Slashdot Mirror
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?"
Use a little logic here, if established companies are going out of business due to the economy (lack of paying customers), how are you going to get work?
Deuteronomy 13:06-9
I have always had good luck with doctors and lawyers. Both of these fields tend to overpay for very bad software, and would be thrilled to pay less for better software. Try asking your dentist.
I know, sounds like a buzzword....but think about it.
What is software meant to do? What is the purpose? To me the best app would be one that allows a person to perform a job that they are completly inexperienced at. Like it or not, Windows is as popular as it is for that reason, it allows people who know absolutly nothing about PC's to use them. Don't get stuck in the rut of creating software simply for it's own sake.
Research your chosen market, find out what is lacking in all the software currently being used, and create something that will exceed it. Ask non-techies what they want out of software, what are their biggest complaints about the software they use know. My company develops software for a select accounting market, but it is so complex that it takes a week of training or more just to get started using it, and none of the training is technical. To me the best peice of software is the one that thinks the way I do, or at least appears to.
If you create a really good app, and are willing to customize it (for a fee of course), you will have more business than you can handle. Don't make the mistake of giving it away either, shareware has been the death of many good ideas, simply because the creator could not afford to develop it any further. Develop the app, take it to the customer. If it is really good, it will sell itself.
Find a reputable consulting firm/group and offer your services as a contract worker to them first. Marketing yourselves directly as independant programmers will be very difficult.
Most companies who are looking for out-sourced programming needs are looking for:
1. Small, one-shot deals (a database, a parser, etc)
2. Maintenance on old code.
3. Supplemental help on a large, in house project without any strings attached.
You will not have time to be an effective programmer and self salesman in a slow economy.
I would say that Certifications are all about memorization, not creativity or innovation.
In this kind of market, people want something new, not that you know what some obsure key in the MS Windows registry does.
"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."
Not to just be a troll, but this sentence alone shows that you haven't really thought this through.
Think about what are you going to be doing in this business. Keywords do not make a business, friend. I don't hire a "C, C++, and Java" programmer; I hire someone who can create an order invoice system (for instance).
"How do we capture the hearts and confidence of potential customers when we don't have PhD's from MIT?"
Another question that shows you haven't researched your market. Potential customers, again, aren't looking for resume keywords. They're looking for someone who can fulfill a specific need. Better yet, they are looking for someone who can explain things to them without resorting to words like "TCP/IP", "HTTP", "DNS", and "C/C++/Java".
To put it bluntly, if you
a) try to sell resume keywords like "C++" or "B.S. in Comp.Sci" as a business;
b) can't explain things in a simple, non-technical manner;
c) pressure your clients to do things your way ("Oh my God! You're using Internet Explorer! UGH! You want me to code what?");
your business will FAIL.
And most of all, don't be flaky! Make your clients feel like they are your #1 priority, even if they aren't. As a consultant, that is the top complaint I have heard regarding other consultants.
I would write more, but I'm onsite at a client's office right now, doing freelance PHP consulting -- that's what I do for a living. It's not easy to be freelance full-time, and you're definitely going to need to put more thought into it than you have already. If what I have said scares you, and you don't want to spend 50% of your time explaining what an "Internet Explorer" is, do the world a favor and don't go into consulting. If, on the other hand, you enjoy dealing with people, dropping off business cards, and generally showing off your work at every opportunity, go for it. You'll most likely find it to be a much more rewarding career in the end.
Simpli - Your source for San Jose dedicated servers and colocation!
I saw a few others point this out, but I'll chime in to put my weight behind it --- make sure you understnad what you're getting yourself into!
In short, you need to understand that starting a consulting business means you're taking on WAY more than just IT work. There's a lot of really interesting growing for you to do here, but be aware that it's going to hurt!
If I were you, I'd look into whether there are any consulting companies who would work with you to handle some marketing so that you can concentrate on some of the other aspects of growing this business. You'll still have way too much work to do, such as project management, billing, bill collection, account management, and so on.
Final piece of advice: Consider doing this if you're excited about trying to build a business, but DO NOT do this if you're just excited by the idea of doing a bunch of development.
Oh, and good luck!
____DevManager_____
Ive been involved in so many failed software company ventures I couldn't count them all ...
:) :)
:)
#1 - Do *not consider* starting a company unless you know exactly what niche you are going to fill.
