Having lighting fits

I am planning to open a small studio on a thin shoe string and am need of some advice on studio lighting. I am using a Pentax *istD and have the AF500FTZ flash plus several other small flash units on slaves. My location is small, 8" x 16" but it is all I have to start. Planning to move into bigger quarters later. I tried using the flash on a subject but the light was stark and harsh. Is there any way I can tone down the harsh light? I will be using a white or black backdrop and will be doing a lot of post production work in Photoshop 7 which I am pretty good at doing. I am pretty much stuck with the lighting stuff I have until I can get things going and buy up.
The town will not support a full time studio. I am retired and am badly in need of something to keep me going. I would really rather burn out than rust out. I refuse to sit on the porch waiting for the undertaker to pick up me. Been doing photography for 65 years now. Mostly for fun, some location professional stuff for a personal friend in Arabia , but I am new to studio work.
Any and all advice for this old dog will be helpful. For instance what color should I paint the room?

My recomendation is to paint the walls white. It will help with reflecting light in your small space. It may help if you aquire a reflector or some reflective material. 1 main flash, a bit off center and a reflector on the other side for a little fill light can make for a simple, but effective lighting set up. You may want to diffuse your main flash a little so it doesn't appear to harsh. You could purchase a velcro mounting diffuser for about 20 dollars. ( I use them when i shoot weddings) or you could buy some frosted paper or velum and tape it to your flash. I commend you in your willingness to go for it. Good luck!

BG,

The easiest and cheapest way to soften your flashes is to construct simple PVC light panels. A single, precise design is not even necessary, just plan out a basic rectangular shape using straight pipe with elbow joints, and make sure you have "legs" using t-joints and smaller straight pieces. Either glue the frame together, or leave it unglued so you can tear it down and store it in a small space.

Attach a large panel of translucent white material over the panel, holding it in place with either tape or velcro. Place this panel in front of your light.

If you'd rather spend a bit more, purchase a small translucent reflector disc which you can then place in front of your flash instead of the panel. Higher budget light diffusion tools are umbrellas and softboxes.

Light modification doesn't have to cost a lot, but does require a bit of thought.

Good luck...