Startup numbers

Updated: 3 days ago

The numbers are based on personal experience and realistic estimates on the field.


Time for first failure: 3 years.


Cost of developing a successful product: 1 million dollars. (again, this cost is always relative. You must spend enough money to make something that satisfy the CURRENT customer).


Any company takes 24 months to ramp up products, sales, marketing, etc. If you plan on startup the take off ramp must be 24-48 months, you must have money reserve for that period to live on your own dime. Investor money won't come in until you find customers willing to pay sufficiently.


Cost of designing a reasonable logo: 75 dollars (2020)


Success rate: 1/10 find some traction. Out that 1/10 find steady revenue. Out of that 1/10 have profit. Out of that 1/10 has continuous room to grow and not facing imminent death. (Link)


Web store conversion rate is about 5%.


Online marketing cost (ranking, SEO, targeting) around 100 dollars/day is normal. The money is used in various ways to maintain your product ranking in a particular keyword group.


The most difficult elements of starts to achieve:
profit.
growth.
talent

These three elements are always relative. They are interconnected. Talent takes money, but profit takes talent. Growth takes design, but design takes experience.


Startup execution is always 1 part product, 9 part marketing. Marketing is not "send the message out" or "go to see my customer". Markets are the places people pull their wallets out. It is always comparison. In business there is no vacuum, there is nothing new. If your product can not get into market through the bouncers, it does not matter.

Cost of business

Making a business is not that hard. But making a good and fat business is not easy.

For local business, the major cost elements are:

  1. space rental

  2. labor salary and benefits (per government rules)

  3. taxes and fees

For online business (such as store), major costs are:

  1. promotion fees for online platforms (jd, amazon, alibaba ranking fees);

  2. product handling fees (e.g. Amazon FBA fees)

  3. google ranking and SEO fees (daily, about $100/day)

Job costs

A job is the safest place on earth. You are with an organization that already has brand, following, and business. If you take your "talent" outside you will have to rebuild all these.


When you work for someone as employee, your paycheck is lower than what you can do by yourself but it is a discount due to the safety and regularity of the paycheck.


it takes about 1-6 months for a person to get used to a job. To understand or change the world, accept it.

A startup is FREE only because you are free to choose what you do. But it is work and satisfying your customers.

Example: Cost for opening a coffee shop


My wife has decided to start up a small cafe, and is wondering how much is a safe yet realistic amount to have in savings before beginning her venture. Any help is greatly appreciated.


Question:

As the title states, my wife has decided that she wants to open up a small cafe around Seattle. It won't be directly in the city of Seattle, but most likely in one of the surrounding towns. She's heard from one of her friends that a safe amount to have in savings before starting the process is $100,000 and that number kind of disheartened her. Right now she's just working as a server so getting that much in savings could take 10+ years. Have any of you guys opened up a cafe? What would you feel is a safe number that is also realistic? She already has some money saved up for this, and she would ideally rather start sooner (within the next 1-3 years) rather than later. (She's currently 28)


Answer:

Haven’t done this myself, but I have friends who have. The way I understand is you’ll need 50k-ish(min) just to put up for a business loan and actually get the cafe up and running. This doesn’t include costs of marketing or web presence, which can become significant costs as well. Additionally, depending on CoL in your area, she’ll need to plan about 1-2 years worth of living expenses. Even if you live cheap and scrimp on everything, it’ll still likely be 25-40k per year to cover housing, food, transport, and insurances. TLDR: $100k is a pretty safe number, less than that risks becoming dependent on others to make ends meet and if something goes wrong (which is likely in food service), there’ll be little-to-no safety net.



Chance of social network impression-to-click conversion rate


A good question from A reddit post. (Link here)


I have a blog on programming. I've added some retargetting pixel to my blog posts and I've been trying to promote them on FB groups. So far I've posted my blog in approx 30 FB groups on a daily basis for the past 20 days. And all in all I get like 20-30 clicks everyday while these groups are supposed to have 10k-30k members. Does anyone know wether this is a normal thing? Where can you promote your blog posts to get more traffic? The only other programming forum is stack overflow (can't promote there) and reddit (no can do here either).


Answer1:

Good online store conversion rate is 100 visitors and 3 buys. Your statistics is the "pre visit" stage, just "impressions". At this stage, about 10,000 fans converts to one visitor (click). If you do this on tiktok, half million fans gets 50 live stream watching audience. Some shopify owner operate for one year with good looking website and gets one buyer total. So basically, 10,000 x100 converts to 3 purchases. That is 3 paying customer for 1 million "impressions". Now you have to TRULY APPRECIATE what starbucks and even your local grocery store has accomplished!! If you are "Bit Tech news" and you have a store front in New York city busy streets, about 1 million people would walk past it every day and about 3 people would happily buy post cards from you. Of course in that case the space rent would be astronomical and you might do better than that. Try advertise to stay at home mom's and make things these people like. That is the primary audience of FB as I heard.


Answer2:

I usually post on hackernews, put them on medium when I have the chance, post on subreddits that have to do with the subject. I also found Dev.to as a place where people post tech blogs.

0 views

Chicago, IL, USA

 

Call

T: 224-213-6831

F: 224-213-6888 

© 2020 by SPC