“I’m going to start my own business and get rich!”
Could be. Maybe. It’s happened.
Casinos brag about the big winners. Casinos don’t lose money unless the government runs them.
You’re not going to get very far with $1M. It would barely pay fro bankruptcy proceedings.
You’re going to work for free, right? How will you pay your bills?
Do you need help? How much help?
A senior engineer might expect to get paid $120k or more (these days it should be more towards $150-$180k). But as an employer, your company needs to pay maybe $300k or more to cover taxes and all. Burden rates of 2-3x are not uncommon. That may have gone up since I was last that deep into company management. That engineer may expect “benefits” of some sort. More cost.
So you offer “stock options” and lower the pay. Maybe you’ll get lucky and find the qualified help you need for $80k/year plus the (very) nebulous promise of stock payout later on.
You get what you pay for.
And I’ve had enough stock options that I needed to keep working.
How many skilled people do you need? You and two others? (take it from me, you can’t do it solo).
Do you need other “unskilled” skilled people? Secretary? Custodial staff? Accountant? Lawyer?
How much support work can you do and still concentrate on the core reason for the company’s existence?
Where are you going to work? You may be OK with your garage … but your help won’t be. Nor will your insurance company.
(Insurance??? Yep. Need it. All kinds. Have to have it. Have to pay for it. Not cheap.)
How big a facility will you need? Will you have visitors? Let’s estimate 4000 square feet. At $15/sqft, that’s $60k per year rent. You do expect to use utilities, don’t you? Electricity, gas, water, waste, internet. Maybe $500/month? $1500? There’s another $6k per year. $18k/year?
Do you need equipment? Computers, test equipment, storage? Generic “office supplies”, furniture?
You pay yourself $50k to cover bills (you own the company, you absorb the risk). You have a senior engineer at $200k/yr and a junior engineer/technician at $75k/yr. That’s $325k. You pay $75k for facilities. You pay $40k aggregate for part-time support staff. You pay $80k up front for equipment.
I haven’t even addressed the costs of development and we’re already past your “I need $1M to get going”
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I wrote this 5 years ago. Back then, I’d have suggested a minimum of $3M to start. That might last the first year. How soon to begin turning a profit?
I wouldn’t try top start a company today without $10M in assured funding. And even then, I’d have to be really firmly committed to whatever brain-fart idea I had.