#2 - Under no circumstance start a videogame company, if I see one more shitty Allegro/Clanlib game Im going to scream
#3 - Get a day job, a couple close friends, and work nights. That way when you fail it wont hurt as bad
good luck
Religion is a gateway psychosis. -- Dave Foley
YES!! These are called "vertical markets". Vertical software markets are plagued by poorly written, outdated, extremely overpriced software.
I just finished another post in this thread about how to approach a vertical market by writing good software with integrated services. Its definetely the way to go, and if you read my post, you'll probably understand my approach.
On a sidenote, I'm employed by a software company to maintain government/non-profit accounting and management software. Its used by municipal governments and school districts. Its written in DOS, using an extremely old outdated non-relational database, spagetti code, and we charge MAJOR $$ for a complete installation. In addition. our users enjoy $3500 annual license fees for the pleasure. Seriously... this is the perfect illustration of vertical market opportunity!!
Skiers and Riders -- http://www.snowjournal.com
I work for a small IT company and my boss has over 20 years expirience. Now we hold on to our customers because we deliver. We usually gain customers by word of mouth and usually take over from inexpirienced hacks who totaly destroyed the network.
Business and Retail are two different fields. Retail usually buys on price, they don't care that the motherboard is a piece of s*$! just it's cheap. Business on the other hand will get mighty pissed if the computer they just bought needs fixing after just one year.
Also it is unethical as a professional to pass yourself off as a consultant when you don't have the expirience. Remeber those professional ethics classes at uni? Don't pretend to be someone who has 15 years expirience when you only have 3. That's why there are so many unemployed "IT" people out there. They don't know jack. And those who do, still have a job. In our expirience it has been god-damn difficult to find someone GOOD to employ
You have "so little experience" that you don't think you can get another job, yet you want to sell yourself as a software consultant?!?!
Am I completely missing something here???
Bud, go work for another company or two for a few more years before you start selling yourself as a consultant. Make sure it's in a big company too, so that you find out what's it's like to work for someone other than a "small software startup." You're eyes will be opened to a number of new experiences.
It's much more likely you'll get a good paying new job that can get you more experience in this industry than it is for you to find business as an individual contractor with your amount of experience. There are good contractors and contractors who just think they're good. Make sure you're the first and not the second before you try striking out on your own.
Good Luck.
Lyell
+1 Insightful, -1 Troll. What can I say, I'm an Insightful Troll.
are you kidding? 3 years of experience??? People straight out of college are getting jobs you should be able to find one. I only have about 4 1/2 years of experience, I was laid off 3 weeks ago and I have contract work to do and people calling me (probably about to accept a job) and my strong points are Perl and PHP.
Seriously if you know C and Java you have it made, you might have to relocate but there are hundreds software jobs out there. I'd suggest going to ComputerJobs.com or to Monster.
I'm not saying you shouldn't start your own company, I don't know anything about the local economy where you live but I'm going to say that with 3 years experience and your skills you shouldn't have too much trouble finding a job.
The Anti-Blog
But I also learned that the most difficult part of getting a business going and making it self-sustaining is marketing. Word of mouth will be your most powerful marketing tool, as others have suggested. However, in my experience, lead conversion is the most difficult part of building the business. Once someone expresses interest in your services, you have to convince them to actually lay down the cash to have you do the work.
One book I've found very helpful is "Managing the Professional Service Firm" by David Maister. This book really brought home to me the reality that as a technology consultant, you really are in the service business, and as such your marketing efforts have to be an integral part of everything you do.
Another thing I discovered is that getting someone to let you do work for them is not the same as them actually paying you in a timely manner. Developing a billing procedure that lets you provide deliverables in stages, which are tied to invoices, might be something to consider. We've been doing that for the past few months with much better results than the "build it, bill it, wait for weeks and weeks to get paid" process, which really sucks. It may seem like a minor detail, but cashflow can be a real problem when you need to buy a development tool or some service, and suddenly you find that you don't have the cash because your clients have been late in paying you.
Also, treat the business process as you would a technology process. Constantly critique your business efforts and try to learn from your mistakes. As obvious as this sounds, a lot of small business people simply don't conduct any form of self-evaluation or process critiquing.
Don't let the naysayers get you down. It takes a lot of courage to go out and start something on your own. There will always be people sitting smug in their salaried positions, ready to sharpshoot you. But they'll never know what it means to put yourself out there on the edge and go for it.
Finally, for the financial and legal matters associated with starting a business, check out Nolo Press. Their books are very thorough and have been extremely helpful to us in negotiating the often frustrating local, state, and federal paperwork shuffle.
Best of luck!
