:10 · Score: 3, Interesting

Well, first off, the poster said unemployed. Therefore the question of available time tends to be already covered. Nobody is saying that you shouldn't look for a more conventional job at the same time.
Second, I said niche for a a specific reason. Its amazing how often you find small niches with needs that are not met, or poorly met. You can find opportunities where the programming effort required is minimal, but the value to that customer is immense. Nobody is saying you should take on Microsoft - in fact its because you're small that you can successfully address these niches. Your local, you know the problem, you know the culture. You can also target your marketing cheaply.
Re:The challenge of financing by irc.goatse.cx+troll · 2004-01-27 07:11 · Score: 2, Insightful

" Uhhh, creating Linux took years. Creating a viable piece of software that someone will pay for takes a lot of effort, and a lot of time."

He's not talking about the kernel, or the desktop. He's talking about the stuff we hack together FOR linux. The perl script you spent a weekend on to `insert niche here`. Thats what can be sold (even while keeping it GPL).

"Without some form of savings/income to draw upon, one can't develop software on their own (Free or not). "

True, but thats where the unemployed part comes in. You're not getting a source of income/savings anyways, so why not start coding? Beats watching geraldo all day.

"You don't get a net connection for free."
If you mean residential, You can hack from a $10 dialup account if need be, do all your work local then put it on a sourceforge page. Once you get some clients, chances are one of them will be able to work out a hosting deal with you.

--
Pain lasts, kid. Its how you know you're alive. Sometimes I think this growing up thing is just pain management-TheMaxx
Re:The challenge of financing by Chibi · 2004-01-27 07:14 · Score: 2, Insightful

You have a computer, you have the skills, your marketing and selling might not be great, but at least one of you will be street smart and presentable enough to talk to customers.

It took me a few years of work to realize this, but sales and marketing are probably the most powerful force a company can have. Yes, you need the tech folks to create products to sell, but a good sales/marketing force can help make a huge difference. How many stories do we have of "X technology was much better than Y technology, but Y won in the end because more people bought into it?" So, why would people buy into an inferior product? Because they were convinced by the folks we all loathe (sales and marketing) that they were getting a somehow better product (whether it be quality, value-per-dollar, whatever).

And in the case of a smaller company, good sales/marketing is even more important. Sorry, but you're going to have a hard time convincing most companies to buy the product that you developed yourself in your basement because no one has hired you for the past year... but get the right face-people to represent and sell your product, and you might be pleasantly surprised.

I'm not trying to discourage those who want to go this route, but if you want to be your own boss and create a software company, I imagine that you'll spend a lot more time on the business side of things than you might expect.

--
If all you have are silver bullets, everything looks like a werewolf.
Re:The challenge of financing by gfxguy · 2004-01-27 07:17 · Score: 2, Interesting

I've been looking to go into business myself (non-computer related), but it all seems so bewildering and complicated - and I think that we somehow must be way overcomplicating things.

I picture the Korean guy in the town I came from who started his own fresh produce market. Talk about start up costs - a software company can be anywhere, but a market needs to pay for prime real estate (he was on the busiest road in town), and has to pay for all that produce up front. He barely spoke english, but somehow managed to fill out all the forms, get his licenses and inspections (you don't need your computer office inspected like a place that sells food) and insurance. I don't think he had any money.

That's annecdotal, but I see people like that all over - they start up restaurents, markets... things that seem to me to have very high overhead. So how do they do it?

The truth is that some of us simply aren't cut out to be entrepreneurs. I know I'm not. I want to be. I'm keeping my eyes open for an opportunity, but even still it will take a lot of trust from a lender to be able to get started - and I've always known I'd have to keep my current job until things took off (god willing).

But I'm simply not willing to take a chance. If I was single, maybe, but now that I'm married with two kids (and the sole income provider) I need to play it more safe. The only people that I know that have gone into business for themselves had money to start with... so as soon as they started making money, it was there's to keep, not pay back to the bank. I won't have that benefit. Like I said, some of us simply are not cut out to be entrepreneurs.

--
Stupid sexy Flanders.
Re:The challenge of financing by Radius9 · 2004-01-27 07:23 · Score: 5, Informative

A limited liability corporation is still being incorporated, its just a different form of corporation. Other than what you need to do to become incorporated, and some rules on shareholders, it is in essence the same as an S-Corp. An S-Corp lets you apply you're corporation's profits and losses onto your personal income taxes, as will an LLC, making your corporation somewhat easier to manage. On the other hand, a C-Corp is a corporation that has to pay quarterly estimated tax, and I believe that is the corporation you are talking about. Where you are mistaken however is that you are double taxed. The only place you are double taxed is dividends, i.e. profits paid out to shareholders (which in the case of 1 person, is just you). If I start a C-Corp, and the corporation earns $300,000, and I get paid $250,000 as an employee, then I am personally taxed on that $250,000, and the corporation is taxed on the $50,000 it has left over after paying me, hence no double tax. If I take that $50,000, and want to pay it out as dividends, then the corporation pays taxes on it (after which, lets say $40,000 is left over), pays out $40,000 to me, and then I pay taxes on that $40,000 of income. What you can do however, is you can do something like pay it out as a bonus, in which case it becomes a write off for the corporation, and you're the only one to pay the tax on the $50,000 (instead of $40k, because the corporation didn't pay taxes on it). The other thing you can do is shift expenses that are business related from yourself to the corporation. Things like your travel expenses, computer equipment, a percentage of the rent, business lunches, etc. The advantage of having a corporation (and this includes S-Corps, C-Corps, as well as LLC's) is that corporations have a greater leniency on certain things that they can write off. For example, if you go on a business lunch, and it is not out of town, you can only write off 50% of the amount. If the corporation has a policy of paying for business lunches, it can write off 100% of the amount, whether it is in town or not.

Just a little disclaimer however, I am not an accountant, just a business owner. If you are seriously looking into incorporating, speak to an accountant first. Although I highly recommend all contractors incorporating, there are numerous things that you have to keep in mind, and there is overhead, so its best to go into it with eyes open, or you are liable to get screwed for not following the rules.
Re:The challenge of financing by hoegg · 2004-01-27 07:24 · Score: 2, Informative

You're not kidding. Sales and marketing has been the hardest part of my business, which is about to be four years old. Luckily, I started with a client and was able to sustain that business while I slowly gained others, mostly through word of mouth.

I set up shop in February 2000, and since then have gone from two business partners to none, re-incorporated once, moved 1200 miles, and changed my core business model several times.

Through it all, the only sure way to get business was word of mouth advertising. You simply have to maintain a reputation and talk to lots of people.
Re:The challenge of financing by llefler · 2004-01-27 07:26 · Score: 4, Insightful

I can't do it because its toooooo haaarddd....

He's talking about creating a job. Is your reputation so bad that you won't hire yourself? Anybody I know that is serious about programming owns a PC. All of them have compilers too. And if they didn't there are free compilers, either OS or previous versions of commercial compilers.

So you need three things; time (unemployed, you have plenty), a marketable idea (a little more difficult, but there are so many BAD programs out there than need replaced, not even counting processes where software doesn't even exist), and someone to sell it. The last being the hardest part.

I have a friend that is always telling me "I need to learn more about this or that so I can get a programming job". Let's see, he needed; better understanding of OOP, web services, XML, SQL.... So I gave him a project to write that addressed all of them. Since I have seen nothing in 4 months, I'm assuming he really doesn't want to program.

I turn down several consulting jobs a year because I like the security of a stable paycheck. I don't have time to do my job and consult. So my experience is that there is work out there. If you know anyone who owns a small business, they can probably tell you how some software that doesn't exist could benefit their company. And unless they have some really odd business, there are probably 1000 other small companies doing the same thing they are. Niche markets can be profitable for a small group of programmers.

--
It is amazing what you can accomplish if you do not care who gets the credit. -- Harry Truman
Re:The challenge of financing by ron_ivi · 2004-01-27 07:27 · Score: 2, Insightful

And the grandparent post is assuming someone's working alone. Do you know other unemployed people? If not, perhaps unemployment's not all it's cracked up together, or perhaps go to a Linux users group and see if they all have jobs. Why not work together on something. It's amazing how impressively a few highly motivated people can turn out a good prototype (perhaps especially if their seed money is running out).
Re:The challenge of financing by FreshFunk510 · 2004-01-27 07:29 · Score: 2, Informative

From what I remember, the taxation depends on your type of incorporation. There are various types of S-corps and C-corps.

And, from what my financial friend told me, while there's double taxation there are also some advantages to certain types of corporation. Basically it involves loop holes with personal compensation and using the company as an entity to lower your taxes. People do it all the time .. how else do you think rich people get away without paying much in taxes?

--

"Injustice anywhere is a threat to justice everywhere." - Martin Luther King, Jr.
Re:The challenge of financing by sane? · 2004-01-27 07:30 · Score: 4, Insightful
You're thinking big, think small.
You need a product that can justify costs of a few k per item. You are not in the Microsoft game, you are in the niche game. Value to a specific niche is what you are looking for. Value sufficient to justify the costs you will charge, and small enough that the big boys aren't interested.
So:
1. Have a number redirected to your mobile, and have a rotation within your little group.
2. A website is cheap to do well. Don't have an office for the first year. YOU are the sales force.
3. You are going to deliver it personally (unless its a web service). You're not in the shrinkwrap game yet.
4. Providing you keep it simple, you can use off-the-shelf software for this for quite a while. Sure, you won't find every tax loophole, but the accountant charges can be kept to a minimum.
5. Keep it simple. Try and start from the basis of your template contract. Use your brain, and a lawyer when you have to. The aim is to be a partner to the customer - if they try to tie you up in too complex contracts or terrible terms, walk away.
6. Work from home. Don't have fixed overhead costs until you have to. Plenty of companies can succeed to the extent they need to never having a 9 to 5 office. Some people swear blind that the office is a necessity. It you agree then get the cheapest, smallest, most dive like office you can.
7. Go to the customer, don't expect the customer to come to you. Sell on the solution you can provide, sell on your dedication. If they want the glitz then you will likely not get a look in until your turnover is $1m anyway - don't go after those customers.
I'm not saying I disagree with what you have said. There are lots of reasons why it can be too difficult, too expensive - but provided you keep you wits about you, they are possible to avoid.
Re:The challenge of financing by XorNand · 2004-01-27 07:38 · Score: 3, Insightful

If you're one code monkey working out of your apartment, don't bother doing anything more than filling a "Doing Business As" (DBA). It costs like $25 in more areas. Essentially it's like giving yourself another name. All income is reported on your 1040 under your SSN. It's cheap and easy. If things grow, then you can always roll it into a new business entity. WAY too many people overlook this option when they have stars in their eyes.

