Do all service based startups need an initial investment?

  • I agree with the above comment NO investment is not needed in fact that is the great thing about a service based start up you can start it with little or no money. I started my consulting business that way

  • Short answer: No
    Long answer: It depends on your goals and the plan you have in mind to achieve those goals

  • My partner and I did it with 2 laptops and $25K initial investment each. That was really to pay our health benefits for the first 6 months of taking no salary, but ensuring we had medical coverage for our families. You may not think of some money as an initial investment, but if you are going to go a period with no salary then it is the same thing so plan for that.

    Even if you have a customer on day one, it will take you 30 days to work for them before your first invoice to them and then they will most likely take 30 days to pay. At best you are not going to make a dime for 60 days. You better be ready for a few months of no income.

  • My former partners and I did it with no cash and stock from a big public company that still qualified as Qualified Small Business Stock (if that IRS hack is still there, definitely read up on it). Basically, if you are in a startup, own stock in it, and it gets acquired in a stock swap, it’s still not a taxable event if you roll acquirer stock into a new startup. You could roll it over and over across companies, and it wasn’t taxable (AMT notwithstanding) until you finally sold it outright.

  • Not necessarily. I started my services based business 11yrs ago. Almost went under in 2011 due to a bad business deal that left me with no revenue and $3k in the bank. I was at the crossroads of push forward or take a day job. I pushed forward and finished out 2011 w/$50k in revenue, 2012 w/$150k, 2013 w/$260k and we are on track this year to hit $500k. I’ve never taken an investment so it’s possible 🙂 I wish you luck, make sure to work smarter rather than harder, and learn to delegate well.

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