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?"

Comments

ha ha ha ha -- um, no.

[SlashChick]

"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.

Some Free Advice

[Monkelectric]

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 :)

You shouldn't

[droyad]

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

Re:How to make money on Open Source software?

[johnnyb]

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.)

Reward back

[bluGill]

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.

From someone who hires consultants

[m00nun1t]

I work for a large corporate, and a big part of my job is to manage software projects. We have no inhouse developers, all work is outsourced. My job is to select & manage outsourcers, I often use small companies (<10 people) as I find, if you pick the right ones, the rates aren't excessive, they are excellent software engineers, and you get more attention from them.

Here's the top hints that would make me hire you:

• Price: don't be the cheapest. Price isn't my top priority. Just don't rip me off like some of the big consultancies.
• People are busy. I am busy. My internal customers are busy. Do things that will save us time and we will like you.
• Focus on business value. I'm not giving you money so you can write kewl code. I'm giving you money so that you can write something that will add value to my business. Don't ever forget that. The more value you add, the more valuable you become.
• Give realistic budgets & estimates.
• Deliver on time (see above).
• Develop a good understanding of my internal systems. Like all large corporates, we have a large collection of sometimes confusing and often illogical internal sytems and tools. Achieve a good understanding of them, and you get a certain amount of "lock in" with me - I find it harder to replace you, as I need to brief a new consultancy on all those tools. See the point about being busy.