A C-Corp is a standard corp and S-Corp is like Corporate Lite. It's designed for a small, closely held group of investors. There are some restrictions on what you can and cannot do, who you can offer interest to, etc. Still though, either form is too complex and costly for most people who simply have a good idea and pocket change to work with. I recommend an LLC for a small group of friends and just a sole-proprietorship (the DBA option) for just one guy.

No, I'm not a lawyer but I have done a lot of this stuff and have learned from my mistakes. Don't do a corporation unless you have serious starting capital (what is not what this /. article was about).

--
Entrepreneur : (noun), French for "unemployed"
Re:The challenge of financing by lost+sheep · 2004-01-27 07:43 · Score: 3, Informative

He's right, the double-taxation only applies to dividends. One giant basic need for incorporation: it protects the owners from lawsuits and creates a separate entity that is the business. What this means: Say you have an employee that works for you, there is a fire, they die. Their spouse sues your company for $2,000,000 and wins, but the company only has coverage for $1,000,000 and only $500,000 in the bank. If you're incorporated: The company goes bankrupt, that sucks. If you're not incorporated: The owners are required by law to come up with the money; the company goes bankrupt along with the owners, that is sucking in a most extreme form. Additionally, if you ever want to do things like bring in investors, bring in partners, ESOPS (aka stock options for employees), do certain kinds of business with governments and other businesses, and have any sort of business exit strategy (except the strategy of leaving it all to your kids) you need to be incorporated. So take some advice, visit an accountant and attorney have them draft the articles of incorporation in whatever state you want them to be in (Deleware is the most popular!).

--
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Lost Sheep to Shepard, you got your ears on?
Re:The challenge of financing by Anonymous Coward · 2004-01-27 07:48 · Score: 2, Interesting

Caution: At least in Colorado, an LLC is not considered a corporation, in a legal sense. That being said, I've founded several LLCs, because they're still the best business structure for a small software company. But read up on this before you do it.

I recently started a new software company (I have one already, but I want to do different things, and do them differently). It so far has cost be about $400 in various expenses, and I'm ready to start coding and selling my first product.

You don't need financing. You need people who can work (for nothing, for a while), and an idea, and a clue of what to do with it. I create products and programs that don't need a million-dollar marketing and business machine to create and sell them.

Go forth, and code! (But not, in Forth.)
Re:The challenge of financing by Charlotte · 2004-01-27 07:51 · Score: 2, Informative

Starting a business is daunting, but the point is spending your money well. You just spend that amount of money that is absolutely needed (I should know, the startup I worked for managed to go bankrupt in 6 months). Keeping your cash flow in balance is critical for any new business.

The problem with many people is that they start a business like you explained it. There's no reason to get a secretary when you have 0 customers, instead get a cell phone. The first thing to do is get a customer. Use your dad's printer, darned, and get a fax receive service where you can go collect any faxes for you.

One very important item: make sure you can survive if your customer doesn't pay. Explain him that you are a beginning businessman and need monthly payments. Do _not_ wait to get paid until the job is finished! Do _not_ give the customer the finished product without asking for a signature confirming delivery. Make sure the delivery confirmation mentions the contract under which the product was delivered to the customer. If the above is impossible then get an insurance against customers who won't pay and bump your price to account for the offset in cost.

Don't bother getting a business location, do that once you have actual money coming into your bank account. Use your house or your brothers' barn instead and deduct the cost as a business location. In my country if your house is 100 m2 and your desk where you run your business (your computer room) is 30 m2, then you can deduct 3/10 of your rent as a business expense!

If you can keep your company going like this for 2 or 3 years you're set.
Re:The challenge of financing by sbeitzel · 2004-01-27 07:52 · Score: 2, Insightful

Wow, mod or post...
I'd mod you insightful, (and I hope someone does) but you missed a really crucial part: an actual business plan.
It's true that without sales and marketing, nobody will know about your kick-ass product. Marketing is important, not least because the sales force can report back what the customer really wants. But, having worked at a few tech startups, let me say this: you can have cool technology, you can have a good sales force, but if you don't have any kind of road map for how you're going to run the business (who's the customer, what problem are you solving, how does each iteration of your product line solve the problem, where does revenue come from, how and when do you expect to meet expenses, et bleeding cetera) then your kick-ass technology and super sales force won't keep you afloat.
You need a business plan.

--
Oh, go on, check out my job.
Re:The challenge of financing by bscott · 2004-01-27 08:10 · Score: 3, Interesting

> if you can swallow your pride and deliver pizza, you could
> just as easily swallow someone else's pride and do gay porn.

Wow, in your mind those two professions are equivalent?
(And I thought *I* was a huge moral relativist...)
The apparent nonexistance of a line between legal and illegal actions should leave you admirably suited to a job in almost any large corporate legal department. Blimey, you're set for life, dude!

Personally, I delivered pizza for 2 years - even while I was earning $75/hr as an at-home programmer. It was a nice break from the keyboard, getting me out of the house on a regular basis, and I got the not-so-occasional free slice - the best kind of pizza is free, after all! So where's the pride-swallowing, I ask you? I'm not begging for change, I'm not representing scumbags in court, I'm not calling people during dinner to sell them siding, and my clothes stay on. It can be dangerous work if you're not in a nice area, but otherwise it's enough to live on and you'd be surprised how many computer-y types I've known through the years who used pizza places as a nice little moonlight position... especially computer techs - I think it's just a nice change of pace to have a job where people are happy to see you!

--
Perfectly Normal Industries
Re:The challenge of financing by oddman · 2004-01-27 08:10 · Score: 4, Insightful

Exactly what is it about delivering pizza that makes it something that you need to "swallow your pride" in order to do it? It is lawful, gainful employment.

Is it glamorous? No. Is it challenging and stimulating? Yes, but necesarilly in a way you'd like. Is it high paying? Not really.

But none of these facts makes it shameful or somehow dehumanizing. In fact one might argue that the refusal to take a job in maunal labor or service (food delivery is both) is shameful. You should never consider yourself too good to take a job, if you are unemployed.
Re:The challenge of financing by h8macs · 2004-01-27 08:12 · Score: 2, Insightful

I would have to agree with all of what was stated by the "master" post. I would add just one extra detail, those of us who have kids and need what little income we can get often tend to take lesser paying jobs in a related field or in a different field all together.

I wonder how many 'good' IT folks in general are scraping by working 2 jobs trying to make ends meet and still come up short. Unemployment is still VERY high, and this isn't the folks that turn it into a career these are the folks that have been attempting careers!

Working hard long hours and for lesser wages does not make it easy to start a business which would entail even more hours worked with perhaps less income.

IMHO

--
:-( --- argh. Despair, I owe again. :-b
Re:The challenge of financing by XorNand · 2004-01-27 08:14 · Score: 2, Informative

No, you are 100% personally liable. It's just registering an alas with the state. FYI, just forming an S-corp doesn't mean that you are immune from personal liability. I would really recommend that you give a lawyer a ring. There are certain formalities that you have to maintain, which vary from state to state.

--
Entrepreneur : (noun), French for "unemployed"
Re:The challenge of financing by Tassach · 2004-01-27 08:28 · Score: 4, Insightful

So you need three things; time ... a marketable idea, ... and someone to sell it
You forgot the essential fourth thing: money to live on. If you're living in your parent's basement, you might be able to survive on peanuts while you build a business. If you have a family to support, then your options are much more limited. If your spouse / SO can support the family while you're building the business, that's great. But when you're the primary breadwinner, you have to do something to bring money in *now* so that the mortgage gets paid and the kids have food on the table. "Sponging off your family" is a kind of financing -- they're paying your living expenses so you can build your business.

--
Why is it that the proponents of "one nation under God" are so eager to get rid of "liberty and justice for all"?
Re:The challenge of financing by wwest4 · 2004-01-27 09:05 · Score: 2, Funny

i'm implying that pride is a negative emotion in the context of how one eeks out a living.

and now for some more funny:

Personally, I did gay porn for 2 years - even while I was earning $75/hr as an at-home programmer. It was a nice break from the keyboard, getting me out of the house on a regular basis, and I got the not-so-occasional free piece of ass - the best kind of ass is free, after all! So where's the pride-swallowing, I ask you? I'm not begging for change, I'm not representing scumbags in court, I'm not calling people during dinner to sell them siding, and I don't have to deliver pizza. It can be dangerous work if you're not in a nice area, but otherwise it's enough to live on and you'd be surprised how many computer-y types I've known through the years who used porn studios as a nice little moonlight position... especially computer techs - I think it's just a nice change of pace to have a job where people are happy to see you! ... amen to that!
Re:The challenge of financing by El · 2004-01-27 09:33 · Score: 2, Funny

You don't get a net connection for free. I do! Thanks to my neighbor neglecting to enable WEP encryption on his Linksys wireless router...

--
"Freedom means freedom for everybody" -- Dick Cheney
Re:The challenge of financing by caspper69 · 2004-01-27 10:00 · Score: 2, Informative

Deleware *used* to be the most popular, primarily because they had a very advanced set of laws with respect to corporations. This is not so true anymore. I recently read an article comparing Michigan Corps. with Deleware Corps. which found that they were very similar (i.e. other states are starting to mimic what Deleware has done). Hey, but Deleware had to have something, right? Since there's not a lot going on there, they went out and enacted several laws that made having a corporation there desirable. Again, other states caught on and decided to follow suit. There is no difference in the eyes of the Feds, so, best to incorporate in your own state. I say this especially since if you were to use a corporate service to incorporate in Deleware (provided you don't live in Deleware!), you will also have to pay your local state to get permission to do business as a foreign corporation (not Foreign as in from another country, but Foreign as in formed under the laws of another state). This can easily be several times more expensive than simply incorporating in your own state. In Michigan, Corporations cost $60 (LLC's $50), but North Carolina, for example, charges a $500 fee for a foreign corporation looking to do business there. Not very practical, especially in keeping with the trend of this thread (starting a software business on the cheap!).
Re:The challenge of financing by odin53 · 2004-01-27 10:19 · Score: 3, Informative

Some of what you say is incorrect. An LLC (a Limited Liability Company) is, by definition, not a corporation. The two business forms are very, very different. This means also that LLCs are very different from an S corporation, because S corps and C corps are exactly the same kind of business entity -- a corporation. The "S" and "C" designation is entirely a tax code thing; you don't "incorporate a C/S corp", you incorporate a corporation. You declare that you are an S corp to the IRS.

