steps/tips to create an online company
A friend of mine and I are planning to start a new company in the US. He and I are full time employees on different companies, but we are planning to invest out of work hours/weekends to start our new company. We plan to provide custom software development services and we also plan to develop our own software products and sell them online.
My question is: what are the basis to start an online based company?
We live in different states
Thanks for the advice
4 Answers
I suggest you do the minimum needed:
- agree how you will share the responsibilities and how you will be compensated (have this in writing)
- figure out what you need to get the 1st piece of business (web site, marketing?)
- when you get your first piece of business, then take the next steps
- set up a business entity (plenty of resources out there with advice)
- set up a business bank account (to keep the finances clean)
- get cracking delivering client value
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Thanks for the response, seems like we did the right thing, we already created the web page, registered the domain and hosted something simple. I would guess that incorporating is the next step? would you recommend a specific state to do that? I've been reading about it and looks like Delaware is in general the choice of small and big software companies – Tivo 13 years ago
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Incorporation is a big step, its expensive (both in the short and in the long run), and it may not be right for a small operation in its infancy. Don't jump into it, you can always start as a small proprietorship and incorporate later, when you know what you will actually gain by incorporating. – Michael Teper 13 years ago
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@Michael, what did you mean "a small proprietorship", would LLC be a good choice to start with? – Tom 12 years ago
PREPARE TO FAIL!!!!!
- You and your friend will probably no longer be friends once all of this is over
- Since you are far enough apart, chances are one person might be working while the other jerks around, but not to worry, both will stop working once the harder worker realizes he is carrying the load.
- Weekends is just about enough time to run a business, that is if your business is selling useless crap at the local flea market, or selling lemonade in front of your house.
- Your IDEA SUCKS! why would anyone hire a weekend consultant to build software? Last time i checked, when we hired contractors we looked for a good deal (offshore), and for a slave that could work 40+ hours.
Owning your own business is not glamourous, part-time, or a walk in the park. Involving friends is a dumb idea 99% of the time, and really only fucks you over in the long run.
Do yourself a big favor:
1. Save some capital
2. Come up with a real idea you can build yourself
3. Code it on the weekends, or when your boss is not paying attention at work
4. Keep your mouth shut about your idea, dont brag, tell anyone.
5. Launch your project, and test the waters, see how it does.
6. If it does well, use some of that capital you saved up to market it
7. once it earns you 125% of what you earn at your job, and if it still has room for grow then you are ready to quit your job and take it seriously.
8. Hire someone to help you. If its your friend whom you enjoy working with make sure he is qualified to do the job as any employee you would hire, and make sure that he is doing it for the same $$ as anyone you could get.
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Frank, thanks for the response. – Tivo 13 years ago
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1. We know that there are some risks, I personally would hate that to happen, but I would hate more to start something with someone that I don't trust from the beginning. – Tivo 13 years ago
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2. I agree, and this is something important to be addressed before anything is set up. 3. In Software Development time is relative, and productivity depends on the developer expertise of a particular technology and also on the motivation level of the team. Just to give you an example we developed a mobile application for android enabled devices, and going from a simple idea to have a first stable release it took us (my friend and I) 2 weeks of work, yes nights and weekends only. It is a priced application 0.99 and we have over 5 thousand downloads so far – Tivo 13 years ago
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4. Good luck with that. Just ask them for the source code of your project and you will see what I'm talking about. >=5 I agree with you that at some point, and Ideally from the start, the new company needs to have a full time person. Wath I don't agree at all is to do personal stuff at my current job, that is simply not right – Tivo 13 years ago
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Considering that you have already had one success there is no reason for you two guys not to do this part time, on weekends, until you have enough $$ to do things full time. Just be very careful. Money changes things, so does unbalanced efforts, both are very hard to mitigate when involving friends. You two are probably not the only two android devs in the world. Look at your friend, less as a friend and see what he brings to the table. He should do the same about you. The reason is, when it comes to business, its all business. Maybe if you two have a clear understanding that you could – Frank 13 years ago
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each split at anytime, then there would be a bigger incentive to work. Dont get me wrong, partnerships with friends do sometimes work, but the amount of communication required takes time. QUick example, If i have a project that one person can do, it takes him 100 hours, if i have two people its 75 hours each for the same project, due to discussions, overlaps, etc. A good software company breaks a project up between specialists, and carefully manages the timeline using a PM or a Lead Dev, where you dont have your bloat. THe reason we take on multiple projects is to keep our guys busy. – Frank 13 years ago
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With all that said, you might find that you could do what you and your friend are doing, by you just putting in the xtra 25% effort. I also feel that if you are able to create items you can sell yourself, (meaning if you are organized to be able to sell, which is very easy for mobile apps), then you should not be in the business of developing for others. The reason most companies have a hard time recruiting good talent, is with the low sales cost, low hosting costs, and low operation costs, most good developers have learned how to work for themselves, and are not available for hire. – Frank 13 years ago
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Frank, this conversation has really helped me analyzing things I haven't even think about. 1. Have clear agreements with your partners (the friend word should not be used here, as you said it's all business), evaluating what each one will bring to the table as an individual and as a team member 2. Be competitive, having in mind that highly qualified competition is around the corner at very low prices 3. Consider starting the business without partners and then add them as the business matures (my goal is to have it running stable within 5 years and making at least 50% of my current job).thanks – Tivo 13 years ago
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Your welcome. THe problem with mixing the friendship is their is already a rapport based on the friendship. Its hard to find two people with the mental capacity to cut those ties. I hope your friend will not be offended when you both wear your "business partner" hats. No hard feelings in business, pussy or war! – Frank 13 years ago
"We plan to provide custom software development services"
That seems to me a brochure website. Also seems likely you won't be taking on many clients at one time...and maybe you'll specialize and have a niche... and maybe you don't even that site at all if you just start meeting the people that might be clients.
To you "online based" might just mean email.
"develop our own software products and sell them online"
Ok, and later an eCommerce site.
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Randy, thanks for responding. You are right, not too many clients, I would say that it will depend if we develop a small product, then we'll be able to give good support to probably just a few customers 'online based', I mentioned it because we are not planning to rent an actual office, do you know if it is a requirement for incorporating? – Tivo 13 years ago
Make sure that your employment contract with your employer allows for your side work. This question has very good information: If I'm working at a company, do they have intellectual property rights to the stuff I do in my spare time? Good luck!
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Agree! doing this before starting is really important! Thank you – Tivo 13 years ago
