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Starting a Software Business in Today's Economy?
Ryfar asks: "I'm a programmer with 3 years of experience in C, C++, and Java. With the current low economic trends in the software sector, the small software company I've been working for since I graduated is going out of business. Since it's so hard to get a job at another software company with so little experience, I'm considering the option of striking out on my own with a friend with similar development experience and creating a small software consulting company. Naturally, until we were profitable to the point that we could hire other people to work with us we would be both the programmers and the marketers/salesmen. The question is, Where should we start looking for business? How do we capture the hearts and confidence of potential customers when we don't have PhD's from MIT? Could those here with applicable experience on this subject share with the rest of us?"
Get your mcse, its well worth the money you spend on the program, and you have more of a chance of getting a good high paying job. Cisco certification is another well respected degree.
How about reading Micheal Tiemann's essay here? It sounds more or less like you. It's an interesting read anyway.
However, I think Ryfar needs to concentrate on what he is going to sell. Building a computer consulting business takes approximately 2 letters and about 1 day of work (here in the UK).
What he really needs to think about is the products he will sell. What will they do? Who for? For how much? How long will they take to develop? How will he survive for this period? Where will he get the capital from? What if it all bombs? What if it is exceptionally successful and your price point cannot sustain the labor you need to employ?
The big idea is the key. You build a business around a big idea, not build a big idea around a business.
I have a small business I run by myself. I develop patient management/tracking system for Eye Doctors. I've been doign this for a few years and let me tell you the secret. Find a market where there isn't much competition. Eye doctors have some software available but it really is poor and overpriced (and most of the people who've used it complain about user-friendliness and such). I offer a simple alternative at a lower price and my client base has expanded by 4 in the last month (I know that seems like very little, but it's not when they bring in the dollars that I'm charging and the time I have to spend on each client). Having a connection inside the industry also helps, hehe. In regards to another post here, there are so many doctors/lawyers using out-dated DOS based software. Someone who could write an equivalent in windows or *nix (if the doctor is willing to switch systems completely) would probably be set. Also, in the doctor/lawyer industry, word of mouth is HUGE so I'm getting calls on my software from people I haven't contacted yet. Just my two bits.
The number one thing with being a consultant is communication. You have to be able to communicate with the customer, to find out what their needs really are, and communicate to them why your solution is better than the rest.
But it's more than just communicating facts. The customer must a) be confident that you know what you're talking about. They really don't care about your degree. They care that you know what you're doing. The customer must b) be confident that you know his needs. This is where most people screw up. They talk about what _they_ like - Linux, Apache, open-source, etc. They don't talk about what the _customer_ likes. Customers don't like Linux, but they do like security. Customers don't like open-source, but they do like having control over their technology. Customers don't like technology, they like their problems SOLVED. The better you can communicate both the problem you are solving, why it needs to be solved, and are able to quantify how much is being saved, while still being a likable, lovable guy, the better chance you will have.
You need to understand that they way you market yourself will have a big impact. Don't market yourself as a Linux guy or a C++ programmer. You're not. You're more than that. You are an analyst who can analyze and solve problems and can build solutions.
Be thinking entirely in terms of their business - how they do business, how they purchase, how they manage, how they interact with their customers. These are all important things. If you have the cheapest and fastest customer-billing system in the world, but it can't print the company logo correctly, it doesn't cut it. This is their business, and if you treat it with respect, that will go a long way.
Try coming up with a product you can sell - something simple. You don't have to actually sell it, it will just get you in the door so you can see how they do business and what other solutions you can offer them. For example, maybe try selling a ticket-tracking system (i.e. - Request Tracker), and make a sales pitch, but while your there, take whoever you are speaking with out to lunch, and find out what his _real_ problems are that you can solve. And offer real solutions, not just technology.
Engineering and the Ultimate
...Is more than possible. We do it with almost no effort after 6 years in business (just two of us). And for relatively competant people there is still a lot of work out there. I went to a clambake last week and talked to 5 people just socially and two of them gave me business cards to call them about projects. I could have talked to more people, but I'm really not very social.)
Number one for going out on you own: have someone else to live off of for at least a year, 18 months if possible. Give it time to blossom because it will take time unless your current contact list is amazing already.