You're right that business owners who are choosing between the LLC form and the corporation should always consult an accountant, and consulting a lawyer would be good too. Aside from the tax advantages and disadvantages, there are many advantages and disadvantages to the LLC as a legal structure.
Re:The challenge of financing by llefler · 2004-01-27 11:11 · Score: 2, Insightful

You forgot the essential fourth thing: money to live on

But the whole premise here is that they are unemployed. So they some alternate income already. Unemployment, SO, ....

The same friend I mentioned earlier is working two jobs, one in retail and one in entertainment customer service (bouncer). Yet still finds many hours a week to play computer games. So there is obviously a little opportunity time for someone who is motivated. I didn't say it was supposed to be easy.

--
It is amazing what you can accomplish if you do not care who gets the credit. -- Harry Truman
Re:The challenge of financing by shaitand · 2004-01-27 13:15 · Score: 3, Interesting

You seriously overrate some IT managers and corporations judge of talent.

I'll give you a random example from my own past experience.

Several years ago (like 6-7, I don't even think I'm under an NDA anymore, ancient times really) I worked for a lesser known corporation called Sony Electronics.

I started off at this Sony Electronics place, in Tech Support. I went there expecting they would be interested in knowledgable people. I walked in and they first did a lie detector test for security clearance and drug testing. Then they gave you a technical test, where they would ask you questions and you'd have to describe how to perform various tasks off the top of your head and explain technologies in certain areas etc (architectures you've worked with etc.). Fair enough, after all a customer isn't generally going to call and give you a multiple choice question.

It wasn't long before the interviewer was starting to scribble on the back of the sheet when writting down the processors I'd worked with (3rd question, after name and date of birth) before he simply sat it down and started quizzing me. All of it fairly easy windows stuff (only setback was that he said it was windows 98se and asked about system resources, I started explaining how to get to the system monitor and he got very confused, he wanted the overall rating in system properties).

So I go through the rigerous Sony 1 month training course and another month on the floor. And then I discover the magic which is numbers. That is all sony cares about. My (now wife) worked there with me, she is of a knowledge level where she knows there is this cd command and a vague idea of how it works, if you ask her how to move to the root of the C drive she will advise to type "cd C:".

She didn't know shit, probably fixed about 3 customers problems for real. It's a fair bet that every customer she handled called back 3 or 4 times. Needless to say she was the Star of our entire shift, 94-96% of her time was spent on the phone or available ready for a call to come in. Her average call time was about 6 minutes. If you checked her calls (easy to do) there was ALWAYS a callback but Sony neither noticed nor cared.

Me, I rated about 85% spending alot of my time in unavailable (mostly spent on call documentation), my average call time was more like 15min. I had an average of 5 or 6 kb updates (solutions that were wrong or had no solution in the sony knowledgebase, wife had zero in the year we worked there) a day. If you looked through my calls you would always see almost nobody I worked with had to call back for the same problem and the only reason I escalated a call was because it required a solution that wasn't within my authority (certain types of repairs) and even then I usually walked over and got authorization rather than bumping up the call.

I have several letters in the Sony book (where customers wrote to the president of the company because they were so pleased with my work) and had one customer try to send me home baked chocolate chip cookies (nazi security gorillas examined and proded them for 3 months and finally handed me a bag full of cookie pieces, seriously).

Now with all that, I was at barely acceptable performance and got lectures on my numbers fairly routinely (course they'd never fire me, that takes a 6month process at sony and they wouldn't start it with my star employee girlfriend as part of the package).

My wife is an accountant by trade by the way, and her poor performance as a phone tech really doesn't reflect on her work in the subject she actually knows something about.

In any case, that is an example of the way Corporate America works, I could give you dozens of other examples. It's much like the government, there are rules and guidelines and reality rarely intrudes on the way things work there.

Market interfaces.... by BWJones · 2004-01-27 06:37 · Score: 5, Insightful

Find a dedicated concept or conceptual area to exploit. How to do this? Simply ask folks what areas they are having problems with software needs.

I'll tell you that a number of folks are doing quite well at the interface between biotech and software. The amount of data that is being generated by biotech is truly mind boggling and we need software tools for analysis and visualization of that data. Software that is capable of analyzing multi-dimensional datasets is particularly in demand right now with gene chip analysis and the work we do in our lab on molecular phenotyping. For instance, we are adopting software used in the remote sensing community to analyze "multispectral" data sets in the retina and other tissues and the communities that this software came from (GIS, Remote sensing, Intelligence) are very interested in software that can help distill multispectral data real time to enable streamlined processing and analysis. Your link to DARPA is particularly informative for these potential projects, but don't forget about other resources as well like the National Institutes of Health.

--
Visit Jonesblog and say hello.

Re:Market interfaces.... by The+Jonas · 2004-01-27 06:42 · Score: 4, Interesting

Find a dedicated concept or conceptual area to exploit. How to do this? Simply ask folks what areas they are having problems with software needs.

Interesting site can be found here.
Re:Market interfaces.... by dustmote · 2004-01-27 06:45 · Score: 3, Insightful

Absolutely. I think that the difficulty that faces a lot of people is seeing what is needed, what there is a market for. It's very easy for a person to figure out what their own software needs are - I can tell you the top ten programs that I would write/have written if I had the time or wherewithal, but it is difficult for me to figure out the needs of the business on the fifth floor of our office building. I suppose that the trick, as you have pointed out, is to find places where a huge volume of information is being generated that needs processing and correlating. Still, it can be hard for a lot of people to see the difference in "things I need" and "things other people want and need".

--

-1, "1337" speak

Start a company? by ellem · 2004-01-27 06:37 · Score: 5, Funny

Pfft! If I had that kind of drive I wouldn't be unemployed now would I?

--
This .sig is fake but accurate.

Yes, but which coder works while the other 9 by Anonymous Coward · 2004-01-27 06:37 · Score: 2, Funny

post on slashdot?

uuuuh. did you think about this? by heller · 2004-01-27 06:37 · Score: 4, Insightful

There's not enough business in the software industry to support the existing industry, otherwise those who were in it before wouldn't be unemployed, and you propose another company?

Re:uuuuh. did you think about this? by Rocketboy · 2004-01-27 06:44 · Score: 4, Insightful

Perhaps the difficulty is that there's little need for more software vendors producing "me too" products. Is there really a profitable niche for selling a new spreadsheet, database, or word processor? E-mail or chat client? I doubt it. The challenge -- and the reward -- comes from inventing new products that don't exist yet, or which do exist but don't work very well. Remember too that the real money often doesn't come to the first group introducing something new and radical but rather to the more highly polished second and third. 'Course, that was before software patents...
Re:uuuuh. did you think about this? by bloggins02 · 2004-01-27 06:47 · Score: 3, Insightful

Perhaps, perhaps not. I think a lot of software companies out there are failing to follow the old adage: "don't sell shoes to shoemakers." Meaning? There are WAY too many software companies trying to sell software and services to...other software companies!

This can only go so far, eventually some of those software companies have to sell to someone else, or we're in a big circle and going down fast. Software companies that hire REAL coders (who, for example, know what a "stack frame" is, I'm not talking about code monkeys) and do software projects for people in other markets still have the potential for success.

Are V.C.s likely to fund your new company which aims to sell yet ANOTHER content management system or source code revision system or .NET component? No. Might they fund a business who writes software that analyzes biotech data in real time, or even controls sophisticated steel factory machines? Probably.
Re:uuuuh. did you think about this? by PainKilleR-CE · 2004-01-27 08:13 · Score: 2, Insightful

Those types of things are fine, and probably can and should be done, but in the end require a lot of the more costly portions of a software business to be in place. It's not just about the time developing the software (which may be a big portion for this market), but also the funding and marketing.

With niche markets you can sometimes get companies that are willing to fund a project based on a pitch and a demo. Small companies are just as likely to do this sort of thing as larger companies, and more likely to take a chance on a small startup with no real history (though everyone will probably want resumes of the people that will actually be doing the work for the sake of making sure that you actually have the capability to do what you say you'll do). If a company wants some way to sort their email in a particular manner in Outlook or connect Outlook to Excel and doesn't really have an IT department that can write macros for them or any coders on staff to handle some simple VBScript (or anyone they can afford to pay to do something as simple), they may pay a small amount for a quick project that you can leverage to other companies or use in a larger project (just make sure anything you might sign still maintains your right to do so). They may need something bigger than that, like a database and front-end for their inventory and tracking system that just isn't big enough for the larger, more expensive companies to handle. A little project done well may be enough to lead to bigger projects down the line, either from the same company or from other companies they work with.

With broad markets you may not be able to get any funding (you'd need something more like venture capital, someone (or multiple people) willing to put in money on the idea for a share of the profits or control of the company), and even when you do you'll have to find a way to get your product to your market, as well as letting your market know your product is there.

