How-to to run a software consulting business

How much money do you need to start a consulting business?

by shabda on October 9, 2011

Two common answers are

  • It depends
  • 6 month into your monthly burn rate

Lets dig deeper.

4 months from starting is a reasonable time to assume that you are making a monthly profit. So you need to keep 4 months recurring plus the fixed expenses to start.

Fixed costs:

  • Cost of incorporating a legal entity: A1
  • Cost of hardware(Computers, printers) to start: A2
  • 1 year of insurance for founders and employees: A3
  • Deposit/Down payment for office rental: A4
  • Miscellaneous one time costs (Buying a domain etc) A5

Recurring costs:

  • (Lets assume two people) Salary B1/Month: 2 * 4 * B1
  • Electricity, Janitorial, AC etc: 4 * B2
  • Cost of web services used(Project management/CRM): 4 * B3
  • Cost of servers: 4 * B4

Put these values in a spreadsheet and get the amount of money you should get before you start. In general between 5-9 months of recurring expenses are a fair estimate.

Did I miss anything? Email us at [email protected]
Have you joined our newsletter yet

We cover Webdev, Django, SaaS, Mobile and cloud computing and
help you “Build amazing webapps”.

Leave a Comment

Previous post:

Next post:

Turning customers to repeat customers

The best way to get business is by getting more work from an existing customer. New customers cost money to acquire. They need to be nurtured before they will get trust with you to let you work on the most... »

Turning customers to repeat customers

Moving up the value chain

  If you want to grow the business without growing headcount the only way is the provide higher end services or to sell products. Do you sell services which can be productized? Do you have technology which can be sold... »

Moving up the value chain

Keeping costs low

As you start to scale the business, the overhead costs start increasing. Eg. When you are self employed you maybe doing billable work 90% of the time. As your business grows, you will have to add admin staff, accountants and... »

Keeping costs low

Browse Agiliq

  • Home
  • About Agiliq

    We develop bespoke web applications using Django, the related Python technology stack and the Jquery javascript library. We primarily work with web development companies as technology partners.

    Copyright © 2009-2011, Agiliq. All rights reserved.