Advice wanted: Starting a web dev. business

[Reverse Transcriptase]

Hello folks!

Where I am:

• I'm 23, a bachelor, living in Seattle, WA, USA.
• I have a BS in Biochemistry w/ a minor in entrepreneurship.
• I'm 1/3 through a Python certification, I finished my first (night) class. I have other experience in programming, but these classes (and my extra work in them) have really helped me. The first class taught the basics, the next two courses will be teaching Django (web programming!) and how to use databases.
• I'm currently working a (full-time) crap job at Google for ~$15/hr, but I end up having a lot of extra time at work which I can re-purpose to doing extra side projects and generally reading articles/tutorials.
• My contract with Google & my certification course ends in mid-May.

I don't think that 3 courses in python, no matter the extra work I do, is enough to get me a job in the programming industry. It's not realistic. Therefore:

The Goal:
I would like to start a web development business, building websites for whoever. I would like to make at least what I make now. I'm in it for the freedom of not being dependent on a job, and having the freedom to continue to learn programming. Eventually both me & my partner will want to move on to other programming-related jobs/projects.

The technical skills
I have a checklist of skills to learn, which I think are do-able by May. These include:
HTML & XML, CSS, Javascript, SQL, Python|Django
I am a confident beginning in HTML,XML, SQL and Python. My class will teach me django. CSS is a matter of memorization and some tutorials. Javascript could be tough, mostly because it's an unknown factor.

The partner:
I have a friend, Rick, who I met at Google and I convinced him to take the python class with me. We also have the same role at Google- we both provide basic IT support to ~100 people as a two-person team. I don't sit next to him, but we IM & talk a lot at work. Rick is an INTJ. I enjoy working with him, he's good at communicating, and our competitive streak pushed both of us to accomplish a lot more programming this term.

(Bio: Rick has a humanities degree from ASU, is 25, has been married for two years, and has a passion for making (indie) video games, which is the reason he was interested in the course.)

I'm thinking about asking him to be my future business partner. (He's expressed some interest.) I'm scared because that means we'll have to find twice as many contracts, and that if I fail then I might bring him down. However, I think he's going to provide me with a LOT more motivation. Rick also has a strong knack for design, his previous job was doing design work. He designs & prettifies things that I think would be unnecessary to design- it's like he has an urge which he can't contain.


The Team:
Classic start-up "teams" often involve 3 parts:Technical, Business, and Design
Rick & I both provide some novice technical skills in programming and making websites. My younger brother is soon to be a Carnegie-Mellon Computer Science graduate, and he's already been "mentoring" us in our programming. (He won't be part of the business, he'll just be an occasional mentor.) My charismatic attitude & natural curiosity about business should help us with our business aspect, but it will be outside of my comfort zone. (My dad is a businessman and will be able to mentor me in some aspects.) Rick is the designer, obviously.

The office http://officenomads.com/
I was thinking about working from home, but neither of our apartments work well for a 2-person team; not to mention it's hard to get into the "work mood" at home. I think that going to a coworking office (an office with many other people there working on projects) would be a great way to have an office, general community, and coffee. I think 3 days a week is best because it keeps us out of eachother's hair, and it provides time at home to focus on coding projects. And Office Nomads is ~$15/day. If we get into deep shit but want to keep trying, we can also revert to working at eachother's homes.

Testing the waters
I've told a few people that I'm taking web programming, and I've already gotten 3 requests from friends to make websites. 1 is a freebie, but two could be paid. I told all three that I'd be available in February to work on these things.

Financials:
Let's talk money.
http://buildinternet.com/2009/12/a-discussion-on-hourly-rates-in-web-design/
As highly-motivated n00bs I think that Patrick & I can only really charge 25/hr. This is unfortunate because I'm going to guess that not all of our hours are going to be billed- all the time doing business development, admin, etc are going to be unbilled. In addition we don't want to charge people for the time that *we* have to spend learning things we should already know.

Costs:
-Rick & I's salaries (hopefully 2,000/month, each)
-Office space at Office Nomads, $420 http://officenomads.com/
-Misc (software, our own website, supplies. We provide our own computers; we both have desktops at home and laptops.)