Personally, over the last 5 years, despite working for a rather large company rather than working for myself, I've managed to expand our oppurtunities simply by building on the simple projects I started out with. Now we're getting to a point at which we're building software to do things that weren't possible before rather than simply to augment or replace existing software that we had no control over (and that the company that supplied the software had no stake in). The development cycles get longer as the scope of the projects get larger (and many small projects have turned into larger projects over time as more functionality was requested by the customers), but the funding increases as well to reflect the difference in size as well as the potential earnings. On the other hand, the software I'm writing isn't something that Microsoft would come in and write, simply because the market is very small, and the knowledge required tends to come most readily from within the industry (certainly not a software-driven industry, but rather one that is coming more and more to terms with how it can leverage software to improve it's products and services). Many of the people that really have the knowledge required aren't software people at all, so it takes people familiar with the industry to be brought together with people familiar with software to really get things moving. People in industries like biotech and other areas should be fairly familiar with the idea that people with little to no software development experience learn something like perl to get a job done more quickly. Now imagine what happens if you bring a software developer into that environment that's willing to learn enough about the industry, or at least the particular project (on a project-by-project basis) to move the more complex ideas those people (the guys hacking together perl scripts from vague ideas of how perl works) have into the realm of actual tools they can use comfortably. Those are the kinds of areas where many companies could use small development houses that can come in and help them out with small projects, and the people doing the software could stand to make some good money that way, if they are there when these industries look for them.

--
-PainKilleR-[CE]

You need to have somtheing to create... by EveningToast · 2004-01-27 06:38 · Score: 2, Insightful

See, I am a very creative guy. but not a very good programmer. Maybe the bulk of people who are out of work are programmers, or not up to the ask of assembling entire programs....

Re:You need to have somtheing to create... by stratjakt · 2004-01-27 06:44 · Score: 3, Insightful

A lot of unemployed people are just plain useless.

They're still waiting for a $200,000-per-year-with-stock-options gig writing FORTRAN routines to create amortization tables.

If you really want it, work is easy to find.

--
I don't need no instructions to know how to rock!!!!

Start a Software Company by danknight · 2004-01-27 06:38 · Score: 5, Funny

I'm Going to call it ... MikeRoweSoft !!!

--
wanted: one clever sig,apply within

slashdot problem by havaloc · 2004-01-27 06:39 · Score: 5, Funny

The problem with starting your own company and gathering a bunch of unemployed slashdot readers is that they will be reading slashdot from 'work', looking for the elusive FP!

Personal experience by Anonymous Coward · 2004-01-27 06:39 · Score: 4, Insightful

More than 90% of IT workers i know are employed. 100% of the good IT workers i know are employed.

Re:Personal experience by Anonymous Coward · 2004-01-27 06:45 · Score: 2, Funny

Do you live in India?

I am a hardcore Linux admin, have been using Slackware, Linux From Scratch, and Gentwo all on the same box with unlimited uptime, one user, and a 0.0,0.0,0.0 load average for over 10 years.

I know all about security, adminsitration, and bourne shells. I refuse to work on Windoze boxen because they get virii and are evil monoploists with no understanding of personal comittment fortitude, or wht I can afford living in my mom's basement.

So you are lying, and the IT market is hard for us pros who won't work on inferior M$ Winblows products.

Thanks for the advice!
--A proud Slashbot
Re:Personal experience by Tablizer · 2004-01-27 07:10 · Score: 3, Insightful

More than 90% of IT workers i know are employed. 100% of the good IT workers i know are employed.

What I find is that good IT and "employable" are two different things. Companies seem to prefer bullshit artists who do hit-and-run short-term thinking and coding. If they make sacrifices in code and design quality to meet deadlines, nobody ever seems to complain. Cleaning up or patching over their own cruft is job security for them.

The good BS artist has an advantage because nobody has the time or ability to verify what is being claimed, so if they put the blame on a bad Flux Capacitor, and are good liars, they are usually believed.

The Dilbertian view of the work world is generally true in my observation, at least in the domains I am familiar with. It is mostly a social/political game, not a technical one.

--
Table-ized A.I.

I did this. by anaphora · 2004-01-27 06:40 · Score: 5, Interesting

I started this when I was 16. I designed programs to teach kids arithmetic. Now I'm 18, have a steady job that brings me about $10/day for all of the work of listing my programs on eBay, and every once in a while, I'll get lucky and a school will want to purchase 50 or 100 copies of my program on floppies for their computers. The programs took about 3 days to write, and they were the best 3 days of my life.

Re:I did this. by tommck · 2004-01-27 06:58 · Score: 3, Insightful

WEll, frankly, 3 days is not enough time to come up with an idea, never mind designing a coding a solution. Then, there's marketing, etc. You seem to have gotten lucky with what you've written, but it's pretty much impossible to write 30 useful programs with an average beginning-to-end time of 3 days. If you could do that, you'd be giving Bill Gates a run for his money...

--
---- It puts the lotion on its skin or else it gets the hose again. It does this whenever it's told.
Re:I did this. by Kenja · 2004-01-27 07:06 · Score: 3, Insightful

So at 10$ a day you would only have to do this 100 days a month to cover basic cost of living out in the real world.

--

"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"

Been there... by AKAImBatman · 2004-01-27 06:41 · Score: 5, Insightful

...done that. And I have to warn you, it's not easy. What you think makes a good product will in fact be very different from what your customers think is a good product. You can plan on at least a year of post-release development before your software meets the needs of your clients. And you'll have to be doing the development while taking the time to advertise the existing version, so you can at least make enough money to make ends meet.

My best advise is to start a small software company while still employed. Don't advertise too much, and listen to what your customers have to say. If you keep constant development going, you should have an excellent product prepped for the next time you're out of work (or to start off on your own).

--
Javascript + Nintendo DSi = DSiCade

Re:Been there... by poot_rootbeer · 2004-01-27 07:08 · Score: 2, Insightful

My best advise is to start a small software company while still employed.

Remember, never take business advise (sic) from somebody without talking to a lawyer first. IANAL, but...

If you're doing anything even similar to software development for your current employer, don't be surprised when they fire you and take you to court seeking ownership of the software product you developed for your own company. If you're bound by a non-compete clause, they'll try to get you with that; if you're not, they'll try to claim your software takes advantage of their trade secrets and may end up getting you anyway.
Re:Been there... by AKAImBatman · 2004-01-27 07:12 · Score: 2, Insightful

If you're doing anything even similar to software development for your current employer, don't be surprised when they fire you and take you to court seeking ownership of the software product you developed for your own company.

This is true. I was assuming a software product that has little to no relation to your current job. Developing something similar to your employer may not always be illegal, but it is unethical.

--
Javascript + Nintendo DSi = DSiCade

unemployed? just get a job! by egomaniac · 2004-01-27 06:41 · Score: 5, Insightful

This is really no different than saying "Hey! You're unemployed, right? Why don't you just get a job? That would fix things right up!"

Where do you think the money comes from when you start a company? That's right, investors. Now, if you can't find a job, what the hell makes you think that you're going to be able to find investors?

"Hmmm. You've been looking for a job for the past year. Unsuccessfully. You have no experience running a company. You don't have a clear business plan. You have no leadership skills. Well, what have I got to lose? Here's ten million dollars. Have fun!"

--
ZFS: because love is never having to say fsck

Re:unemployed? just get a job! by jacem · 2004-01-27 06:55 · Score: 2, Interesting

I think one of the problems is that several of the start up firms that I worked for since the late ninties started out with an invester saying.

"Hmmm. You've been looking for a job for the past year. Unsuccessfully. You have no experience running a company. You don't have a clear business plan. You have no leadership skills. Well, what have I got to lose? Here's ten million dollars. Have fun!"

Then again most of those companies were extrodinary failures.

JACEM

--
DOC Disinformation Obfuscation and Confusion
The carrot to FUD's stick

I'm available by Abm0raz · 2004-01-27 06:42 · Score: 2, Funny

I'm not much of a manager. I owned my own company before. My partner stole a bunch of stuff and there is currently litigation against him pendinf. If someone wants to start a software system, I'll code. I'm not much for free coding (so don't suggest sourceforge) seeing as I need to pay rent and stuff. I currently do freelance coding for various people as well as work full time running mail servers and anti-spam software for a large Architectural and Telecommunications firm.

-Ab

--
Nothing fails quite like prayer.

Umemployed? Why not start a software company? by Anonymous Coward · 2004-01-27 06:42 · Score: 2, Funny

Can they DO that?

unpaid internships by happyfrogcow · 2004-01-27 06:42 · Score: 2, Interesting

I've heard some internships are unpayed these days.:-)

Yes, how do companies get away with this? If the internship is part of a college degree/coursework then that is one thing, since you get course credit. However, unpaid labor? Aren't there labor laws? I hear a lot of the movie industry uses unpaid internships because people, apparently rich kids, really want to be in the movie industry and can afford to use ma & pa's bank account to float their boats for a while until they move up to a real job.

Can you waive your rights that are protected under labor laws? Is that what these "unpaid internships" have you do by signing a contract? Whatever happened to minimum wage laws?

I do realize that back in the olden days, apprenticeships were used regularly. But even these, didn't they offer housing and food in return for work?

someone please enlighten me.

Re:unpaid internships by thasmudyan · 2004-01-27 06:59 · Score: 3, Insightful

My company does unpaid interships and I'll tell you why:

At most other shops, interns are paid, allright, mostly to make coffee and do the tasks no one wants to do. And it's OK that they get money for that.

At our company, interns receive a personal training plan and are basically treated like students. The employees are encouraged to spend lots of time with them, teaching them what they know. Our interns work on real projects, and are getting real experience with their desired field of work. This costs the company a bunch of money, because time and resources are diverted to implement these training plans.

So, no, we're not paying them additional money but when they leave (and some get assimilated by us), they know a whole lot more about their future jobs. Getting this knowledge across basically costs us money that - let's face it - we're never getting back in any way. It's true, an intern also produces stuff during her stay, but the value of that doesn't compare at all.

Sure we are by jasonditz · 2004-01-27 06:43 · Score: 4, Interesting

Is anybody really NOT doing this?

I mean, every unemployed software developer I know still freelance codes to make ends meet (at least once unemployment runs out).

But making ends meet and having a strong business where you're honestly "getting ahead in the world" are two very distinct things. Of all the people I know trying this, few were able to come up with more than $10,000 over the last 12 months, and some of us considerably less than that.

Finding paying customers for software isn't easy (at least those willing to pay what the software is worth). I often go 3-4 weeks without anything profitable to do... and get called by someone who wants a 20-30 hour job to cost them like $50.

