We started a web dev agency with 3 people: How much did our first year actually cost?

We made a similar mistake two years ago. Here's how we trimmed our expenses: 1) Switched from prepaid annual licenses to monthly billing. 2) Canceled our physical office membership and went fully remote. 3) Didn't buy any new hardware unless our personal laptops literally broke down. That cut our monthly fixed costs in half.

Just to share my own numbers: in our first year, we spent $1,800 on incorporation, $2,200 on cloud infrastructure, and $1,500 on accounting. Zero on hardware. Our total expenses stayed under $5,500, and we hit profitability by month four. Spending $3,200 on hardware in your first year was definitely overkill.

Everyone's saying the coworking space was useless, but how are you building trust with enterprise clients without meeting face to face? In the US market, especially if you're dealing with local SMBs, lacking a prestigious address and a proper conference room can cost you major deals before you even start. Wouldn't it make more sense to keep an hourly meeting room package instead of cutting it entirely?

First thing tomorrow, list out every tool license you have and cancel anything that hasn't been opened in the last thirty days. Write a quick script to shut down dev environments on cloud instances outside working hours; that alone will save you hundreds a month on your bill.

sorry you had to go through that but almost every dev pays this kind of tuition in year one. when we started our first company, we got all hyped up and bought branded tumblers and premium email suites. total waste. the important thing is that you caught the mistake early and stopped the bleeding.

How much of that $16,400 spend was actually covered by incoming client revenue, though? What was your net loss? Also where did your first clients come from—referrals or cold outreach? Hopefully you didn't zero out marketing while cutting costs.

Any money spent before client work comes in just shortens your company's runway. You should've run a zero-fixed-cost policy until you actually started billing. Coffee shops would've been more than enough early on instead of paying for coworking space.

Thanks for posting. The first thing to break as you grow is communication not the numbers.

If I were you, I'd go this route.

I have an objection here. The reason for failure isn't one big mistake, but the accumulation of small decisions.

Everything goes well for the first three months; problems arise in the fourth.

I think differently. If the gap between accounts receivable and accounts payable turnover days is widening revenue won't save you.

Hope this helps.

My question might sound amateurish, sorry about that. Mistaking revenue for cash is the most expensive illusion; trust the bank account.

Proven by experience.

The most overlooked point about software company startup costs is this: The biggest time-waster for us was not knowing who had the final say.

This is my opinion, I'm not claiming it's absolute truth.

I went through the same thing two years ago. When making a decision, first look at what data you have on hand.

Good luck with that.

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Same here.

I'll argue the opposite, don't get mad. Cutting your own salary is a temporary tactic; if it lasts more than six months, something will break.

I'm also curious if anyone does it differently.

I have a question, don't want to go off-topic though. The moment you depend on a single client, you no longer set the price.

If you have questions, write them; I'll answer as best I can.

I'm curious too. The longer you delay cutting the team, the more people it affects.

Of course, it varies if your situation is different.