>I completely disagree with the advice to charge
>the "full" rate with any startup business. When
>you start a business you should be fully prepared
>to run the business at a LOSS for the first 12
>months minimum, with very low prices to establish a
>customer base and assure future income. .....

I doubt this is quite the way to consider it. I would be endeavouring to
make a profit from day one and be pricing accordingly, BUT do not be
surprised to make a loss due to things you have not considered budgeting
for. Because of this it is doubtful if you will make a profit from day one,
but if you "price cheap to get jobs" you will be a disaster waiting to
happen.

There will be all sorts of niggling things eating away at the profits until
you get your expenses benchmarks sorted out. Include sellotape, faxes,
software upgrades (why did we buy that software that was never going to do
the job ??), printer paper (how many reams did we use last month ?????),
cellphone expenses (you made how many calls ???), PC upgrades (I do really
need more disc space/bigger monitor/faster CPU/better simulator-debugger
than originally planned for).

And then there will be "hidden features" in the specification you thought
you had read so carefully, and suddenly find have not got in the software,
even though you thought you had them covered. These will eat into the time
allocated for the job, and probably result in late delivery - which means
you will be late starting the next job!

>NEVER start a busines with the expectation of
>making money, at least not straight away.
>Always ask, "how many hours and how many $$ can
>I sink into this business over the first 12
>months??" ......

Well any accountant worth his money will tell you this is why you need
capital to start with. The capital pays the bills initially and buys the
equipment.

Only you can decide if you have enough hours in the day to do your new
business on the side while working a "normal" job for someone else to have
the cash flow to pay bills. If you need to work this way then you are under
capitalised and will always struggle until that "big job" pays. Also
inevitably you will need to go to meetings for your consultancy during
"normal business hours" which will take you away from your normal hours
job - can you deal with this unless you are doing something like peak hours
bus driving and have some business hours free at which you could set these
appointments. This may not always be possible because of some out of town
visiting manager needing to see you.

You may well be better off organising with the bank manager a suitable
overdraft facility and just hack at the consultancy full time. Which ever
way you go will produce angst with any partner/spouse/family because of
worries you have, and time outside normal business hours you put into it. If
all else fails you will need to have a fall back plan or time limit agreed
with whoever is doing the financing to decide if you are making a go of it
and heading for profit or will have to can the whole thing and go back to
work. This should be included in any quarterly or annual review you do, and
is probably the biggest area a Chamber of Commerce Mentor that someone else
mentioned would be of assistance.

When I talk of financing your consultancy I include a spouse or partner
going out to work to have bill paying cashflow while your business gets up
to speed. If this is the way the bill paying is financed then you will need
a definite time limit set to have a review to say "we are making it" or "we
are going down the tubes doing this", and backing out.

Lastly who is going to do the "office work" - phone answering, photocopying,
etc while the muse is on you to write code? Will you get an office in one of
those business park offices with a secretarial staff to do this - another
expense, or will the spouse be at home doing this while you are in the
basement coding - she(he) cannot be out earning bill paying revenue if this
is what happens. Are there children in the picture, will the spouse be
looking after them or will a grandparent be co-opted, while you both work.

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