Starting your software company

A graduate wrote to me: “I have a degree in Computer Science and two years of experience as a software developer. I know something about software business and I want to start my own company instead of working for someone. Do you have any suggestions for someone who wants to start a company? Please advice.”

Answer: In theory, starting a software company seems easy because it does not require a lot of capital. All you need is a computer and a place to work. Unless you develop mobile apps as one person team and sell them via app store, to start software company is not that simple. You need to have vision and business strategy. You have to ask yourself about your aspirations for your company. You need a rationale of how your company creates, delivers, and find an innovative ways of doing business. You need to know how you make money and how much you can generate within a short period of time. You must be able to answer questions such as: Are you building a product such as applications, software games, or providing services such as support customers’ information system? You also need to know who your customers are. Who will buy your product or pay for your service? Why do they want to buy your product instead of from others? How do you set price for your product or service? There are many questions that you must answer before starting your company; else you will waste a lot of time and efforts.

You must also have a business strategy on how your company will operate. Are you planning to work alone as one person company or will you hire additional workers? Where do you get money to start your company? How much will you have and how long does it last? If you and several friends want to start a company then you must be very careful in selecting co-owners because you will have to work hard to maintain the relationship with them. The number one mistake that company fail is having the wrong co-owners or partners. Everybody can be your friends as they all share your dream until all of you work together in a startup company. During this time, “true characters” of certain persons will emerge. You do not really know someone unless you spend time, good time and bad time, with them. Bad time always tests people’s characters and this is where friendship can easily be broken. Partnership in a starting company is a very emotional thing and sometime greed, selfish and ego will overcome common sense and friendship. I have seen many good relationships went bad when people argue about finance, works, benefits, and even titles such as who will be president or vice president etc.

In Startup Company, things can be good one moment and worst in the next. The emotional ups and downs are the biggest challenge that happens to everybody. It is difficult to keep everyone motivated during bad days, bad weeks and with bad news. After a while, things could get worst and there is a limit to how much people can endure. It is easy to say that you must be strong and determine but going through it is not easy. You must be persistent and courageous to handle these challenges. Only by overcome them, you will build your characters and develop the ability to be a true leader.

The most important of any business is having customers. Customers are the center of any business because no company can survive without customer. You must know what customers need and make conscious decision on how to serve them. It is the customers that decide whether you will be success or not so you must listen to customers. Many people start company by doing what they think customer will need. That is a fatal mistake. You do not know what customer will need unless you ask them. It is important to start with a prototype, not as a full product and get customers to tell you what features that they like. This is how you learn about your business and it is not easy. Everything that you do should be experiments, and you must learn to listen to customers inputs.

Once you start talking to customers, I guarantee that you will be surprised by what they tell you. When you let customers tell you what they want, they will tell you what they are willing to pay for and that will be your pricing strategy. If they do not like what you have but want something else than you must change your product to meet the demand. This is not easy because sometime your ego will be bruise. The fact is if you sell the wrong thing that they do not like; you will not last very long. In business, customer satisfaction is everything and this is the first lesson that you must learn as you must also learn to be honest and ethical. Please remember that in business, it is the customers who determine what they will buy and who they will buy from.

As your company grows, your job will change. It will be less coding, less designing but more managing, planning, hiring, and meeting with customers. You will have to deal with employees, who have different motivations too. If they are not happy, they will leave so being the owner of a company is a stressful position. However, this is where you build your characters. As you becoming more confident, more patients, more organized you will enjoy more as you see your passion is being realized. Good luck on your new company.

Sources

  • Blogs of Prof. John Vu, Carnegie Mellon University