First Steps In Starting A Software Development Business (Part 1)
Here is the process I went through when starting my software development company in 2009.
I get this question at least five times a day via private messages on LinkedIn. So, I think it would be a more efficient use of my time to answer this question on GoPakistan.com and hopefully it will reach the masses. Also, I will be able to just copy and paste this link to interested parties and really give them an in-depth view of what is entailed to startup a software development company.
I remember back when I wanted to start my own software development company in 2008. I first had to decide what kind of software development company I wanted. Was it one where I was the developer? Was it one where I would handle sales and hire a software developer to perform the work I sold? If I did that, then I would also have to be the project manager and I would have to work with clients that were not very technical. I had a little experience in doing this previously and I must say it didn’t fit my personality. I wasn’t good at convincing non-technical people that it really would take one month of programming to do what they thought was simple drag and drop features. I also didn’t enjoy having to constantly pitch my worth to a someone like a dentist that thought I should build his website for free because, really how hard can it be? In 2008, we didn’t have Wix, SquareSpace and WordPress was barely around. Most things had to be done by hand, and I decided right then I wasn’t interested in working with the retail clients.
I knew I needed a team and I knew I wanted clients that were technically minded.
So, in order for me to build a software development company that I could scale, I knew I couldn’t be the programmer, heck I wasn’t all that great at it anyway. I knew I needed a team and I knew I wanted clients that were technically minded. This way I would work with people that understood how long it takes to program things, and they can manage the developer’s tasks on a day-to-day basis. So with that, I cut out two obstacles with one swoop. The client’s would love it because they would be able to communicate in real-time with their developers and they were always in the loop on where their projects stood.
First Steps To Starting A Software Development Company
- Determine Your Role (Programmer, Sales/Marketing Person, CEO)
- If you plan on being all three, you will severely limit your opportunities to scale.
- Determine Who Your Competition Is
- What are they doing? Can you do it as good or better?
- Determine What Will Make You Different (Unique Selling Proposition)
- How can you stand out amongst a crowded space?
- Determine How Much Capital You Need To Get Business, Pay Developers, Rent An Office
- You will need several months of capital to afford ongoing expenses.
- Determine where you will get these funds, investors, family, your own savings or a bank.
- Define Your Company Focus, Vision, Mission and Culture Statements
- What will your main focus be on? Customer Service, Producing Quality, Producing Great Speed?
- Define your company’s vision and mission statements so you can begin to train your staff on what you want your company to be.
- Define your company’s corporate culture. How will be behave in the company and towards customers?
- Choose Your Team, Focus On Senior Level Individuals Early On That Can Help You Out Of The Gate
- Early stages of entrepreneurship needs experienced leaders to get over the hump, don’t cut costs here and hire juniors. Your early business quality will suffer and they won’t have the experience to overcome early business challenges. If you hire a sales and marketing person, make sure they KNOW your industry and how to sell your services. They will be worth their higher salary when they bring you a steady flow of business. Same on the flip side. If you hire a senior-level developer as your first developer, then your quality will be excellent and you will gain early confidence in your business when your clients are happy about the work your company produced.
My next step was to determine my market competition. Who was I up against? I knew I was up against software companies in India that were charging $16.50 USD per hour on oDesk. I knew I was up against local software companies charging upwards of $125 / hour. I figured I should be in the middle somewhere, but still, how was I going to get my competitive advantage? How could I charge $20 – $30 / hour and be able to afford an American programmer? I knew I needed connections to the Asian market in order to be competitive and not break my bank of paying high American programmer salaries. Then on the other hand, if I had Indian or Pakistani developers, how could I differentiate myself from companies based there charging $16.50 / hour?
The next step was determining my Unique Selling Proposition? Why should clients go with me over established players? How was I going to be different and offer value? Well, it turns out there happened to be some pretty amazing developers in Pakistan that could speak English and were willing to work U.S. business hours. After I found this out, I knew I had my USP.
I was going to offer senior level developers, working U.S. business hours that could communicate highly effectively in English. This way our clients would have direct access to their developers and I would be right there with them incase anything broke down communication wise and I would have team leaders right there to help if things broke down technically. Also, since I was based in the United States, our clients would be dealing with me on all business matters. So our clients would be protected by U.S. law. All invoicing would come from a U.S. company, all disputes would be handled between U.S. companies and this would make clients feel safe.
This was going to be my USP and now all I needed was a back office to house my development teams. Well, luckily I had established the perfect connection. I met Mr. Raheel Afzal in 2008 and he would help me establish the business of a lifetime. Stay tuned for Part II as I discuss the steps Raheel and I took in order to get my idea up and running.
In future blog posts, I will discuss how you can also set up an American company and ideas on how you can create a realistic American side of your business to attract American clients. Be sure to subscribe to GoPakistan.com email alerts so you don’t miss those posts.