Read the EFF's Fair Use FAQ
I am in a similar situation having been laid off a while ago and I too have considered doing some consulting work. It is awfully tough though because you won't be alone and so few companies are willing to spend. Some reccommendations:
1. Work out of your home, keep expenses low and your rates very reasonable. You need to have a very attractive pricing advantage over the larger, more established out sourcing firms.
2. Even though you are working out of your home, you need to look professional and not a fly by night venture. If you live in a basement apartment or the low rent district of town don't advertise it. Also don't use a PO Box. If necessary hire the services of an office front where they offer admin, mail and boardroom services. Have your mail sent their and pick it up or have it forwarded to your place. Whatever you do, make sure you look professional and as good as the other guys.
3. Define a very small target market or a very small set of services you wish to sell. Become a Java consultant not a Java/C/C++ consultant. Even better would be a Java web developer or a Java enterprise software developer. Choose whatever you know best, learn to know it better, and market only those skills. You will need to market yourself as being 'experts' in that field as opposed to a couple of smart guys who knows a lot about software development and can do whatever people may ask. If you try and be too much you will come across as not being an expert in anything and right now I think companies are only interested in talking to the experts.
4. Read books about sales and marketing strategies. Few "techies" really understand what sales are all about. We've all heard and told the jokes about sales and marketing people. Be prepared to become one. When approaching a company, try to figure out what services they might need and focus on solving their needs as opposed to what you can do for them. They aren't interested in what you can sell them, they are only interested in having their problems solved. If you don't think you can solve their problem, forget about it. Don't waste your time on a potential contract you likely can't/won't get.
Other than that, be prepared for a lot of work but have fun. Don't expect to make a million dollars. If you are only in it to get rich, you will certainly fail. If you enjoy what you are doing you are more likely to be successful.
How can an Open Source software company make money in today's economy?
********
By selling solutions, not software. The software "product" idea is going away. In it's place, there will be numerous tools developed by people building solutions for others. If you sell a a product that you obtain for 0 cost, people won't need to do business for you. But if you sell solutions that consist of free elements that you put together to solve business problems, you will be paid well. In fact, the business usually won't care how much you pay for the pieces, as long as you deliver the full package.
Those solution providers will release the tools they develop themselves solving business problems as free software. Why? Because they recognize that it is important to maintain the environment that allows them to be successful.
The legal environment is a good analogy. Legal knowledge is free. All court cases and laws on the books are accessible at zero cost. However, lawyers are one of the highest-paid professions. Why? They put the pieces together (which were obtained at zero cost) to create a valuable solution for the client (getting out of jail, etc.)
Engineering and the Ultimate
You're not going to be seen as a company for the first little while - for now you're essentially going freelance - you're code for hire.
I was in the same situation you are now - I was laid off a year ago (Aug 1, 2001). I started looking for full time work where I could. After a few weeks of picking up the pieces, I decided to give starting a company a try - and I did - well - sorta. When I approach someone for work and I tell them what I do, I usually get "Oh, you're a freelancer then" or "How long have you been out on your own?" or something like that. I have to explain that I'm a company - I registered my name, have a business bank account, I have a company website.
Still, you won't be recognized as a company - you're freelance. The people I've talked to think that freelancers are somehow lower than dirt. I don't get paid on time - I don't get complete requirements, I get told I have the job and then the work it pulled. You're going to get sand kicked in your face. It's a really hard line of work and you have to make sure that you really want to do it.
Where do you find work? I don't know. I got lucky and found some connections through a friend of a friend - I get most of my work through there. It's best if you have personal projects (that you think might make money! Don't forget - you're in this for money!) to do when things are slow - otherwise you'll end up watching too much daytime TV.
Why do I keep doing it? I love the freedom. I've done so many different types of projects - the straight web stuff gets boring after 10 minutes, but the exciting projects just zip by. The hours rock - I can take off any day of the week I want - of course I don't get paid and I usually end up working weekends.
Ask your friends if they know anyone who needs work done - ask family - do volunteer stuff. Get in the newspaper - get free publicity. Make sure that you're cut out for this kind of work - it's exciting stuff, but you really have to want it.
Like sex? Read and write about it! Indecent Blogging
Note, that word of mouth is the best reward is a two way street. When someone mentions they are looking for X, pull out the buisness cards of all your clients in X, and give them out. And tell your contact the next day you did so (if they are good salemen they will call right away to see if your friend is serious)
Referals are a two way street, if your customers find out that you don't refer people back to them when the opertunity comes up they will drop you (and perhaps activly refer others to your compitition). You can only contact a few people a day, and not all are interested in your business, but if you work for all your customers and suppliers they will work for you a little, and you contacts will go way up.
