Eric Sink on Starting Your Own Software Company

prostoalex writes "The topic of starting your own software company was recently brought up on Ask Slashdot as a way to fight current employment trends. Eric Sink from SourceGear, who shared his software company-building experience before has written a new article published on MSDN. Getting started with your own software company suggests several simple steps to evaluate your abilities, count your estimated expenses and then start the software company, if the idea still seems feasible."

Comments

A thread from joelonsoftware...

[tcopeland]

...on starting a company is right here.

Lots of similar ideas there, including a few rants against VCs and incubators.

Some simple advice

[a XOR b XOR a XOR b]

I know tht;s a bit flippant .... but if you use a PO Box for your company's registration and correspondance and no one ever is going to come to your house you're not going to piss anyone off .... and they probably wont care

Re:Some simple advice

[michaelhood]

PO Boxes are expensive and only accept USPS mail. I have a box at The UPS Store, formerly MailBoxes Etc. It accepts mail from any service, and they will even hold UPS/FedEx packages for me (ones that obviously don't fit in my box.) One large advantage, IMO, is that it allows me to put my address as "12345 Culver Dr. #A144". This looks like an office suite, instead of a PO Box. YMMV. Good luck.

Myer's-Briggs Test

[ChopsMIDI]

One way to increase your self-awareness is to take a standard personality test. There are several such tests, but my favorite is the Myers-Briggs Type Indicator (MBTI).

Determine your personality here: http://www.humanmetrics.com/cgi-win/JTypes2.asp

I'm an ENTJ (coincidentally, the same as the author of the article).

Re:MSDN?

[NotClever]

Modded funny? How about not factual at all. Source Gear is an independant company. Eric just happens to write a bunch of stuff that ends up on MSDN. As do dozens of other authors.

Shareware

[rjelks]

The Association of Shareware Professionals has some great resources for writing, marketing, and selling software for the author on a tight (read almost no) budget. While some companies probably get VC help, I think this a great start for research if you are interested in trying out some capitalism with your software. There is a lot of competition due to the low barrier of entry, but a motivated individual with talent could end up quitting their day job. WinZip is a good example of a success.

do it!

[mixmasterjake]

just past the 1 year marker, having started my own business. he forgot the one thing that i think is the most important. make contacts before you take the leap. sadly, who you know is more important that what you know. if it weren't for the contacts i've made in advance of starting my business, i wouldn't have lasted two months.

Re:do it!

[Gargamell]

sadly, i agree that this is the most important aspect of generating revenue in any company

i am in the situation where i see my NEW company making it with very little funding, simply b/c we have the right contacts, entry points, and of course determination (code)

i will be sure to give the update in 1 year

Re:Contractors

[EricWright]

It's funny, but in the late 90s, there were a lot of contractors out there because of the outrageous hourly rates they could command. Now, there's a lot of contractors out there (myself included) who are doing it because of a lack of permanent jobs.

I've only been at this for 4 months now, but have a freshly signed and delivered 12-month contract (for which I turned down a permanent government job). At least I won't be out job hunting for 6-8 months, which IMO is the biggest down side to contracting.

Re:MSDN?

[jhoger]

Reality:

1) You drink the corporate cool-aid and start company with big new good idea using expensive Microsoft development tools for one of the Microsoft Platforms
2) Microsoft incorporates implementation of the idea into Humungous Office Application X and doesn't pay you a dime
3) Go out of business

Re:Awesome concise article

[Strudelkugel]

This is good stuff

Sure is. I started a company with some friends. It did great at first, then fizzled. I'm assuming you will eventually want to find others to help build your company. Here are my most critical observations about my experience:

(1) How easy or difficult will it be to work with your partners? Be absolutely honest about this with yourself. Ambitious people have to have egos, but will everyone's ego drive the company forward or turn the company into a battleground?

(2) Write up a business plan. Make sure everyone agrees to what it means in terms of roles, responsibilities and expectations. This will help a lot with item (1). As Eisenhower once said: "Plans are worthless, planning is indispensable."

(3) Hire an excellent attorney to draw up the company documents before you write the first character of code. If you think you can't afford it, or worse, don't think you need to, you will regret it, and it will cost a fortune to do later what could have been done for less at the beginning.

If (1), (2), and (3) are going well, it will not be that hard to raise money. Notice I haven't said anything about the actual idea, just as Sink describes. There are lots of things that people will pay for, and between you and your partners, you can think of a few products. Debate the pros and cons of each idea, then put the best one into the b-plan. Investors will be interested in your product/service, but they will be far more interested in your team's ability to execute. A bad team won't get funding for bottled fountain of youth, a good one can get funding for an arctic ice service.

Business Plan

[Herkum01]

I disagree with his statement about a business plan, he concentrates on the one thing most people write then for, getting venture capital or a bank loan. While it is true that a VC or a bank would require this there is a very good reason to write one. It is focus yourself on what your are trying to accomplish.

What is your product, who are your customers, how do you do business, what are your expectations. Do decide to write customized software for dentist offices or are you just desperately doing anything for cash? How are your customers going to know who you are and what you do if you are not willing to define what you do to yourself!