Ideally we'll bring in at least 5k a month. But that means that at 25/hr, we need to have 62.5% of our hours billed in a given month. That'll be tough. (My dad says: "If you're billing 70% of your hours, you're doing great.") It means bringing in a lot of clients, so we may need to advertise or something (suggestions?!).

Here are my key anxieties:

1. Are we going to have the technical skills to pull this off?
2. What problems could come from having Rick as my business partner? (I'm kinda worried about petty arguments about who should code what- is there a good way to avoid that?)
3. What would we do if one of us got another job?
4. How do we drive business?
5. How do we make (semi-accurate) estimations for making websites based on an hourly rate, when I'm not honestly sure how long it'll take?
6. is 25/hr the best hourly?
7. If we're not making enough money, when should we stop?

Starting to make websites in Feb. is going to help us answer #1, 4 & 5. We could also start doing minor advertising while we're still at our jobs, to kind of "test the waters". My dad is a self-employed economist-consultant so I think he'll be able to help me with some of the business development.

Thoughts? Suggestions? Anything? Answers to my anxieties would be great.

 

[SkyWalker]

1 make something really impressive, e.g. your own showcase project.

2 optionally: and then show it at some exhibition, just take the cheapest spot and just put a cheap desk and a computer there (even though everybody else has invested 100k in the presentation over there). they have respect for 23 year olds who do that. you'll get clients if there is a wow factor.

right now you are not sure about anything, this will leak out to your potential clients as well.

just make your own cool project, something technically impressive. once you have done that you will be full of confidence. use the christmas holiday!

 

[gruesomebrat]

OK, before I begin, I notice that you mentioned you want to be making at least as much as you are now, once you start the business. I also noticed that you say you have a lot of free time at work that you can use to work on side projects. Now, you're also saying that to bring in $5,000 a month you'll need to work, from what I'm figuring, 40 hour weeks, and billing $25/hr for 70% of the hours you're working on the business.

That would mean that you're really only making about $17/hr, which isn't that great a step up from your work at Google. When you factor in the job security at Google, and all your anxieties about going into business on your own, i think one of your first questions may need to be whether that $2 raise is worth it. Now that I've probably made your concerns a little worse, let me try to negate some of that.

Since the 1st, 4th, and 5th questions in your list of key anxieties will be addressed in February, I'll leave those alone, and start on question 2.

2. I doubt that you'll have too many problems with having Rick as a business partner, so long as you both agree to be flexible. Obviously, like in any situation where friends have to share equal responsibility, there will be some compromise once in a while, so be prepared for that. Other than that, I don't see any problem with taking him on as a partner. Obviously, you trust him to some extent, which is the first priority when picking partners. Be sure to discuss any concerns you may have with him before getting to deep into working together, though.

3. I know you guys are kind of looking at doing this business as a full-time thing, but if you both have time for personal projects at your current job, what would stop you from doing work for your business there. Considering that you work for Google (and not knowing the setup for your offices there), I'm going to go on the assumption that a lot of the resources you would need for web design would be available to you there at your current job. Why not take advantage of that fact? Continue working your current job, while slowly building up your business on the side. Then, as the business gets to be more time-consuming, transition over to it as your prmary source of income.
Same goes for if one of you were to get another job offer. There is nothing wrong with running a business outside of your regular work hours, whether the business or the job are your primary source of income.

6. Without having done any market research, I can't really say if $25/hr is the best hourly rate, but I would suggest flat rates for a web design business. Hourly rates are great for someone like a dentist or accountant, who are only able to bill for the hours they're in the office. When it comes to home businesses, and especially design, it's often difficult to gauge how much time was really put into something. What might take you an hour might take me 4 hours, and who could really stop you from fleecing the customer that way? I'm not suggesting that you would do that, but I think a flat rate would come across a bit better. Figure out with your 3 site designs in February about how much time a site will take you, and figure it out from there. If it's going to take 12 hours of work per site, than something in the neighbourhood of $300 would work. Another idea would be to have the rate being per page of the site...

