How much BUISINESS does one need to run a company?

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28 comments, last by Obscure 15 years, 8 months ago
[Accidental duplicate here.]
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Quote:Original post by Splinter of Chaos
Other than that, thanks for all the comments! One thing I find interesting is that no one is mentioning that failure probably means financial ruin. No? It's possible to eventually get back up again? I won't say that sounds encouraging until someone confirms this.

It depends a bit on what you mean by "failure". I'm sure you've been told the statistic that something like four in five new small business no longer exist after five years*. But that includes those cases where the business was sold, achieved their objective, or closed due to the owners wanting to move on.

In the worst case you could face bankruptcy, loss of credit rating, and maybe even your personal assets depending on the type of business you set up. But there's precautions to stop you from getting that far. If you do your homework and set up the right sort of company framework with the help of a lawyer and an accountant you'll be safer. And even those who go bankrupt can and do bounce back.

However you'll have to note that I'm gearing myself mentally up to start my own small solo business, so I might be taking an optimistic viewpoint here. [wink] Do your own research to reassure yourself.

* I'm not sure how true the raw figures are in this statistic, or whether it still holds.
Quote:Original post by Splinter of Chaos
One thing I find interesting is that no one is mentioning that failure probably means financial ruin. No? It's possible to eventually get back up again? I won't say that sounds encouraging until someone confirms this.

Well, the good thing is that creating software (including PC games) doesn't necessarily require a substantial initial investment. You don't need a factory, expensive machines or rare raw materials to start working. What you do need is creativity, talent and lots of (productive) time. The fact that many people here make games as a hobby is a proof of that.

Of course you still need to pay the rent and eat a sandwich once in a while. Therefor it may be wise to start saving some money while having a 'regular' job. It may also be important to set yourself (and the others involved) a deadline: if after a year the company doesn't generate enough income to support yourself, ask yourself the question whether you should continue or not.

Like Trapper mentioned, most successful entrepreneurs have a couple of failed attempts on their track record. It's not the end of the world, as long as you learn from your mistakes and don't give up.

Starting a business will always involve financial risk, but the returns may well exceed that of a steady job at an established company. Make sure you are aware most of them in advance and make sure you have a backup plan if things aren't going as well as you would have hoped.
Quote:Original post by Splinter of Chaos
Both 2 and 3 sound like solid votes for taking at least two--maybe three--biz classes in college; this is aside from the book(s) of coarse.


Best thing you've said so far.

A business has two faces: there's the bit where you do what *you* want to do, and the bit where you do what the government says you *have* to do. The latter is the boring bit that many seem to think they can just dump onto the shoulders of their accountant friend; either way, it's *unavoidable* overhead. For smaller businesses, this overhead is often quite small and easily handled if you've a head for organisation and can force yourself to set aside a few hours a week to deal with it all. ("Hey, it's Paperwork Friday! W00t!")

I have a personal rule of thumb that has helped me quite a bit in life: "Know enough about each subject to recognise bullshit when you see it." This is a good general rule to follow, but it does mean reading up on basic accountancy and your country's laws as they apply to small businesses. If you don't you run the very real risk of getting screwed by whomever you hire to handle that side of the business. (In other words: even if you do hire an accountant, keep an eye on what they're doing to make sure they're not making mistakes. Even accountants are only human, and their mistakes will cost *you* money.)



Quote:What if I want to aim for audiences that don't exist yet?


And, er, how will that audience *know* about your game when you release it? Marketing and PR don't magically appear: you have to pay for them. And pay quite a bit. Viral marketing can help up to a point, but it can take *ages* for it to gain valuable traction. Time that your rivals -- and make no mistake, if it turns out you're right and there is a market for your game, you *will* have rivals -- can use to build their own games and market them using their established teams.

Quote:
I don't want to work with people who think of games in terms of audience. I want people who think of games in terms of "awesome, everyone will love it" and "that idea sucks."


Don't be so quick to dismiss traditional marketing and PR techniques. These are based on very sound, solid science. Seriously: read up on it sometime. (You'll want to do that anyway if you intend to market your own games.)


Quote:One thing I find interesting is that no one is mentioning that failure probably means financial ruin. No? It's possible to eventually get back up again? I won't say that sounds encouraging until someone confirms this.


I'm currently watching a close family member, who runs her own business, scrabbling around, trying desperately to raise over £20K to keep the bailiffs from repossessing their *home*. It's not as if there were no warning signs that her business was in trouble, but they made the classic beginner mistake of not planning their Exit Strategy: i.e. deciding in advance when they'd pull the plug and walk away.

It is *very* easy to get so attached to your business -- your "baby" -- that you can't face the idea of shutting it down. If there's any one point you should take from this thread, I think it's that. There's been a lot of great advice in this thread, but, for the sake of your sanity, do NOT fall into the trap of seeing your business as anything other than an abstract entity. Don't let stubbornness -- a common trait in entrepreneurs -- blind you.