Also starting your own business does require alot of focus, you have alot of things to do and you have to be timely about accomplishing them. Paying employees, the bills, contacting customers, while you are very scattered in what you working on, you cannot hop from one to the other just because you cannot focus one thing. The IRS will have your butt in a sling you don't do payroll properly, your customers will have your butt in a sling if you don't deliver what you promise, the list goes on and on.

The other thing about small business is he ignores that you don't have to do everything yourself. There are alot of companies that cater to small business to do the time consuming but boring things that have to get done, like payroll. Always look around for help in this area because for $50/month(or whatever) is cheaper than you spending 8 or 10 hours a month trying to figure all the forms and making sure that they all get done in time.

Here's some good information

[Anonymous Coward]

I posted this a little late when this was discussed a couple of days ago, so here it is again so that it can hopefully help out some people.

You can't just throw clever programming at the problem and get money out the other end. For one, it takes a hell of a lot of marketing knowhow, something that most geeks should have known they were crappy at when the prettiest girls went to the fast-talking football players. There is much more to making a company than clever tech. Tech ability is becoming a cheap commodity.

Amen. This gets right to the heart of what most people here don't seem to realize, much less mention. Starting a software company requires great coding AND marketing skills, not to mention a good sense of what would even be a good product to make. I'm speaking from experience here; I've succeeded in my own startup.

Most geeks either don't have what it takes or aren't willing to put forth the effort required to make a software company succesful. Aside from the coding, there's the packaging and the selling. After the packaging and the selling, there's the support and maintenance. And by maintenance, I don't just mean maintenance regarding your product...but your company. Because once you get to the point where you've got a nicely packaged product that needs to be supported and maintained (assuming you've done it right), you've also got a nice little beast on your hands called a corporation.

Now I imagine that most of this stuff would be a breeze for the average slashdotter, except for the part about packaging and selling (i.e. marketing). This is the most difficult area for geeks to master. The head of the evil empire is where he is today because of his mastery in this area. But Bill Gates isn't the only geeks with those skills, so if you want to succeed, find yourself a partner with (very important) BOTH marketing AND technical skills. Let him do all the talking. Let him handle user iterface, software packaging (installers, icons, etc...) and you can concentrate completely on coding while he puts a pretty face on it and handles the customers.

Of course, this is all easier said than done. So I'll tell you what I've done and how I've succeeded. Hopefully this information will help you succeed as well

A couple of years ago I was running out of contract work and I didn't want to go get a "regular" job because I don't like being a cog in the man's machine. So I decided to start looking for opportunities.

Step 1: Look for an opportunity
I figured it would be easier to start in a niche market with little competition. I also knew that small businesses are a ripe market for IT services. It just so happened that one of the companies I was doing part time consulting for was a small business in a niche market. The owner of this business had excellent contacts in his industry as well; I don't mention the industry because I don't want to invite competition :)

I knew I possessed the marketing and people skills necessary, but I didn't quite have some of the coding skills to pull it all off. So I talked to a friend who is a top notch coder working for a large web hosting company who was interested in starting a business. I told him about my contact in this small, nich market and about the need for certain types of software. We both had similar outlooks on life and our personalities were a good match for a business partnership, so we agreed to start a company.

Step 2: Incorporate
I then did a little bit of research to learn how to actually create a company. Whichever of you is the smartest one should handle this. I just happen to have a 156 IQ, so it was a breeze. ;) My research led me to these guys who created a corporation for us in Delaware for about $100. We also bought a corporate kit from them (for ~$50) which included a corporate seal and all the necessary legal documents. On a side note, a lot of the informati

Not Worth It

[NatZi]

I would think seriously before starting a "software" company. As an experienced software company executive, the current legal and economic climate minimize the viability of any software firm.

First -- unless you are well funded, the errors and omissions insurance is either unavailable or so costly as to not be economically viable. Starting a software company today, considering the patent portfolios of most companies and the litigious environment, is simply negligence.

Second -- if I had a micro-payment for every person who thought that he or she could "do better on their own," I would make Microsoft look like the corner grocery store. Frankly,it is not that there are no good ideas nor that there are no goiod people. The current legal environment practically limits any innovation. Until software "patents" are struck down, this issue will not change. If you think you have a "hot idea," you would be best served, and probably save yourself a lot of litigation costs, by keeping it to yourself.

Third, many people starting a company naively think "gee, I earn $60,000 per year" so I can just charge that to the customer myself and make a killing. However, to "earn" $60,000 in salary, you would need to bill, on average with very low overhead, $150,000 to $180,000 of work. Are you prepared to do that (including working three times your current work week)? Most new entrepeneurs fail because they underprice services. Undercutting rarely works unless you have a true commodity. And even then, you better have reserves to survive when your competitor undercuts you simply to make a point.

Frankly, I would councel people to make use of there time for something worthwhile and not waste time on software. The patent environment makes it almost impossible to innovate without paying license fees. It simply is not worth it.

If you are serious about starting a company. Read

[Zapdos]

Please do yourself a huge favor and follow this link S.C.O.R.E.

Re:Modded Funny for too close to reality

[dar]

Eric didn't disavow AbiWord. He just doesn't recommend open source development as a way to make money.