Something I've always wanted to do is start my own small games company. Now, I realize the futility in my dream giving the startup costs and the current economy (not to mention small studios in the game industry), but it's fun to drive around, see an office building for rent, and think 'How could my game studio fit there?'.

I guess it kind of sparked by this web series by Gamespot done awhile back called 'Indievelopment' and I thought it was interesting that their whole company was essentially 4 guys in this elongated apartment just hammering away on their game idea.

I'm just kind of brainstorming what costs are incurred when someone starts a company. Here's some stuff I've thought up:

- Building costs (including heating, electricity, rent/property costs)
- Employee costs (wages, possible benefits?, possible contract work (audio, art))
- Office Hardware costs (buying computers, desks, chairs, etc...)
- Software costs (IDE's, art packages, possible audio packages)

What else am I missing?

(By the way, I'm speaking of a legitamite small company, not like me and 2 friends in basements halfway across the world calling ourselves 'Awesome Games Inc.'; no offense Help Wanted posters :P )

All of these are costs that are relevant at some point in a game studio's life. They are not, per se, all relevant at the beginning.

The bare minimum cost you'll need to incur is probably that of filing any required legal documentation with the state in which your company will operate (for example, LLC forms) and the federal government. Depending on how you organize your company you may need to file extra taxes, so that will take some time, and you may need to do things like rent a PO box or whatever is required to designate a room in your home or apartment used partially/entirely for business use. You will also need to pay a lawyer to give you more accurate and reliable advice than I am.

But the point is that you don't need to go to such great lengths, expenditure-wise. A company is legitimized by the legal documents filed with the government -- not by renting space in a nice building. Talk to a lawyer.

jpetrie is correct: Defer costs until they bring meaningful value to the business. Do you need office space and office chairs and fancy dev machines when you can get the work done in your apartment with your friend and your two laptops you already have? Do you need to buy an IDE when you can just use Visual Studio Express? (until you are ready to sell a product... it looks like Express is now for educational purposes only).

By far, your biggest expenses at the very beginning should be your own living expenses. Because if you're going to start a business, you're going to have to quit all your other employment if you want to dedicate enough time to the business to have it succeed.

If you're going to have employees and an office building, you'll need a tax attorney/accountant and a lawyer for leases, employee contracts, general legal issues, etc.

I'd agree with Jpetrie, a bad spot to start unless you are loaded with expendable cash that you can gamble on. 4 employees at $50k (extremely conservative) is $200k a year. That's a lot of money to front with no guarantee of income. Established game companies with publisher advances go bankrupt working on titles.

Quote: Original post by programmermattc
(By the way, I'm speaking of a legitamite small company, not like me and 2 friends in basements halfway across the world calling ourselves 'Awesome Games Inc.'; no offense Help Wanted posters :P )

If you take the business side seriously and actually incorporate (at least with the LLC we registered, it was fine that my partner lived in a different state), this is a viable strategy.

We work from home and from college saving a ton on office expenses among other expenses. Hiring freelancers and independent contractors has its benefits.

We have avoided a lot of the costs that the "real" businesses you speak of have to deal with; yet, we are a legitimate company making relatively decent money using out unorthodox method.



I think what I'm getting at is that you do not have to spend all of this money right out of the woodwork. If you want to make your dreams a reality, you can find ways to make it happen without winning the lottery or investing half of your life's savings. Google started off in someone's garage and look at it now.



While the costs you have brainstormed are pretty thorough, you do not need all of them initially. It all depends on your business strategy and your ability to sacrifice and overcome less than optimal conditions.


It may not always be applicable to your business, but advertising and travel are important start-up costs to consider.

Hear it from someone who going to be freelancer soon!

Unless you have a rich family members, you want to minimize cost. Good are people that have rich family members that willing to be guarantor for bank loan (those that have collateral).

First, you must know the industry. Small games company is still viable, IF you develop for IPhone, android, or other mobile devices. But you really need to do marketing. There are companies who ARE NOT game developers, but want to have FREE IPhone games for advertising purposes - just like some companies are now have facebook and twitter account, for whatever reason, as if they haven't bombard us with enough advert already :-)

Anyway, you need to do marketing. Even though I have resigned from my day work (still 1 1/2 month to go through) I already printing business cards, go to trade shows, and get lots and lots of client.

Since my plan for freelance was to have a freedom while completing my night study for a degree, I need to have a one year plan and two year plan. And I have enough business idea and contact to feed me for two years.

