Risks associated with starting a business

The problem with starting a business is that it takes money to do it. So for some period of time you have to live in the precarious state where money is flowing out, but not enough is flowing in to replace it. So logically you would actually be better off doing nothing at all, at least that way you’re not losing so much money. This is the scariest thing about starting a business. However, there are some trends in the software field that are reducing this risk.

In the past it could take huge sums of money to get around that corner. However, there have been some trends lately in the software engineering field to reduce that level of risk.

Sever costs have dropped dramatically. For a budget conscious startup, decent servers can be had for < $1000 running linux. These are definitely capable of getting a small business off the ground.

Software itself has dropped dramatically with open source alternatives. Linux for servers, mysql for database, java with eclipse and tomcat for applications. You can build a world class software infrastructure for $0 in licensing fees. Of course, to do this effectively you need some smart people to set things up, but if you're launching a startup you had better have them anyway.

If you're trying to reach a niche market there is no more effective way than using very targeted search ads. The cost is low enough and the rate of return high enough that as a small startup there is no need to go with massive branding campaigns to get your name out there.

There are reports surfacing of small startups getting to breakeven for less than $100k in capital. This definitely puts it in the realm of microinvestors. I believe the trend will go in this direction. The large companies will allow micro-entrepeneurs to take on the risk of developing new features and then purchase the company for a reasonable sum. This offloads the risk from the company, the entrepeneur gets a reward for taking on the risk and everyone wins.

Now if I can just get the beta release out and move on to finding customers, that's when the real fun starts.