Eventially you hope to hire salesmen who do this, and love the doing the referal game, but even then you should refer when the oportunity comes up. Your pocketbook will thank you.
PS, always make sure your referals are to good companies. If you know one of your customers does cheap work, don't refer them except when cheap is the only consideration, and then make it clear that cost is the only reason to consider them. In general you should refer people to the best.
Uh, yes and no. You don't talk to small one man mechanics in a suit, you wonder in, and while talking up the benifits of your software, guide the transmission while he lowers the jack so it comes out faster. You will have much better luck if you can speak the language. (Warning, do not try this unless you actually know how to do it right. The salesmen that wonders in and helps do a task that should have two people can get a sale, but the salesmen that turns a $200 job into a $2000 job with one wrong move not only loses the sale, but all chance of others in the industry) In reality you will never touch a car when you talk to the mechanic, since it looks like you are pushy, and trying to take the job, you just need to have the ability.
Don't even look at a bank without your suit. Make sure when you go to a dry cleaners make sure you have it starches perfectly. When you mail to an envlople company spend as much effort on the envelope than you do on the rest of the presentation. You can wear jeans into most (but not all) computer companies, but the suit is better until you are sure. With some clients the suit will hurt you, with most you can't get by without.
2) Read up a little on tax law.
3) Read up a LOT on selling, cold calling, marketing. Self help stuff too if you need motivation. Many people do.
4) SELL, that's right, *SELL* your service. Be a salesman first, geek second.
I did the Java programming route for five years in NYC. Fun, but even my bubble went pop and working as an S Corp has soooo many benefits. Shall I list a few?
1) You are your own boss.
2) You have no limit to what you can earn (no bottom either, carefull!)
3) You are officially an Officer of a Corporation, a "President" actually, and you can tell that to cute girls in bars and it's great. Much better sounding that "Java GUI programmer". GUI sounds icky, makes most girls run away.
4) You keep most of what you make (you'll know exactly why after reading a bit on tax laws).
Good luck!
What I have learned:
- ~80% of all new businesses are started by engineering types.
- ~80% of all new businesses fail.
- Technical people, for the most part, are not business people.
- 3 years of experience will not you make a business success. Trust me. It takes a long time and a large effort.
- You must be focused and have an over abundance of energy.
- You must be able to put your ego and ideals aside when required; you will have ample opportunity to show your $hit; patience truly is a virtue.
- You must be able to ride the storm. In most cases, life will be feast or famine.
- Quickly gained success is quickly lost.
- There is no substitute for experience.
- A partnership is like a marriage. You better be ready for this one.
- You must be prepared to fail. And, when you fail, you must get back up and keep going. Otherwise, you are wasting your time; get a job.
- Attitude is everything.
Jamey
Jamey Kirby
Here's the top hints that would make me hire you:
Read reviews of shopping cart software
Personally, in your situation, I would rather flip burgers. If the reason for starting your own business is inability to find work, then it's not going to be easy. Because starting up your own businness is expensive. Both in time and money.
The first thing you should do is to start is to contact local companies telling them that you are in the process of deciding whether to start a local business and see if they are interested. This will give you a chance to see how many paying clients you will get, what kind of work you will get, and how much they are willing to pay.
The second thing you should do is to contact an accountant, preferably someone with experience of helping small startups (i.e. plumbers, hair-salons, etc...). This is important for two reasons:
I would also consider contacting the employment agencies in your city. They may offer courses, etc..., for people thinking about making a startup. At the very least, they should be able to point you in the direction of somebody who does (again, I don't know about US, but I imagine the situation is similar).
There are a number of pitfalls:
And finally: don't go bankrupt! If you do, you will loose everything in the process. Remember that this might also include such things as your wife, kids, and house!
If you are still interested in starting your own business, then have a go at it. But don't do it because you might think it to be easier than just getting a job.
Yes, actually. The rule of thumb with a resume is that a lie of omission is NEVER a lie. You're a PhD and you're being told you're overqualified? Only list everything up to your Masters. Still overqualified? Only list up to your bachelorate.
You worked for your own company for five years? Pick ONE of the 'hats' you wore during your time, that's appropriate for the job your hiring for, and build your entry around that.
Vintage computer games and RPG books available. Email me if you're interested.