It's not because of lack of great ideas by Anml4ixoye · 2004-01-27 06:43 · Score: 4, Insightful

The company I am working for I didn't join because of their great ideas. Though what we are building is very cool. It was the fact that the CEO and President are both Ernst and Young alumni, and two of our Board of Directors have significant experience in the industry we are building it for. On top of that, they have a rock solid business plan that I was very impressed with, and know what's important to spend money on (legal, dev workstations, software licenses) and what not to (not working off of a yacht yet).

Add to that what an earlier poster said about financing and you have the mix to keep most people from starting or suceeding at this. Show me software developers who know how to create a good financial plan, can prove a track record of delivering software, and know the industry they are building for, and I bet very few of them are unemployed.

--
Random Musings

I have tried multiple times by Tablizer · 2004-01-27 06:43 · Score: 5, Interesting

....and failed. It is not easy. You can't just throw clever programming at the problem and get money out the other end. For one, it takes a hell of a lot of marketing knowhow, something that most geeks should have known they were crappy at when the prettiest girls went to the fast-talking football players. There is much more to making a company than clever tech. Tech ability is becoming a cheap commodity. That is life in the new mellenium. The sun is setting on us geeks and there are fewer and fewer escapes.

--
Table-ized A.I.

Mindset by savagedome · 2004-01-27 06:43 · Score: 2, Insightful

Starting a software company sounds like a neat idea but is easier said than done. When you are unemployed, the primary focus is finding a way of paying those rising bills. Starting a company is not going to solve that right away. It takes quite a bit of time before you get into the profit making green zone.

Also, software company is about having an idea that would make for a good software. When hunger strikes and you are driving down a freeway, you are not looking for a gourmet restaurant. Any fast food joint does it for you.

--

Free XBox, PS2

Fund your development with services by Anonymous Coward · 2004-01-27 06:43 · Score: 4, Interesting

The lead time before your software dreams start generating cash flow is immense. Sometimes it never happens.

I've seen self-employment work best as a service business. Can you do networking and software support? Do you think these jobs are beneath you? Do you have skills in dealing with customers? You know software development inevitably turns into support in successful projects?

Support pays the bills and generates the cash flow needed to fund you development efforts. The problem is most developers think they're going to develop a successful product and let someone else worry about the support problems. Never happens. Might as well bite the support bullet now. You will find it is not beneath you. It is hard even for the technically skilled. It will pays the bills and give you the time for pure development.

Business plan by Space+cowboy · 2004-01-27 06:45 · Score: 5, Informative

Don't expect to get anywhere without one. It may be crap. Hey, it *will* be crap. You'll look back and laugh (or cry), but it's important to have a standard yardstick to measure yourself.

Beware of angel-investors (people who know you and are willing to give you cash to start up). Unless you have a better experience than most (myself included), you'll fall out, and it'll get messy. I wasted 3 years.

Do a *realistic* assessment of your income and needs. Before you jump ship or give up something else, make sure you can support yourself. Sounds stupid, but it's amazing how little costs can add up. It's easy to fall afoul of the law with tax returns and VAT as well (for us Europeans)...

Get people on board who can run a company - not as paid (or maybe nominally paid) - someone who's outside the business most of the time, and isn't fixated on the next quarter, because you will be, and you'll need a longer-term plan as well as the short-term survival strategy. Make them a non-exec director.

That's about all. The business plan *is* the most important, believe it or not... Most banks will help you through it for free (hoping to get your business). At the very least they'll give some sound advice. It's their job to fund businesses that work....

We've been going for 2.5 years now, and learnt the hard way (the aforementioned 3 years) that there's more to doing this than meets the eye...

On the other hand, if you can handle the extra pressure of being both boss and worker, it's a far nicer lifestyle than being a cog in the engine :-)

Simon.

--
Physicists get Hadrons!

The experienced can get jobs. by RyanFenton · 2004-01-27 06:47 · Score: 2, Interesting

The unemployed are most likely comprised primarily of those MANY people who are either IT people who without a huge portfolio or over 5 years of experience, CS people who haven't graduated, or have less than 3 years recognizeable experience. It's hard to push through phone networks to speak to people who would ordinarilly throw away your resume, and it's very hard to get acceptable experience in this market. Without experience, and without the money that comes with it, it's VERY hard to start a business that other businesses would give regular business to. The experienced people can still find jobs.

It's that span between "cheap high school/early college labor" and "unquestionably valuable asset" that gets people in this market.

On that note - Anyone interested in a CS Major with around 3 years professional experience? - I'm friendly, helpful, quick of mind, and have paid my dues.

Ryan Fenton

Same reason I didn't by dejaffa · 2004-01-27 06:47 · Score: 4, Insightful

I'll give you the same answer a friend of mine gave when he and I were quitting a consulting company about the same time and someone asked why we didn't start our own.

I don't know anybody who's good at sales whom I trust.

--
There is no 'i' in team, but there is in fiasco...

Can't lose by dylanm · 2004-01-27 06:50 · Score: 2, Interesting

About 2 years ago I took a software job for minimum wage, at the very least it kept my skills honed and looked more attractive on a resume to be currently working. We worked our butts off and the company actually started to make enough money to back-pay a real salary. We were eventually acquired by a large software company and all made out quite well. Realizing what you can do while sitting at folding tables and plastic lawn chairs in a cramped office is probably the most valuable thing I took from that experience.

Regarding the poster suggested by GoofyBoy · 2004-01-27 06:50 · Score: 3, Insightful

... defense soliciatations.

These are alot harder than you think.

1. There are alot of companies with deep pockets going for it.
2. You will spend a huge time writing proposals down to accounting to the cent before you get into what IT guys would want to do. PHB type of things. And you are not guarenteed you will get the job or get paid for that work.
3. The amount of waiting for things to go through would destroy a business with no income.
4. I can almost guarentee you that a bunch of unemployeed slashdot readers will not qualify for these types of jobs either finacially or with experience contracting with the government.

--
The surprise isn't how often we make bad choices; the surprise is how seldom they defeat us.

Re:Regarding the poster suggested by ivan256 · 2004-01-27 07:01 · Score: 2, Insightful

5. Few things suck as much as not getting paid for over a year after you finish a job.

99% persipiration, 1% inspiration. by gurps_npc · 2004-01-27 06:50 · Score: 2, Interesting

Actually, those numbers are off.

It is more like this: 30% pure luck

30% Financing

30% Perspiration

9% favorable government laws/rules

1% Inspiration/talent

But it is clear that talent/genius/great guys get nothing. The people that make it in the real business world have a bit of luck, find some financing, work their asses off in the early years, get a some favorable government rules, and might have a passably good idea.

Bill gates is practically the posterboy for this formula. He had the luck, the cash, some hard work in the early years, a lot of favorabel USA rulings, and a very very few ideas taht weren't 1/2 bad.

--
excitingthingstodo.blogspot.com

Re:99% persipiration, 1% inspiration. by FreshFunk510 · 2004-01-27 07:06 · Score: 2, Insightful

In the spirit of Rounders (the movie), I wouldn't call it luck.

To quote, poorly, from the movie:

"Why do you keep on thinking it's luck? Why do you think the same 4 guys end up in the final round every year at the World Series of Poker?

I wouldn't say Bill Gates got lucky but I'd say he bet on a high probability event. He knew computers were going to get big and he knew they could exist in the consumer space so that's where he bet his money.

It's the same with Warren Buffett. He adjusts his portfolio so that a certain % of it is on high probability events and smaller %'s are invested on lower probability (high risk, big return).

--

"Injustice anywhere is a threat to justice everywhere." - Martin Luther King, Jr.

I am trying to... by gtrubetskoy · 2004-01-27 06:53 · Score: 4, Interesting

Great topic. IMHO, entrepreneurship is the only way out of the tech marketplace disaster we find ourselves in. (BTW, Cringely is suddenly not at all optimistic about the "offshoring phonomenon").

Here are the reasons why felt absolutely compelled to start a company:

Ever since being laid off from a seniour level job at a large ISP in 2001 I have been unable to find anything that would match my level of expertise. I have not been unemployed a single day since, but I've changed jobs 3 times already and have been frustrated with the level (or lack thereof) of technological advancement, at least in my general area - Washington, DC.
I know for a fact that the survivors of the dot bomb are plagued with all kinds of moral and managerial problems. I am convinced that this will not pass, and that the only way to find an interesting project is to make one yourself. Sure it's easier to "get a job", but the management of today's companies who have the money to hire lack the vision and creativity to provide you with a dream job, so you have to do it yourself. I also see this as a competitive advantage - I can have my prices very low because I don't have the overhead of loans, layoffs, chapter 11, etc.
I do not think I can make a living by simply being a developer or system administrator. The offshoring thing is very real, and unless you insert yourself into the IT chain not just as a programmer, but as a manager and steakholder, don't expect anything other than a mediocre living.

The bright side is that it is still much easier to start a business in the US than most anywhere else. Really, why not take advantage of it?

Working on it... by ThogScully · 2004-01-27 06:55 · Score: 2, Interesting

My brother and I have a company. I'm the IT and he's the management, currently getting his MBA at Yale while I have recently graduated with a degree in CS. We've been in business since 1998 and have no debts as a company, but each of us has plenty.

The hard part of getting off the ground is that there's just me coding for the most part - he will help when he's got an idea and some time, but any code reaching production usage has to go through me before I put it on my servers. It's awfully tough finding programmers that will work for free like I essentially do in the investment that the company will be successful and yield a paying job. And since I don't have much help, we're limited to how fast we can grow. Working with the pretty fast-paced music industry clients means that development speed is very important, but we can barely keep up.

The best advice I can give anyone is to work on creating one product that is solid, then work on another product. Try not to spread too thin over too big a project or too many projects. Once you complete a project, only go back for bugfixes or to fork it into a new revision when you're ready for a new version and featureset.

It's not easy and if not for my fiance, an engineer with a good reliable engineer's salary, I wouldn't be able to afford working only this job, which is already taxing my credit cards too heavily and my stress levels can only take so much of the 24x7x365 on call status.
-N

--
I've nothing to say here...

... Investor money for what? by cjustus · 2004-01-27 06:55 · Score: 4, Interesting

... I've read through many skeptical comments, and I'm just picking this one more or less at random...