[Edited by - stimarco on July 31, 2008 9:51:10 AM]
Sean Timarco Baggaley (Est. 1971.)Warning: May contain bollocks.
Quote:Original post by Splinter of Chaos

2. Hmmm... Good point, although are you suggesting I only hire people with at least elementary business knowledge, or inform them upon entry?



I would recommend educating yourself enough to ensure you aren't taken advantage of down the line, and I would strongly recommend that at least one member of your team knows enough about complex business planning, transactions, negotiations, marketing, employment law, human resources, tax law and single-purpose entity formation to keep you from doing any irreparable damage, i.e. tax evasion. Businesses can be extremely complex, enough that many consulting firms and law firms make a significant portion of their income through handling corporate/company maintenance (such as annual meetings, corporate quarterly filings with state/federal governments, etc.). With small businesses the maintenance is typically less arduous, but you can still hurt your business by not knowing your responsibilities under the law.

Quote:
Now, a few miscellaneous comments:
Please, no more remarks about finance. The one who keeps my college fund assures me that I'll supposedly have more than enough for college, and even some left over for capitol. Not that she'll tell me how much of MY money she's keeping in MY account, but there's enough evidence to support I won't be taking any loans any time soon. Please, no more remarks about finance.


You don't know how much of your money is yours? And you don't think this indicates a little bit of financial immaturity?

You're in a fortunate position.

Quote:Please, no more remarks about commitment and sacrifice. You don't know me, you don't know enough to judge my maturity, intelligence, understanding, or commitment. I'm not even going to try to justify myself here; I'd like you to all have the respect to give me the benefit of the doubt--or at least consider it pointless to ask me if I don't think I should do what I'm telling you I think I should do.


If you're that temperamental about suggestions and critiques re: legitimate business matters (i.e., financial an professional maturity, experience, commitment), you are in for a very rough ride. You need to get used to the idea that people are going to try to offer advice, that nearly everyone you encounter in business is going to think you're too young and therefore unreliable. That's what you're going up against. Consider this training. People will not waste their time getting to know someone if their first impression is one of unreliability.
~Mona Ibrahim
Senior associate @ IELawgroup (we are all about games) Interactive Entertainment Law Group
Quote:Original post by Splinter of Chaos

2. Hmmm... Good point, although are you suggesting I only hire people with at least elementary business knowledge, or inform them upon entry?



I would recommend educating yourself enough to ensure you aren't taken advantage of down the line, and I would strongly recommend that at least one member of your team knows enough about complex business planning, transactions, negotiations, marketing, employment law, human resources, tax law and single-purpose entity formation to keep you from doing any irreparable damage, i.e. tax evasion. Businesses can be extremely complex, enough that many consulting firms and law firms make a significant portion of their income through handling corporate/company maintenance (such as annual meetings, corporate quarterly filings with state/federal governments, etc.). With small businesses the maintenance is typically less arduous, but you can still hurt your business by not knowing your responsibilities under the law.

Quote:
Now, a few miscellaneous comments:
Please, no more remarks about finance. The one who keeps my college fund assures me that I'll supposedly have more than enough for college, and even some left over for capitol. Not that she'll tell me how much of MY money she's keeping in MY account, but there's enough evidence to support I won't be taking any loans any time soon. Please, no more remarks about finance.


You don't know how much of your money is yours? And you don't think this indicates a little bit of financial immaturity?

You're in a fortunate position.

Quote:Please, no more remarks about commitment and sacrifice. You don't know me, you don't know enough to judge my maturity, intelligence, understanding, or commitment. I'm not even going to try to justify myself here; I'd like you to all have the respect to give me the benefit of the doubt--or at least consider it pointless to ask me if I don't think I should do what I'm telling you I think I should do.


If you're that temperamental about suggestions and critiques re: legitimate business matters (i.e., financial an professional maturity, experience, commitment), you are in for a very rough ride. You need to get used to the idea that people are going to try to offer advice, that nearly everyone you encounter in business is going to think you're too young and therefore unreliable. That's what you're going up against. Consider this training.




~Mona Ibrahim
Senior associate @ IELawgroup (we are all about games) Interactive Entertainment Law Group
Mona wrote:
>If you're that temperamental about suggestions and critiques re: legitimate business matters (i.e., financial an professional maturity, experience, commitment), you are in for a very rough ride. You need to get used to the idea that people are going to try to offer advice

Amen. Especially when you actually go out and ASK for advice in the first place!

