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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."
The advice seems very balanced and well-thought out. I RTFA and enjoyed it a lot. I want to encorporate these ideas as I start to look for a new job as I recently burned out at my support job and quit for sanity's sake. This is good stuff.
"What we do in life echoes in eternity." Maximus Decimus Meridius
Starting your own software company is easy, but you'll probably go under. The key is coming up with something that people really like so much that they're willing to pay for it. Obviously you have to conciously avoid geek tendencies to go Linux-only or to use Emacs for a GUI and so on. But that aside, it is still tough to come up with a real niche where you have _the_ product that people want to buy. You can't just jump into an existing niche with a text editor or password manager or anything else there are fifty of already. You also can't compete with high-end applications like Maya and Photoshop. Finding the right niche, and filling it correctly, is most of the battle.
The right answer for 99% of programmers is to become a contractor. People have been becoming contractors since time began yet for whatever reason this is now a big deal. In 1999, most of the programmers out there were contractors.
As a contractor you're satisfying all the reasons the authors give for starting their own "businesses" and it's a lot less of an initial risk.
http://www-swiss.ai.mit.edu/~bob/clarisworks.php
It's a bit out of date (we started in '89), but even so, we were told it was too late to get into the software startup game. We had no business plan. Yet we managed to beat our Microsoft competition (MS Works), with no venture capital, in fact without even incorporating... of course, getting bought by Claris helped. But I think keeping everything ultra-low overhead was essential - *all* of our time was spent designing and developing, and none on coming up with a business plan, a "failure plan", etc., as described on the MSDN article. YMMV...
There are still plenty of great ideas out there, waiting to see the light of day.
Borrow from friends and family.
Have a working spouse.
Borrow from your credit cards."
Obtain money from a potentially major customer
This one is often overlooked. If a company has a problem they need solving and is willing to fund some of your development effort to solve it, this is a golden opportunity. Depending upon what problem you are solving, the company may not be interested either in owning any of the IP you create or supporting the product if/when it takes off.
This is how the company I'm with now started and their sales are $500MUSD per year. It all started from a $500K investment from a major industry leader, who remains the company's biggest and most valued customer.
Accounting software. Yes, much bookkeeping software already exists, but one company noticed that there was no package available that was 1) in Dutch, 2) Easy to use for lack of (unnecessary) features, and 3) able to get non-accountants going quickly. They targetted home and small office users, with success
Gym software An older example, but one of the best known ones, and one of the earliest small business niches to be recognised. Many companies discovered (independantly) that there was software to do accounting, software to work out training regimens, and software to track client training progress, but nothing that integrated all of these functions. Someone discovered this niche, and now there are quite a few packages that fulfill all of the IT needs of gyms.
Power plant maintenance and safety management software With power plants being the domain of big, wealthy firms, you'd think they would already have decent software to coverall aspects of this. Not so, apparently. One student wrote a package to do data mining and efficiency improvements for a nuclear power plant, as his graduation project. He turned it into a business,, and now he is talking to many large European energy suppliers to sell his software. You can find profitable niches even in heavy industry, apparently.
Pattern generation for embroidery machines I kid you not. Years ago I found out that patterns for embroidery machines were all made by the machines' manufacturers using record-playback... I asked to have a custom one made, and was quoted a price of about $500 for a simple pattern.
I thought of starting a business, and sell software able to create patterns from scans to shops with such machines. Shops would be able to embroider custom designs onto jackets and such for $15 rather than $500. I never actually did it, but I know that the manufacturers of embroidery machines have only recently started to offer such software.
This last example also illustrates the point against having too strong a competition. I could have been successful selling this software, but I could never have competed against the manufacturers, once they got into the action. I suppose being first to market wil allow you to outdo the larger competitors, but it will not last. Don't let such products be your only products. Or hey, you could get lucky and be bought by the larger competitor.
Niches for software and IT services abound. Look around you, especially at areas where IT services seems 'too expensive', like small businesses, bakeries, mom&pop stores and such. Look for businesses with particular needs, and think about how IT can fill those needs.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...