How much money will we need to startup?

[KitKat]

Hi everyone!

I have not been on here for a while but hopefully I will make an appearance from now on. There are lots more people than last time!! :p

My boyfriend has been talking about starting his own business doing IT consulting. He currently has a job as a Systems Administrator (I think) and earns pretty good money but is sick of working for someone else so I suggested he go it alone.

He has about $15k saved and was hoping to use that to start his business, we bought a house about 6 months ago so we need to make sure we still have money to pay the mortgage, so we are hoping that 15k will help us get by if it takes a while to get the business up and running.

How much do you think he will need to get the business started?

[J_D]

Hey KitKat,

If it were me, i'd sit down and figure out the following to establish rough costs:

- What marketing do i need to do to get a solid customer base (If he already knows a stack of people in the industry who are willing to send clients his way, or become his clients, then he doesn't need to initally spend as much money on getting his name and services out there)

- What tools does he need to be able to do his job from his home office (laptops, computer infastructure etc)

- There are also obvious costs such as registration of business name, company name etc. Business isnurance, income protection etc. to consider.. website, business cards etc.

It can all be a little daunting it first, but if the ground work is done properly it makes it a little easier further down the track.

Cheers

JD

[kingchevy]

What makes him more capable than the people he works for is something he has to ask himself what is going to make him more succesful than the next person.

Is he commited to work the hours it will take to make it work. if he isn't any one of those things then find a better paying job and invest you're money because believe me if he does'nt have the balls to make it work then it is not going to happen.

sorry to be blunt but starting you're own business is not the easy way out......

[kingchevy]

and for starting a business make sure you're have deep pockets ie more money avialible than you thought you might ever need like equity in a property because you can have the best business in the world but without the cash flow to back it it will crumple

[itycoon]

The first thing I would say before thinking about starting an IT consulting business is to look at some factors. How much experience does he have? He might be able to do the job very well but people are not going to want to hire an IT consultant who has less than 3 years of experience (and even that is cutting it close).

Secondly he has to look at insurance and bonds. For him to be serious about this type of business clients are going to want to know that he is bonded and insured.

Last but not least. You guys have a mortgage. Is it possible for him to start the business on the side and work it up until he is able to move away from his regular job? It would be quite foolish to jump out of the boat and into the water if you can barely swim (figuratively speaking) and 15K is not enough to start a business and keep a mortgage up.

So I would suggest that he start it on the side and build up a clientele basis. Once he has a steady stream of clients I think that is the time it would be safe to take the plunge. Until than tread water for the time being.

[KitKat]

Thanks for the replies :P

In answer to some of your questions, he has been working in the industry for about 7 years and every year he has been promoted, so he must be doing something right! :P

I know he can do it, he has a good attitude towards business and is not afraid of the hard work, we are both still pretty young so we think taking a risk at this stage in life isn't too bad.

I still have a full time job so I dont think paying the mortgage will be a huge issue.

We have done some figures and 15k should be a good start for about 3-4months of the business if he wasnt making any money at first.. do you think thats reasonable? or should we have 12 months worth of turnover when starting to be a little safer?

Thanks guys :P

[itycoon]

Well here is from talking to friends in the IT department. I have an uncle and two friends who are both experts in this field and they tell me the same thing since I am interested in getting started in the field.

You need two things. Experience, credibility and insurance. I would say before he decides to get out of the boat try and see how he could come up with some clients. I don't think it would be wise to cut cold turkey.

Since you're not expecting to get 15 clients your first month I think it would be best to work on the side in that area until you have enough clients so that you don't have to pull money out of your pocket to keep the business alive. Since you will be working that should not be a problem. But you want to make sure that the business is at least able to sustain itself rather than you having to dump money in it every month.

[J_D]

While working on the side you will need to ensure that he continues to maintain credibility in the industry... His employer may see his jump to 'moonlighting' as a damaging thing and he may be suddenly forced out of his job?

JD