Quote: Original post by Saruman
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.

Amen.

It is sad to see the "not in my basement" attitude. Managing start-up costs can very easily mean starting in your basement. You can easily have two or three or five workers there, although you will need to make sure it is legal. You might need to get "maximum occupancy" stickers, post escape routes, post bathroom signs, and carry different insurance on your home. But it removes a huge cost in the early days.

Managing costs means no significant Internet access -- which also keeps down the time on web surfing if there is either no access or limited to a bare minimum bandwidth.

It means not buying ANY phones until you absolutely need to. Then you buy ONE phone, shop around for the absolute cheapest package, and buy the handset at a garage sale.

It means not buying software until you have a strong business reason to. It means reading license agreements and seeing if you can share license seats even though it inconveniences your team. It means using free alternatives as long as possible, and making do or doing without.

It means asking your workers if they will bring in their own chairs, providing second-hand desks and other furniture, and otherwise being the most frugal leader imaginable.



I know one company that started with no real "company" costs. The start up as an indie group but took the time to run their business as a business. They had a 3-way ownership with a president (34%) and two VPs (33%). All costs were shared jointly, all revenue was re-invested into the business. They started running from their own homes at their own expense, eventually dividing two of them buying out the third. They became a family business with some of the original owner's grandchildren running the show today.

I've known a studio that started by only paying minimum wage paychecks and subsisting in a basement, until money started rolling in; even then the owner had multiple mortgages on his house to pay the bills, and he was the last one paid when revenue started flowing. He retired young, travels the world, and drives fast cars (without caring about expensive speeding tickets).

And I've known three professionals who started as lone wolf developers at night, slowly growing their own very significant business. Only one of them has reached millionaire status, but the two others are well on their way.



The only "mandatory" costs are the ones required by law to do business. In most places that simply means the cost registering your business name (typically DBA or LLC or s-corp) and paying taxes. Everything else is optional.

If you're going the 'proper business' route of paying folk salary rather than wanting them to share your dreams, this cost makes everything else seem pretty small... renting an office can be done cheaply and buying a bunch of PCs and furniture will only be 1 month's salary per person, max.
Working remotely is perfectly viable and not only for a hobby project, I know of at least one company with quite a few employees who work that way. It will save you money but if you're paying salaries that is the challenge.

So that's your challenge... launch as a business venture backed with enough to pay at least a few months' salary, or launch as a 'when we get rich we'll share the money' team, convincing people what you do is worth their time.

Quote: Original post by frob
It is sad to see the "not in my basement" attitude.

I'm not opposed to the in the basement/garage type startup, I know lots of stuff has started that way and in fact I think that's pretty cool. In fact, I used to work for a small company that someone ran out of the basement of an apartmnet complex they owned.

I think there's a lot of good info here, I especially like frob's post about having workers bring in their own stuff and slowly amassing office items like phones, etc.

I think part of my problem is I don't have any local game developers that I know of so when I think of starting a small business, I'm thinking hiring folks that specialize in these areas rather than finding some friends who will do some voluntary work to build up the business and products.