But at some point you must be saving up profits right? Eventually you will have to hire people that do not have billable hours, you can’t rely on just cash flow from work to cover salary expenses.
The company should be saving up some of its profits for future investment, yes, but the question was (at least that's how I understood it from the way it was phrased) how much to save up before actually starting. My point was that one of the great things that are specific to software is that you don't need large up front investments, or even any investment at all besides some hardware and an internet connection. You just get started and reinvest the earnings, e.g. by hiring people (where the 'investment' is the non-productive ramp up phase of any new hire).