7. There are really too many variables involved here to give a definite answer. It depends on what your financial situation looks like, but as a general rule of thumb, if you're unable to pay both your business's bills and your personal bills for 2 consecutive months, you'll probably want to re-evaluate where the business is going. This is actually one of the best arguments in favour of my point on question 3. If you work on the business as a side project for the first 3 or 4 months, you'll get a pretty good idea of how much you're going to be looking at making or losing, but you'll still have the security of having a steady job to make sure that you're not losing your housing arrangement or unable to pay your hydro, water, groceries, whatever...

 

[Reverse Transcriptase]

The thing is that our contract *ends* in May, since we're Temps and Washington's contractor laws are kinda weird.

Yeah, I do like the idea of working other jobs while we do this, even just random freelance stuff. But then we need to figure out a decent way to split revenue when people are spending different amounts of time on projects. And a system that won't be petty.

 

[Inappropriate Behavior]

1. Are we going to have the technical skills to pull this off?
2. What problems could come from having Rick as my business partner? (I'm kinda worried about petty arguments about who should code what- is there a good way to avoid that?)
3. What would we do if one of us got another job?
4. How do we drive business?
5. How do we make (semi-accurate) estimations for making websites based on an hourly rate, when I'm not honestly sure how long it'll take?
6. is 25/hr the best hourly?
7. If we're not making enough money, when should we stop?

*note: I'm mostly speaking in generalities about business. The exact nature of opening a web design firm is not within my experience, knowledge etc.

1. Probably, but you should temper your initial ambitions to a level equal to your best estimate of your skill level. In other words, don't take on jobs beyond what you've learned thus far. Lot's of people start up businesses thinking they need to make a big splash right away. Absolutely not. You must stay within the limits of your capabilities or else risk a reputation you haven't even had time to earn yet. Take what work you can do, get some successes under your belt and work your way up the reputation ladder one rung at a time.

2. Your the best judge of this as I can't get a read on the dynamic you two have together without first hand observation. A suggestion though: If possible, try to divide the jobs between you as much as you can. By that I mean if let's say you have two jobs come in on Day 1, you be in charge of one and he on another. That's not to say you don't collaborate or double check each other's work. It's just to say you have final say on yours and he on his. It might be a very good idea to try and work this out somewhat before you "open" shop.

3. You say above you want to make equivallent money to what you are now. I had to chuckle at that (no offense). I don't know what overhead you will be facing (especially if you rent an office) or what all will be included in your start up costs (will you need work computers? will you take credit cards as the stuff involved in doing so ain't free my friend) I do know that businesses generally don't see a profit for some time. Unless you have savings for your own living expenses that you're willing to dip into, you both might want to have another job. Generally, your odds of making good money right away are only marginally better than winning the lottery. Successful businesses are usually the ones that are able to persevere through the austere times.

4. A whole myriad of ways. Remember that you need to build up a good reputation. Also know that a lot of your time in the beginning will be spent getting your "name out there". Buying an ad in the yellow pages and sitting by the phone waiting for it to ring probably won't cut it. Networking....so much networking.

5. You're not actually thinking of charging by the hour are you?? I've never hired a programmer before but it seems to me it's a lot like any other contracting. You give an estimate and if they hire you you do the job. The only thing that can cause the price to go up from the estimate is if your costs go up (NOT TIME). It doesn't seem as if you will incur extra expenses like buying hardware for your clients but if you do, you need to explain it to them first and then you can charge extra for that. You CANNOT (or at least should not at all) charge extra because the job is taking longer than you estimated unless other circumstances are involved like your client making changes mid-project. It's going to be trial and error of sortd until you learn what it takes to do the types of jobs you'll be doing.

6. I hope you're asking this for your own estimations and not how you will negotiate with potential clients. Again, I've never hired a programmer but if you try to charge by the hour you are opening up yourself up to a myriad of possible problems. I'll explain if you want me to.

7. I kinda touched on this. How badly do you want it? I mean if this is going to be your only source of income and if you don't have a reserve of money to see you through, I can only shrug and wish you luck. I don't know the nature of this business but I've been in the business thing before and can only speak in generalities which I should probably mention at the top...okay done. Starting a business is an investment in much more than just money, it's time an energy and dare I use the cliche, your heart. If you've gone 6 months without making enough to cover your office rent and find the idea of eating Rama noodles again nauseating then yeah, might be time to move on.