-- Tom Sloper -- sloperama.com

Splinter of Chaos:

The industry today has grown a bit, I should think. You meantion games as being intended as some sort of art form or a product of ingenious creativity, but as far as I can tell, games are called games because they're meant to entertain. Nobody is going to put a game on a museum anytime soon or make them worth $10,000 or release like ONE copy of a game. Commercial entertainment and commercial art are the things games in the market should be looked as. Keep that in mind when you wonder about "target audience" and such. With a company, you'll want to sell your games in order to be able to pay whatever it is you need to pay. Finally, don't forget that it's better people say "That game is SOOO fun!!!" about your game (and truly mean it) than for them to say "wow, it's so different from other games!"

My two cents.
Quote:Original post by Splinter of Chaos
Do you really think this is shocking to me? Did it not occur to you that the reason I wanted to start my own company was due to this obvious fact?

Of course it didn't, because starting a business does not confer absolute freedom. If you privately sell a stake in your company to raise capital or go public, then you're beholden to your shareholders. If you sell any games, then you have customers you have to support and consider when making subsequent games. If you have any employees at all, then you're answerable to them, too. The only time you have absolute freedom is when you exit the marketplace, when your actions only serve to satiate yourself - when you are your own sole audience. Nothing you've said demonstrates an understanding of this.

That said, I understand your desire for the focus to be on games, first, based on their inherent quality, not on their market positioning as filler or clones. And I respect that. Just remember - have an exit strategy!

Quote:The one who keeps my college fund assures me that I'll supposedly have more than enough for college, and even some left over for capitol. Not that she'll tell me how much of MY money she's keeping in MY account, but there's enough evidence to support I won't be taking any loans any time soon. Please, no more remarks about finance.

LOL. Tell your mom we said "Hi!" [smile]
Quote:Original post by Metallon
Finally, don't forget that it's better people say "That game is SOOO fun!!!" about your game (and truly mean it) than for them to say "wow, it's so different from other games!"

My two cents.


That's what I was thinking. I don't want to make games different TO be different, I just don't want to WORK at being the same. There's a difference. I don't want to make a survival-horror game and try to shock the player just so I'll fit into the genre. Counter intuitively to the genre, I want to be psychological and examine the human condition (more so than Silent Hill). I couldn't give a flying fuck if people said it's an original take or not.

In other words: It's one thing to think outside of the box; it's another to think without a box.

Quote:Original post by Oluseyi
LOL. Tell your mom we said "Hi!" [smile]


lol. People are always so assure of themselves when they make guesses like that. Wrong answer (you probably won't guess the right one), but good try.

(If I had a bad relation with my mom that I couldn't know how much money was in my own college fund, would I be able to have such silly ambitions with such conviction that I obviously have local support?)
Quote:Original post by madelelaw
You don't know how much of your money is yours? And you don't think this indicates a little bit of financial immaturity?

You're in a fortunate position.


You have no idea. I live the most "charmed" life you've ever seen, but I'm very grateful and try not to take advantage. Yes, I have an unknown lump sum of money that's been accruing since before I was born, managed by someone who planned for expenses I'll never have. I am in a very fortunate position.

Quote:Original post by madelelaw
If you're that temperamental about suggestions and critiques re: legitimate business matters (i.e., financial an professional maturity, experience, commitment), you are in for a very rough ride.


Good point, but I asked people to stop commenting on irrelevant things because it wasts both our times. I've got the commitment I'll need (I can sacrifice anything I need to), and I have projects in mind that don't need ten years of experience to pull off--and well. But proving that to you guys would improve nothing and spend my time which I could otherwise do better things with.

On the other hand, no one's said anything, yet, that really makes me question if I can do this. In fact, I'm more determined than ever. I really appreciate the advice I've gotten here (in fact, when the thread dies, I'm saving the pages on my external harddrive) and I really want to give this a try. Maybe two.



Several random people:
> Yes, take those classes (biz and law). Something about protection.

Than it's set! No more discussion of that necessary unless someone has more specific advice...?

EDIT:
I think it's funny that no one mentioned "exit strategy" until I reveled I might be a complete dumb ass. So, I'll probably learn this later but, what exactly is involved in an exit strategy? I'm betting pay off all my employees, stop renting office space, and let all unfinished works online for free isn't the best plan as it's the most obvious.

Or does an exit plan more have to do with if X condition is met: exit?

EDIT2:
Quote:Original post by WanMaster
Well, the good thing is that creating software (including PC games) doesn't necessarily require a substantial initial investment. You don't need a factory, expensive machines or rare raw materials to start working. What you do need is creativity, talent and lots of (productive) time. The fact that many people here make games as a hobby is a proof of that.


Heh. This is actually pretty close to what my mom said. And the fact that I produce games as a hobby is proof of this!

Although, I have to imagine the machine that copies all the info onto the CD's is a little much.

[Edited by - Splinter of Chaos on July 31, 2008 10:37:47 PM]

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