What do you need investor money for? You own a PC, or you wouldn't be on slashdot... Compilers are a dime a dozen... The biggest expense for many companies is R&D... It's not like you have to stop looking for a job while you're coding - you keep your skills current... The cost to enter the software development business is pretty much nil for someone who isn't working...

I guess before there were investors, there were no companies, and all companies have required investor money to get going...

Those of you interested should check out the Association of Shareware Professionals ... Lots of good info here...

--
Platform independent bug tracking software

Re:... Investor money for what? by Kenja · 2004-01-27 07:08 · Score: 2, Insightful

Rent, food, electricity, gas, water, garbage service, internet connection etc. These things cost money. To pay for them is why people have jobs. When you dont have a job you cant pay for them. So where are you living while you write this software?

--

"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"

What do you do if you... by Baron_Yam · 2004-01-27 06:55 · Score: 2, Interesting

Have 'support' skills, not 'creative' skills? Seriously, what can an unemployed LAN admin offer to start a new company?

A programmer can make a whizbang new application and sell that; an administrator needs an existing application to require his skills. In addition, IT support techs can't start a new company all that easily because everyone else already has...

doing just that by jrexilius · 2004-01-27 06:57 · Score: 5, Informative

although I am not unemployed. An earlier poster touched on the key point: paying rent. And I mean my own rent. A software company doesnt need an office. Here are my business expenses:

1) server colocated in datacenter with back-up dial-in line $300/mo + $2000/server
2) SSL cert, web site marketing costs, etc. $500/yr
3) answering service, mail box, fax service $600/yr
4) cell phone & DSL at home $100/mo
5) incorporation, filings, fees, business liability insurance, registered agaent $2000/yr
6) business checking account $500/open
7) software, $0. all open source

So the company costs me an upfront ~$5000 and $400/month after that for a grand total of ~$10k for the first year.

Personal expenses:
rent/mortgage, utilities, taxes, maintenance, etc.
car payment, gas, insurance, parking, maintenance
debt (credit cards, student loans, etc.)
food, clothes, fun money, living
insurance (health, dental, death, disability, etc.) (~$200/mo for individual health)
savings & retirement etc.

My personal expenses after cutting out A LOT of fat are $4000/month for a grand total of $48,000 for the first year. after taxes.

I have 12 hours a day 6 days a week for 50 weeks a year, burstable to 18/7 for short stretches. When you are responsible for everything you cant burn yourself out.

So you look at your resources, your overhead, do the math and figure out if its feasible.

This is completely ignoring the fact that most engineers make for very poor salesmen, financial planners, marketers, and strategists. Which are as essential to a business as good technology or product.

Re:doing just that by Idarubicin · 2004-01-27 08:20 · Score: 2, Insightful

My personal expenses after cutting out A LOT of fat are $4000/month for a grand total of $48,000 for the first year. after taxes.
You ought to be able to cut that back some more. Try getting rid of your car and moving to a cheap apartment near public transit. A car (gas, maintenance, and insurance) is probably your second-largest (after rent/mortgage) or largest expense. Unlike mortgage payments, car payments don't even build equity for you.
I am one of the lowest of the low, one of the so-called serfs of science. As a graduate student at a Canadian university, I live in downtown Toronto on a stipend of $22,500 per year--from which I pay $6000 per annum in tuition. It is possible to live on $14,500 per year--that's $1200 per month. It just sucks.
So, the question is--how much of your lifestyle are you willing to sacrifice for your company? Living on $4000 per month? That's nearly fifty thousand after-tax dollars per year...Unless you're supporting a family, try to dredge up some memories of your student days, and recall all the ways to cut costs.

--
~Idarubicin

What sort of company ? by psycho_tinman · 2004-01-27 06:59 · Score: 3, Informative

Earlier posters have already pointed out that you need either a business plan or a product to get a company started (not to mention some source of funding).

Another type of company that I've contemplated starting is a specialist in an area. For example, any sort of networking project, or any sort of database administration work... Guns for hire, in other words. You go in, do a specialized install, get a maintenance contract, and you're done. Some system administrators may require training courses in specialized server software.. you handle those.

Basically, you have two ways to go. You can either be a product oriented company, and try to push as many of your product out into the marketplace, or you can be service oriented, and take it project by project. Each has a set of pros and cons..

Product oriented means you need deep pockets at the start, and a lot of faith. You may be coding without a client for ages, while you build a product that works. These companies are a lot more stable in rough times, once they get a few clients, but breaking even is a huge task, because they have so much invested in a product (which may sink in the marketplace).

Service or contract or even project oriented companies are easier to start up. Here, funding is less of a problem but you need solid contacts to give you projects at the start. Your margins are driven solely by how well you can deliver and close out the individual project.

In either case, you're looking at a lot more work than you would encounter being a wage slave. It takes a lot of different skills (you need to be savvy with business, have a head for numbers, worry about your presentation, and like Napoleon asked of his generals, "you need luck"). Once I sat down and figured out all this (and had friends tell me pieces), I realized that I might be able to handle the technical aspect, but definitely wouldn't have a clue handling a business. So, for now.. my plans are on hold.

Personally, I think people who start companies and have an entrepreneurial streak generally have a pretty good idea and aren't doing it just because they can't find a job..

Working well enough for me... by mclove · 2004-01-27 06:59 · Score: 4, Interesting

I started my own company back in college, and thanks to an unexpectedly successful product by graduation time I was making enough money so I didn't even need to look for another job. But even if you're unemployed, depending on your credit history and other factors you may be able to get startup financing, or failing that you can try to find a low-paying low-stress part-time job that'll pay you just enough to keep you going until your first product release.

I design/write/sell software for Palm OS, and for what it's worth, PDA's and embedded devices are a *great* opportunity for small developers now - the size and expectations are low enough so that one programmer in a couple of months can create a top-tier PDA product. The only problem is that the programming tends to be a more frustrating than for Windows - Palm OS in particular can be very perplexing for someone who isn't familiar with event loops and 80's style application coding, and even Pocket PC is fraught with weird compatibility issues. And the development tools for both platforms kind of suck. I'm not exactly a brilliant programmer, though, so it's more a question of patience than anything else, and if you've got the stomach for it it can be quite rewarding.

Really it all boils down to ideas; the key to early success as an independent software developer is making something that's sufficiently innovative/exciting that your customers will basically sell it for you, because even with Google et al big advertising campaigns are still the domain of big companies. One great way to get started is to find a small niche market with few competitors, create a well-polished new product for it with some innovative ideas, and back it up with a friendly attitude and impeccable support - at $99 a pop you can make a perfectly decent living with a few dozen orders a month.

I haven't met many... by kwelch007 · 2004-01-27 07:00 · Score: 2, Interesting

I haven't met many very talented yet unemployed software developers. I've met lots of mediocre or average developers that were unemployed. But the developers that I've met who were "very talented" have had little trouble finding a job.

Finding a job they like might be a different story of course.

Commit by FreshFunk510 · 2004-01-27 07:01 · Score: 3, Insightful

My friends and I tried to start a business venture and I'd say our idea had some viability but people seemed to commit in varying degrees at varying times. I think one way to get everyone to commit is to put a price on it.

For instance, one big problem we had was determining how much we should spend on marketing. We thought it best to go on a situation by sitaution basis as we encountered them and to determine, at each time, whether marketing ventures were worth it. I think this was a big mistake.

What we should've done was determined how much it would've cost to start a business BEFORE we set out for it. Even a rough figure will be good enough to prepare everyone to how much they are going to be committing financially to a company. I would then recommend amassing this money and then setting out on your venture.

This way you can set a budget for costs such as marketing. When you send out an ad campaign for $500 or $1000 you won't be thinking about how much of that comes out of your own pocket but you'll be thinking like a real business like how much of your total marketing budget that is, whether it was worth it and whether you want to spend it again. If you pull it out of pocket right then you'll always be stingy because you have no real solid metric to evaluate costs.

Finally, putting your money on the line from the beginning (whether it's $1000 or $10000) makes you try a lot harder.

--

"Injustice anywhere is a threat to justice everywhere." - Martin Luther King, Jr.

Insulting by DevCybiko · 2004-01-27 07:01 · Score: 4, Insightful

Thats an insulting attitude. It's like saying "Hey, you're an assembly line worker, why don't you just go out and start building something". The fact is that there is more to making a successful software company than writing code. In fact, the code is the easiest part of the process. To be successful in business you have to identify a need and convince someone to give you money to address the need. Software Engineers (typically) are not well suited to salesmanship. IMHO you need at least 3 different personality types to start a software company. You need someone with creative energy and vision who can ariculate that vision in a way that motivates both clients and employees. You need a financially minded individual who can see the vision and convert it into dollars and cents - making sure that its a viable venture. and you need an imaginative technical lead who can turn the vision into a product that meets the needs of the client and keeps to the bottom line. It's not just a matter of writing code and raking in the bucks.

Why should you need financing? by Coventry · 2004-01-27 07:06 · Score: 5, Insightful

I did this over a year ago, with no financing. In fact, I was in debt upto my ears. First, some misconceptions need to be cleared up:
- don't get an office. They cost money. Work From Home. If you have multiple people, either work remotely and meeting irl a few times a week, or choose one central house/apartment and setup shop in a room there. Basements are fine, so are spare bedrooms.
- Use existing hardware.
- Get dirt cheap hosting and put up a good looking website. customers won't know you're only paying 5$ a month for the site.
- don't pay yourselves salaries - I've seen way to many people think 'I need X amount of cash to pay myself Y per week for six months until the business is making money'. Plan on paying yourself what you can, and using unemployment as a cushion until things take off.

Heres how it works: while on unemployment, come up with an idea for a type of software business, and then throw up a website (make sure it looks good), and start writing software. You have to keep looking for a real job, but as long as you aren't making money on the biz, you don't have any income to report, and still get unemployment. If you want to sell products, write them while still on unemployment. If you want to do consulting or custom work, be finding clients while on unemployment. If you are small enough, and have learned to be lean, then your first customers will pay enough that you drop off unemployment and go from there. If not, then divy up the money, pay for expenses, etc (The biz can pay you back for the web hosting, for example), then pay yourself. You Can make money while on unemployment, as long as it's not much - they will reduce how much you get from unemployment in a near 1:1 ratio.