Beggars are not choosers. You do things that will generate revenue. For example I went to screenwriting class - and a director - knowing that I have tendered my resignation - want to have me in her film. It's good, considering I'm going to enjoy it. But more important is - I want to be known in the film/movie circles as a screen writer and an actor. But of course, if some movie director want to have android games as a form of advertisment, I can use Game Editor no problem. But I doesn't want to spread myself too thin, as my focus is in writing / translation (including subtitles)/ multimedia.

Anyway, my idea was more focused on freelancing, not business per see (although freelance IS business). it was more focused on skillset (translation / writing).

Anyway, have you googled "how to start business" websites for your country? You need to know taxes, etc, etc, rules and regulations, etc, etc. For example I borrowed books on how to save tax for small businees and how to save tax for individual (although I do plan to buy my own copy of next year edition).

have you thought about insurance cost?
again, have you look into rules and regulations? even when I'm targeting short tv animated series (7 or 13 x 5 minutes animation) you have no idea the paperwork I have to do, and membership I have to join. Oh, 7 x 5 minutes animation per year is enough to support me for the whole year - which is why I plan to freelance :-)

And that's why I does not plan to go into the 23 minutes animation market and compete with the big boys.

To cut things short, you really need to google how to start business for your country websites. And you really need to know your industry inside out. Did you know that I took translation courses years ago ( was it 3?) and was a member of the industry only newsletter for equally as long? It's not like I took the courses today and freelance tomorrow.

Also, it really help if you do have experience - eg - worked at other company and see how things are run. I used to work at family business, and other people business, and was executive in IT, Operation, Finance and Marketing. Don't ask why, but life is funny. but it teaches me how to find client, lead, how to collect your money, how to handle you finance, how to talk to the bank, how to ask for loan, and how to handle the IT (server, pc and AS 400). And if when people don't pay, how to go legal. It was true that if you want to run a business, you better be able to support a lawyer. And if you are a really small company, find lawyers that do Pro-bono for really small company.

Remember the story of Korean dry cleaning shop that got into trouble with a lawyer regarding trouser or something? Yeah, you really need to know your indsutry, laws, and where you can get help when you're in trouble. Even if Pro-bono.

To cut things short, you really have a lot of research up ahead of you. And there is a reason why I go freelance instead of running a business - even a small one. I guess there are people who enjoy running things, and there are people who enjoy doing things - AND GET THE PAY THEY DESERVE.

Oh, and always have a back-up plan.

It's great to have a up and up friend that trust your ability enough to absorb you into their animation studios in case it didn't work.

"Fable, why are you freelancing? My company need people like you!"
"I know how much a company can make off me, which is why I'm freelancing - har har!"

Life is funny.

I see two basic paths to starting a new studio (assuming you're not already loaded with cash):

1) The basement programmer.
Work on your own equipment, in someone's spare bedroom, using cheap/free software, paying your own living expenses, etc... Finish a product, make a boat-load of money, then use money that to cover the costs of building a "real" studio.

2) The businessman.
Spend the first year not doing development, but building a rock-solid business plan. Spend money on laywers, market reports, surveys, etc... Then take this to investors who want to gamble a boat-load of money on a high-risk/high-reward opportunity, then use that money to cover the costs of building a "real" studio.

The smartest startups are the ones keeping the costs as low as possible without affecting employee morale or performance. For small companies working on their first game this could mean anything from a few guys working out of a coffee shop, to having mainly remote employees, to renting out a house or apartment for a small team.

I mean look at the history of various game studios like iD software working out of a house, MMO developer Turbine started up with a team working in a house, etc.

Shiny things cause bankruptcy, especially when they aren't needed. When you are talking about building a new company every penny matters, especially in software and engineering where you have nothing to sell for quite some time.

For your info, I operate from a small room I dedicate for the business, in a cheap apartment I bought using the money I get from other freelance business, which I run from a small cramped rented room which I live in with another person. Actually, it was more of a dormitory for working person - just to give you ideas how small it was. But for business that you only need a PC, someplace for you to put a PC is all you need.

Oh, before I forgot, in order for you to get a job, you need a portfolio. One of my plan to support me through my two year study while working on my personal MEGA (mega for one man, that is, meh for bigger studios :-P ) project is write-for-hire, and i have two book published, which proves I can deliver write-for-hire works. You have no idea how much software company hire freelancers to write the software manual. But remember, you take a long time to develop a software, but only write a manual once it finish. and even if you release updates, is it cost effective to have internal writer - or to hire freelancer once needed? Remember, know your industry in order to find / get jobs.