Best thing we did for marketing was to join the local chamber of commerce and volunteer on various committees, some on technology so the fit is nice. Go to the regular events and mingle. If you can't manage to hold up a conversation with a business person, leave time to learn how in your business plan.
Get started by volunteering your services to a non-profit (the WORST to work for, by the way, making it a great learning experience as the organizational problems will be at their max) or to a friend's company or a friend of a friend's company. Whatever. Get out and work! even if it is for free. What will happen is this, after the first three or four jobs where you make people happy, people will come looking for you.
Exude confidence, but not cockiness when you talk to people. Offering free advice that people need to hear is the best way to get them hooked on hiring you. Seem busy and act busy. It is just like with dating, potential dates crawl out of the woodwork when you are already taken because of the way you act, this is true in business as well.
Another thing: people are hiring you more on who you seem to be (how you will be to work with) than you think. It is about 50/50 with what you know (this surprised me).
Be prepared to say "no" to work that is out of your focus. Once people realize you are competent they will ask you to do everything, including basic sys admin stuff. This is where we, personally, draw the line. We don't do Windoze which makes this easier to get out of. It may seem strange to imagine turning down work but you will be constantly learning and you need to specialize to really be effective and you can't specialize in everything.
Buy basic marketing books like "gorilla marketing for the home-based business" and "selling your services for those who hate to sell" they helped me get going.
And good luck!
After my first job as a programmer went bankrupt (in 1980), my fellow programmers and I toyed with starting a business. We sounded a lot like you. It was hard to get a job, so we would just start a company. Can't be that hard, right. We'd do a better job than the boneheads that put our last company out of business, right. We were programmers, by god, we could do anything if we set our minds to it!
Twenty plus years later I am glad I decided to get another job. I've learned a few things I'll share with you for free that I paid dearly for:
1. You don't know everything when you are 25. Or 35. Or 45.....
2. It is more important to be a businessman than an engineer if you want to be successful.
3. Learn how to write a business plan and execute what's in it.
4. Learn what all those funky financial reports mean, how to create them, and why you're business life (and personal life) depends on them.
5. Become a marketeer. If you don't know how to get a message across to someone, or how to figure out what to charge, or who your competitors are, or what the barriers to entry for you company are you will fail.
6. Become a salesman. Not necessarily work in sales, but be able to sell your idea to investors, to partners, to employees, and to customers.
7. Learn to take responsibility. If you are a procrasinator, you will fail as a entrepeneur. In a startup you are the boss, even if there are five or ten of you. You have no support organization, no secretaries. If you don't do it, it may not get done. Remember, you will have employees, and they will depend on you for their livelihood. What you do and do not do will affect and possibly destroy people's lives. If you are not up to that level of responsbility, get some more experience until you are.
8. Learn to learn quickly. As I mentioned above, you will be doing many different things, some of which you have never done before (and may not want to do again). Figuring out what to do quickly will give you more time to do the important stuff.
9. Management is important. Learn scheduling, people management, budgeting, and espcially how to help others deal with change.
10. Figure out a way to buy a business that is profitable already rather than build one from scratch. It's always easier to make more money and get more financial backing if you are profitable. After twenty years that's what I am doing right now, buying an existing profitable business.
If you are dead-set on going ahead, remember one thing. The successful super-geek programmers were the ones that team up with solid, smart business people, i.e. Gates-Ballmer, Joy-McNealy, Andresson-Clark, etc. Who's your partner going to be and do you trust them absolutely with your life.
I've seen other posts stating this, but I will
reiterate it... it all comes down SALESMANSHIP.
You may be the best programmer in the world, but
if you cannot communicate clearly with the customer,
figure out their needs while making
them feel confident in your abilities, and then
follow that up with a very professional looking
proposal... you will not succeed as a consultant.
I've been an independant consultant for over
seven years. I've met plenty of programmers
that are probably more skilled than me, but they
were unable to hack it as an independent because
they never could get the hang of customer
relations.
It also takes quite a while to build up a list
of industry contacts and repeat customers. Many
places hire contractors only off of a 'preferred
vendors list', and getting on one of those can
take some work. Hand out your business cards
liberally, and hang onto every business card you
receive (or better yet, enter them into a database).
Join your local chamber of commerce.
Volunteer to teach some free technology courses.
Develop and release some useful free software and
use it as a hook to draw traffic to your website.