If you do good, you may find yourself off unemployment and making better-than-unemployment wages within a month or two.

You may fail, miserably, but with a cost-of-entry of a few dollars a month and your time, it won't cost you much to fail. If you aren't on unemployment anymore - say if it ran out - then find a job somewhere else to tide you over while you try to get the business going. After all, a 8$/hr job at a bookstore is a lot more money than 0$/hr.

Also remember that starting a business is Not for everyone - many people want the security of a known salary, and don't like the idea of taking risks. Others don't want to work long hours, especialy on something so risky. Ask yourself if you are one of those people.

Me, I've been lucky, and perhaps that has skewed my perceptions. My friend and I were discussing starting our own company, and then a client fell into our lap... a client that by themselves paid our bills and allowed us to grow the business for 6 months. Of course, now we're looking for more clients, since things are slow, but thats the nature of owning your own biz - risk.

neurokode.com - yup, thats me and my partner, and yes, it needs work - we've been too busy to touch it much. Need contract development, or a code audit? Contact us. Want tools for DB development with python? Check out pdo.neurokode.com

--
man is machine

Re:Why should you need financing? by EvilTwinSkippy · 2004-01-27 08:01 · Score: 3, Informative

I'm using a slightly different approach. My wife and I are developing a hosting business on the side. She goes out to people's houses to tutor them on the Internet while she's home with the baby. She makes pretty good money at it to. I get called in to do rocket science type stuff, like wire a small network or set up a website.
Along the way she occasionally runs into someone who runs a business and needs hosting. We have been snapping up a few small $5-$10/month clients, and also host a few non-profits who needed some server-side scripting stuff at around $30. At this point our DSL line into the house is paying for itself.
My plan is to keep adding small mom and pop enterprises until it starts to rival what I'm making during at my day job.
The key is that we have that social in. We aren't Sach's, and we aren't Walmart. We are that nice young couple who Estelle recommended to use who teaches computers, and hosts internet sites, and they are oh so good at explaining to the tech support line about what isn't working with the computer.
We have yet to advertise. Our customers tell all their friends about us.
It all started with sending my wife over to give the former CEO of our organization a few computer lessons. Next thing we know, she told a few friends who after she dropped by told a few friends...

--
"Learning is not compulsory... neither is survival."
--Dr.W.Edwards Deming

What you may not realize by deadline · 2004-01-27 07:07 · Score: 3, Insightful

What you may not realize is that in a traditional business model, the software development expense is about 20-25%. The rest is sales, marketing, administration, etc. So, the cost of starting a company is generally 4-5 times more than the cost of your core team. Add in the 2X modifier because start-ups always need twice the amount they think and you are looking at about ten times the cost of software development. Plus, you need to have one of the core team intimately involved with the initial sales effort. Do not trust your vision to someone that needs you to explained to them. This is often hard for programmers to do, but it is essential when starting up.

Now, OSS models change this equations. because most software (unless you are doing a lot of custom stuff) has to be number one or two to survive. So companies spend a lot of money on marketing and discount the software to try and "tip" the market to a point of increasing return for there product. Open software does not require this expense and in a way almost guarantees that your software will begin to build a critical mass (if it does not you are barking up the wrong tree)

--
HPC for Primates. Read Cluster Monkey

Times have changed, people have changed by mabu · 2004-01-27 07:08 · Score: 4, Interesting

I like the way the poster arbitrarily suggests, "Why not start a software company?" as if this is something you can casually do because you're bored or something.

The truth is, even if you had a good application to address, whether you could write a viable piece of software that was marketable is an entirely different matter. Even if you get to that point where you have a good market, and a good product, it's only then that the real tough work begins...

I "accidently" started a software company many years ago when I wrote utilities to help clients in my computer consulting business. The products turned out to be so useful that everyone suggested I start selling them, which I eventually did. It took me almost three years, living in a crappy 1BR apartment that didn't even have working plumbing, making some months, not enough money to pay the rent, but eventually word got out and my product received Editor's Choice in PC Mag. Ok, now I've made it? No. Another problem -- distribution. Even though I had the best product in its market, my competition was in bed with the 1-2 major distributors and put pressure on them to not carry my product. I was in a catch-22 as I couldn't afford to spend money on advertising unless I had distribution, but the distributors wouldn't carry my product unless I was advertising, but I didn't want to put a $20k+ ad in PC Magazine (the major pub at the time) when the product wasn't on store shelves. Eventually we picked up distribution, but it was through a lot of hard work, travelling around doing promotions, exhibiting at Comdex (which at the time was an uber-expensive mafia setup where you'd pay a fortune for a crappy location and then find out when you arrive IG moved your both to the middle of nowhere). I won't even go into the nightmares of trying to deal with venture capital firms -- let's just say I'm still on medication from the rash those people gave us.

Before Windows, the economics of the industry was bad enough. Now it's even worse. You don't have to worry about distribution; you have to worry about some other company with more resources and a desire to envelop every market they can copying your product or bundling it with their existing products and destroying your market. Whereas a great product would eventually be found out, nowadays, most of the industry is hype/advertising driven and those with the most resources, not the best product, rule.

That's not to say it can't be done. But starting a successful software company has more to do with having a realistic idea of exactly what you need to do, and a *tremendous* amount of perserverance. There are lots of shortcuts you can take to offload responsibilities to exploitive partners and publishing companies, but you might as well get a 9-to-5 if you do that because you'll end up getting taken advantage of and losing control of your work.

Unemployed? Make money through Gnome! by tellurian · 2004-01-27 07:15 · Score: 5, Informative

Make money through the Gnome Bounty Hunt:

http://www.gnome.org/bounties/

Wasn't Laid Off....I Quit by ChopsMIDI · 2004-01-27 07:16 · Score: 3, Interesting

About 5 months ago, I quit my full time, decently paying, software development job to start working for myself.

Personally, I don't see what all the whining is about ("waah! my boss fired me to offshore his work to india!"). I've experienced offshoring code first hand on two seperate projects and both times, niether of them understood what was requested. And several tens of thousands of dollars later, they were canned. I find it rather easy to convince people that offshoring is one of the biggest wastes of time and money, and becuase of that, I found it rather easy to go on my own.

I'm hardly what you'd call a people person, but the contracts still keep rolling in. And although I'm currently making less than I was full-time, I'm the happiest I've ever been....I make my own hours, I program in whatever language I want, and I set my own wage. And now I have time to do a morning exercise, to try to lose all this weight I gained working in a cube for 3 years.

--

How could I say to men: "Speak louder, shout! For I am deaf!"? -Ludwig van Beethoven

Bubble burst, or champagne still bubbling? by ron_ivi · 2004-01-27 07:19 · Score: 2, Funny

Yesterday's SJ Mercury news article has stats that VC funding is way up (22% over last quarter), and that software is the big winner with $415 million in the bay area this quarter.

Sure one bubble may have burst, but looking at the glass as a whole, the champagne is still sparkling.

(or the beer's still got a nice head of foam)

I would start one... by rivaldufus · 2004-01-27 07:21 · Score: 2

but I can't find any unpatented ideas.

Worthless ideas by bluGill · 2004-01-27 07:24 · Score: 4, Interesting

That sounds great, but it is worthless. When you are unemployed the state (might differ if you are not in the US) pays you to spend 40 hours a week looking for a job. I know that almost nobody actually spends all 40 hours a week looking for a job, but that is what you should do.

I cannot start a company and remain on unemplyment, it is against the rules. Lookup OddTodd one time, he created a successfull cartoon, and the state wanted to take his unemplyment benifits back, he only won that case because he was able to show that he didn't expect his cartoons (which are funny) to make money. If you start a software company can you really expect me to belive that you do not expect to make money?

Open Source as an Inexpensive First Step by virtigex · 2004-01-27 07:38 · Score: 4, Interesting

One of the unstated advantages of an open source project is that it can serve as an online resume. Employers can only guess at how real your resume is. You may say that you're a hot-shot programmer, but how can an employer really know? Answer, they can download, compile and run your project from SourceForge. If they cannot do this, maybe you don't want to be employed by them anyway.
If you release you code under the GPL, there is nothing to stop you (as the copyright holder) from re-releasing the code under a more commercial license if your open source project is popular or you find a market for it.
Starting your project off as open source is a great idea. Even if it does not take off, your code is out there and other people (and future employers) can see what your programming ability is like without having to take your word for it.
It certainly works for me. I have two project on SourceForge that helped me land two $100k+ jobs.

The only way to start a successful business... by Flyboy+Connor · 2004-01-27 07:43 · Score: 3, Insightful

...is having a client.

I have observed, from closeby, many people starting their own software business in the last few years. The ones that survived were the ones that had a client from the outset.

You can build something you like and/or you think is useful, and then try to sell it. That doesn't work. Most likely no-one is interested, or only interested in your product if it is changed considerably. Moreover, if you have an "off-the-shelf" product, people don't want to pay a lot for it.

Get a client, and build what that client likes. This brings in money. Make sure you take into account that on average you work 20 paid hours per week, no more. The rest is needed for time between jobs and for finding new clients.

You will still be cheaper than the big guys, so you may be able to sell yourself. Especially since renting someone from a big guy is as likely to get you a cheat as a good developer, while you, obviously, are a certified good developer.

In the past when I did odd jobs I usually offered a "no cure no pay" scheme, if it wasn't a very big job. Clients are willing to pay more for such a scheme, and as long as you know you will succeed, no harm done (just make sure you define the "cure" conditions).

If there is any time remaining, build your brilliant general solution and try to market it.

There are several good books available on writing and marketing software as a small business. Find one and read it. It will help you avoid the greatest pitfalls. I learned a lot from Hudgik's "Writing and Marketing Shareware". It's fairly old but contains lots of good advice.

Re:The challenge of spelling by sane? · 2004-01-27 08:21 · Score: 4, Insightful

Utter rubbish, put about by English teachers to inflate their perceived worth.

Don't beleive me? Take a look at the papers and articles of those with the ideas, those that have actually advanced knowledge. There is NO correlation between the ability to write well and the ability to think well.

