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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

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4 Answers

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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 Mar 12 '11 at 5:22
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 Mar 15 '11 at 7:14
@Michael, what did you mean "a small proprietorship", would LLC be a good choice to start with? – tom Dec 4 '11 at 7:52
up vote 1 down vote

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 Mar 14 '11 at 12:05
up vote 1 down vote

PREPARE TO FAIL!!!!!

  1. You and your friend will probably no longer be friends once all of this is over
  2. 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.
  3. 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.
  4. 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 Mar 12 '11 at 4:40
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 Mar 12 '11 at 5:18
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 Mar 12 '11 at 5:18
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 Mar 12 '11 at 5:18
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 Mar 12 '11 at 18:12
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up vote 1 down vote

"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 Mar 12 '11 at 5:30

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