Never pass up an opportunity to market yourself.
After you find the customers, be sure to manage
things correctly. Never work without a signed
contract. Include late fees for slow payment.
Get a good accounting package or at least a good
accountant. Build up a warchest of money to
ride out the slow periods (I'm glad I did).
Thats about it. Only time and a lot of work will
reveal if you have what it takes to be an independent consultant and (more importantly) if
you actually enjoy it.
Thad
Start small. Projects you can pump out fast and charge a minimal amount for, but do your best work on these, really polish them and make them shine. Be prepared to work a LOT of really long nights, and on boring shit like web design. This is not to make money, it is to build a base of clients who will recommend you to other people. The better your reputation, the more money you can charge for your time.
Where to look for clients? Everywhere. Friends and family. The net. Newspapers, yellow pages, and bulletin boards. People you meet on the street. (I'm serious.. face to face has a really magical quality to it that makes people listen to you 100x more than a phone call, fax, or email) Carry a really cool conversation piece that demonstrates your talent (example: a graphics demo on a PDA)
Want to know what people want in today's economy? (Well, always, really) To save money. To get businesses to spend money on you, you have to demonstrate how what you can do for them will save them money. Show them how they'd be fools NOT to buy your software.
And make you you put a lot of work into building a truly reusable code base, it pays off huge in the long run.
"Mind, as manifested by the capacity to make choices, is to some extent present in every electron." -Freeman Dyson
Get a list of potential customers. They are going to be project managers in corporate IT shops for the most past. Worst case, get a list of companies and hustle the switchboard operator and the secretaries. Find people that might hire people with your skills. If you can team up with a few other people and pitch more than just yourself, so much the better. When you get a prospect on the phone, don't start talking about yourself. Ask questions. What is his job? What projects is he working on / planning? What technology does his team use? What skills are needed? Does he ever use outside help? 99% of the time, they will tell you to buzz off. 1% of the time you'll get a meeting or interview. 1 our of five of those will get you work. So plan on 500 calls! Have a good resume ready. Take notes. Ask if you can call back in a few weeks / months. Send material: resume, business card etc. Follow-up. When a project manager needs a contractor, he's going to call the guy that he's talked to and blown off three times in the last six months. Contacts you make tomorrow will yield business two years from now. People will hire you if thay think you have the necessary skills and they like you, so be likable. You should be coming out of your shoes with enthusiasm. Practice your pitch. If you feel embarrassed because you feel like you're "over the top", f' it, take it up a notch. If nobody hangs up on you or tells you you are an asshole in the first 25 calls, you aren't making an impression at all. This is not to say you should be obnoxious ... but don't be afraid to let them know who you are. Laugh, tell stories, talk to prospects like they were your friends over a beer.
I have done all of this, beginning almost twenty years ago. I have founded and sold three businesses and netted over $20MM. I'm not BSing, even a little. And by the way, I have never ever had a job title with the word "sales" in it. I am a software architect and developer. But if you're turned off by the notion of selling, get over it. We all sell all the time. So figure it out. Get good at it. Take the Dale Carnegie sales class - among the best there is for geeks who don't get it. Read books by guys like Zig Zigler (Of Vegematic fame). Don't bother with all the heady stuff about consultative selling and customer satisfaction.
Go for it! And two last points: you don't need an MIT degree. NEVER EVER apologize for not having one! And for the mook whose advice was, "If you have to ask for advice, you are going to fail," I have one word: LOSER!
Good luck! This is how it starts for all of us.
Agreed, I did this in the last downturn and that is excellent advice.
Go for the small to medium sized companies. When they ask questions, answer them with out charging for your time. You'll make your money when you do the software. Don't talk over people's heads and match your dress to the business, pin stripe suits for banks and blue jeans and baseball hats for garages. They will trust you more quickly and be less likely to hold back money or information later.
It takes an average of 5 sales calls to make a sale. So spend lots of time visiting and re-visiting local businesses.
Sign up as a software re-seller for some software you like that is related to what you want to be doing. It will help get your foot in the door, and th commissions can be quite high.
I know it's kind of zen, but it's working for us. It's the idea of using an opponent's strength against itself. While it seems off topic, or something form a completely different direction, think about when the movie studios do well. They're having a great summer this year, but the past few summers they were worried about why they weren't making boffo bucks. Why? Because during a recession people ALWAYS want to be entertained.