We are all put together differently, with different skills and mindsets. You often find those that excel in one area will suffer in others.

I used to have teachers like you, and I'm damn glad that there were others to support me and recognise just how dumb such theories were.

In the end I got to the stage where I could string sentences together tolerably well, and make only a few mistakes.

Somehow it never stopped me making patentable advances and being a world leader in a niche technology field.

Funny that.

Why does it have to be a software company? by Biljrat · 2004-01-27 08:42 · Score: 2, Insightful

There is most like something besides software you can do to earn money if you start slow and do not try to over-extend.

I now program, cook, bake (and yes, those last two are different skills), play bagpipes and do/teach these from my house. I retrained and started really slow. Used my work/social networks to get low paying (sometimes free) jobs in the new skills until I had a couple of regular clients (it took a couple of years). In the meantime I kept programming for the man.

It is eight years later and now I take a contract or two that interests me, have a regular batch of students that pass through, and play at lots of weddings, funerals, graduations, etc. It is quite varied, I have lots of fun, and get paid quite well for what I like to do.

The point is, just do what you like while you are doing what you need to get by. If you work at it, you will get good enough to be paid for it. Until then, just do good work and do not live beyond your means.

Think about what you are spending your money on. You do not need $100/mo DSL if you get get by with $10/mo dial-up and occasional trips to the library or Kinkos. You do not need $500/mo co-located server if you can get by w/ $75/mo shared server space. You do not need ___ if you can get by w/ ___ . Just fill in the blanks and adjust your expectations and money requirements accordingly.

You can live in the US and quite well for $1000/mo if you change your expectations.

--
http://nwbagpipes.com/

Re:The challenge of spelling by sane? · 2004-01-27 09:10 · Score: 2, Insightful

Thanks for your kind words. You might well be right. I happen to have a way of seeing words that means I can read well, but spelling, grammer, etc. are hard work for me. As a kid I had teacher shouting at me since 'by theory' I was supposed to be able to write as well as I could read. It took hard work to be able to fake it well enough to survive.

Throughout my life I've had related problems in writing and getting across ideas in words. Thing is, because I think strongly in pictures I'm actually better than most at finding new ideas. Its a kind of karma thing, the way the brain is wired; and I wouldn't change it for the world. I can always find someone to rewrite things for me if I really need it.

I've no problem with people not agreeing, provided they do so after thought, not rote reaction.

I've posted my thoughts here because I've seen time and time again people coming up with loads of reasons why its impossible for them to start their own business. At the same time, I've seen people with no talent (technical, business, finance, people, anything) start and succeed at business. In the end it comes down to fear. People fear the unknown and 'wise' words of others, and feel they are safe in a big firm. However, nobody is safe. If you can take control of your life, then you can be the agent of your own future. In the end that is the only place to be, when you make the transition from sheep to wolf its like waking up.

If you can code, you can understand finance, and enough law to get by. Marketing is 99% bull - just doing something different and running it by someone else first is usually as good as a marketing degree. Buy and read an 'idiots' book instead of a software book - you'll be amazed how simple it is.

The only area that software people tend to fall down on is people skills. No matter what, you have to grow to be passable at them - and even code jocks can get there through reps training.

As a by product, it helps in dealings with the opposite sex as well.....

Up to my ears in startups by MythoBeast · 2004-01-27 09:12 · Score: 2, Interesting

I currently have numerous startup type projects going. The problem I've had is in finding decent partners. Why do we need parters, you ask? Because nobody I know knows how to write both the network connectivity protocols, the GUI front end, and can still draw well enough to create the graphics. Under the circumstances, you're left with the options of either taking partners or spending months learning new technologies and skills that you may never need again.

In once case, one of the partners decided to try to take my code and run off with it. After that got sorted out, we spent several months waiting for another of the partners to crank out his part of the project. Right now, we're scrambling for beta testers.

On another project, I've been the bad partner. The bulk of the coding is my responsibility, but I keep finding more things that the project needs. Mostly, they're waiting on my designs to settle out so they can work on their chunks.

And then there's the issue of how to split the ownerhsip of the company once you actually start the company. Most people get the bright idea that you should automatically split the company equally among all contributors. This means that the guy who designs and writes the bulk of the code winds up with the same percentage as the guy who designed a few icons for the web site. Deciding how much each person's contribution is worth is more than a little taxing on the business relationships.

To this date, I've been working on those startups for over a year, and am still waiting for them to pay off. Maybe they will, maybe they won't, but it isn't due to a lack in my effort.

--
Wake up - the future is arriving faster than you think.

The barriers are there by UninvitedCompany · 2004-01-27 10:10 · Score: 2, Insightful

I've done it. It was hard, and we made some money for a while. I'm back to the corporate world for the moment.

You have to find a market that is presently underserved, and where they have some problem that can be solved with software that is worth spending, oh, at least $10,000 or more to solve. You can't build a business out of $500 software sales unless you have a lot of seed capital.

Generally, you need a sales rep that has some sort of background or insight into the market you have chosen. If you want to sell inventory management for shoe stores, you better get a sales rep that used to run a shoe store, or that sold to shoe stores, or had some other industry contact.

There will be dry periods. You can't count on self-funding a startup and paying everyone based only on some custom projects up front. If you can all work for half pay for a year, or if you have a couple people that will work for stock only, then you have better chances. Generally, you can't get investors to put money in early unless someone on your team has a personal track record. Otherwise you have to wait until you have an established revenue stream.

The other comments are germane. You need someone to do support. There will be a lot of on-site work. You will need someone with both software skills and people skills.

Most of the costs are salary and travel. The professional fees, the phone, the fax machine, paper for the copier -- these don't really add up. Not like a market salary for two developers and a sales rep, anyway.

I believe that it is tough right now because most businesses that have a custom software need have already replaced their DOS-based systems. Most are reluctant to change. The overall consolidation in so many businesses means that most of the small corporate clients are much larger than they were 10 years ago. These larger businesses are less willing to deal with smaller, newer software firms.

And there is increasing commoditization of software. Places are willing to have a clerk spend a day or two each month "doing the reports" in Excel. It's hard to sell against that, particularly with the small outfits.

All that said, the deals are still out there. And it beats sitting around the house even if it isn't particularly lucrative.

Startups by Bytal · 2004-01-27 11:30 · Score: 2, Informative

That is exactly what I and few close friends from high school and college are doing right now. openorbit.net

And let me tell you the difficulties you encounter brought my opinion of people like Bill Gates or Larry Ellison or even Miguel de Icaza to a much higher level. Though I'm sure few people think running a software company is easy, I don't really know how many programmers or hackers appreciate the business side of things. I would have to say that legal, financial and management issues are 60-80% of a good business. The coding itself is often a safe retreat from navigating the perilous fields of US business and legal practices. And not every firm can afford a lawyer for every little detail from incorporation/LLC formation to contract negotiations, trademark protection, NDAs, patent searches. Not even to mention regular business practices such as accounting, tax law and employment rules. The amount of work/finances required to cover all of these bases is one of the major hurdles that discourages most wannabe startups. Like they say "It takes money to make money", and starting your own business, software or otherwise is something that often cannot be done on the cheap.

Looking at the huge amounts of half finished products and low quality scripts that abound on sites like freshmeat.net it's very easy to get your own project lost. What few hackers want to admit is that waiting for the world to recognize the inherent greatness of your product, no matter how well coded is not always a solution for a software firm. Marketing, networking and media contacts and plain people skills often make or brake companies no matter what the quality of their product. And this is without taking into account market forces and the demand for said programs. Say what you will about the business practices of Bill Gates and others like him, but when you see in person the difficulties they had to surmount, they at least deserve respect for having the will and the ability to get to where they are right now and stay there.

Unemployment = 1/2 income for 26 weeks. Not a lot. by Richard+Steiner · 2004-01-27 17:46 · Score: 2, Informative

...and it usually tops out between $350 and $500/week depending on various factors. The formula is designed so UI benefits are roughly half of your qualifying income (i.e., have of what you were making), but the ceilings are such that even someone like me who was making $32/hour as a consultant only received $350/week before taxes.

That doesn't come CLOSE to paying my bills.

Not only that, but after that initial 26 weeks, there *is* no further unemployment income (thanks to our Congress who decided to drop the Federal Extension that existed for the past few ears), so even someone who was willing to spend that initial period of time trying to create a startup instead of actively looking for work is going to find the bottom falling out of his income very quickly.

It's pretty damned hard to live on an income of zero! And it's a lot harder to start a business in those conditions...

--
Mainframe/UNIX Bit Twiddler and long time Windows/Linux Hobbyist.
The Theorem Theorem: If If, Then Then.

I did it, its tough by scphantm · 2004-01-27 18:34 · Score: 2, Informative

The company i worked for folded about a year and a half ago. The job market in Pittsburgh was dismal at best for a windows web app developer. i was a lucky one and was given about 3 months notice from one of the owners that we were going to be closing "suddenly" and i should start looking. after sending out about 250 resumes, i got 5 calls and 1 interview. my problem (accourding to a head hunter) was that i was overqualified. so, 3 weeks after being married with a new step-child and cleaning my desk, i did what anyone would do, i copied the client contact list before i turned off my PC (being the admin has its advantages). i called a few of the clients and within a few days i was in business on my own. that was a year and a half ago and things have been definatly up and down. i have learned that you can only milk a customer for so much money before the well dries up and there is nothing more humbling than spending 5 hours a day looking for 1 hour of work.

my daily routine is now get up, travel around meeting with people, calling people, writing proposals, and responding to questions from potential clients until about 4. then i come home and start coding. i code until about 11:00. thats when i stop to watch the news. while im watching the news, i hit ITMoonlighter.com and try to drum up more work. its a tough living but its a living. i make nothing like the money i did with a real job because my market is so saturated with people doing the same thing. how can i possibly compete on a development project where a fully qualified student at Pitt U is bidding on the same thing project and looking for nothing more than beer money.

my only saving grace has been my wife and i live cheap. i have good months and bad months. and sometimes, really bad months. i have yet to have a really good month but thats the lifestyle.

My summary, if you take on something like i have, it is definatly a lifestyle, not a living.

--
*** I suffer from a colorful array of psychological problems

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