//e in 65C02 assembler when the //e was still used in mnay businesses!). An opportunity popped up where a local business man who deals with people in financial trouble. I dropped the DV film business plan immediately, took a week to learn perl, and told him I could provide him with the information he wanted.
I started by wanting to create a digital film company (I have a lot of experience writing scripts and wanted to produce them). I haven't done any programming in over 10 years (the last programming I did was on an Apple
I put a dream on hold because I realized the business this person is in BLOSSOMS in a recession. And now a few of us are providing data for him. He's backing us to market this service to people thoroughout state and we've already contacted people he knows in nearby cities. Next week we will be rolling out version 1.0 and beginning to deliver our service to businesses nearby, but not near enough to be competing with our initial contact.
This particular business has two STRONG advantages over many other businesses: 1) It's based on providing services for companies and people that do well during a recession, and 2) We aren't selling the program, we're providing a service, so instead of being paid 1 time for a program, we're paid monthly for our services. (Like the way M$ wants to move from selling Windoze once to making it a subscription based service.)
There've been a few bumps -- including the fact that the head programmer (me) hasn't programmed in over a decade. I think that, in the long run, has helped, since we haven't been "boxed in" by preconceived notions or software business experience. Instead of deciding what types of programs to supply, or analyzing a market, I listened. I did not jump until I saw something that was a long term demand. I also made sure the service I was providing would basically not be effected by recessions (and, in fact, business is better BECAUSE of the recession).
I have to add I also learned from on of the local big companies. In Richmond (VA), Philip Morris is a huge employer. When a recession comes, people may not pay the rent, but they'll shell out bucks for smokes. While it is possible to take advantage of the trends of a good economy and provide luxeries, it's important to make sure your company's base services are not dot-com flashes, but something that meets basic needs that people will pay for, even if there is a recession or depression.
(BTW, based on our current client list and the people asking to subscribe, we expect to be profitable within 6 months.)
"Legal knowledge is free. All court cases and laws on the books are accessible at zero cost."
Baloney.
It takes tens of thousands of dollars to furnish even a minimal law library. A single multi-volume treatise like Witkin's "California Procedure" can run you $1100 easily. Cases on-line? Lexis/Nexis and Westlaw cost an arm and a leg themselves.
Your analogy is simply dreadful.
(When I think of how much money I've sunk into programming books over the years, I *wish* you were right about knowledge being free.)
"Imaginary solutions to real problems."
Being a January 2001 graduate EE grad from CWRU, I know what you're going through. After graduation, I decided to make the switch into programming because I hated EE. I came off to a *very* bumpy start (bad GPA, no relevant internships, "wrong" degree, lived in Cleveland, OH., etc.) Searching for the first job took many months, and eventually I swallowed my pride and took a $10.00/hr scripting job at a local .com. I was horribly underpaid, but I found many opportunities to automate the scripting process. Eventually, I created two applications using Visual Basic and Visual C++. This experience compensated for my lack of internships. After nine months there, the VC funding had dried up and I had survived three rounds of layoffs. I decided to jump ship before the company sank, and wound up finding another tech job in the Cleveland area for ~$35,000/yr. I am quite happy with my new job, and the pay isn't bad considering the current situation.
My advice to you:
1. Get some certs. A cheap method is buying a subscription from brainbench.com and taking as many tests as you can. The certs will not get you the job, but they will get you the interview.
2. Get a professional resume. You have good skills but a horrible resume. I needed to swallow my pride when it came to this, but as a technology dude I suck at resume writing. A good resume leads to a good interview. When I started job searching, my resume sucked and that cost me dearly. Good resume services are expensive, but calculate how money you are losing by being unemployed! Try to find a firm that has a focus on IT. Make each job sound like a natural progression in your career, even if it isn't.
3. This is bad market for technologists. If a job requires you to learn Powerbuilder, Delphi, Oracle, etc. take it anyway. You can't afford to be picky right now.
4. You may get paid less than you're worth. Sorry, those are the breaks.
4. You may need several different resumes for the optimal search, but this will get pricey if you get them professionally done.
Hope that helps...
P.S. DO NOT get an 8 page C.V. If you don't have a PhD it makes you look unfocused.