Setup software company

In this section, you really just want to document how your business will make money. Your action plan will include a schedule of tasks or milestones. These will be mapped onto dates, responsibilities, and budgets so that you hold yourself accountable. Given the iterative nature of planning a business, you will likely come back to your action plan and add more steps as you go.

Instead of rushing headlong into your first and favorite idea, this step acts as a check. It will help you determine whether or not you have a good idea that can be turned into a viable business. One of the biggest mistakes companies make is doing mostly secondary market research, instead of primary research getting out of the building to talk to people face-to-face.

It can be as easy as launching a coming soon website , running search ads or even launching a kickstarter to see if you gain any traction. The important thing is that you are getting real-world feedback and setting parameters for success to determine if your idea has merit. Gene Caballero, co-founder of GreenPal, validated his idea by getting out and speaking with random people. Based on what you learn, you may find you need to go back to your lean plan and revise it or refine it.

The presence of competitors in your market is actually a good thing. It means a problem has in fact been identified. We know that Word and Excel are time-consuming, error-prone, and offer no help and resources. Our solution, an automated business planning tool, helps eliminate those pains for customers.

Keep in mind that your competitors may not be immediately obvious. The industry your entering may simply have very disparate companies currently providing services. Another great, and somewhat necessary testing method in the SaaS space, is creating a minimum viable product or MVP. This is the simplest version of your product.

Eric Ries, a Silicon Valley entrepreneur and author of The Lean Startup, popularized this strategy for web applications. If you can get an early prototype built, all the better. Besides software prototypes, MVPs come in many flavors, including:. An MVP is a great way to save time and money before you go ahead and build anything, so take the time to make one and run it by your potential customers. SaaS products often use a subscription-based pricing model. So instead of paying once for a lifetime of use, your customer pays on an ongoing basis — usually monthly or annually.

You can think of it as a software license. The longer they stick around, the higher their lifetime value. You likely spent some time modeling different subscription-based sales forecast scenarios during the creation of your lean plan.

It hopefully gave you a rough idea of how reducing churn the number of canceled subscribers and other variables can affect your path to profitability. Growing SaaS companies are always testing their pricing models. You need to be willing to shift your pricing to fit what your customers are willing to pay. Now there are a lot of different ways to get customers in the door to kick the tires, from offering free trials, to freemium services with upgrade options.

You can check out the Bplans guide to SaaS pricing models for more on how to get started. You may want to pull from the competitor research you did above to help position yourself. You can also leverage tools like Canva to workshop designs, brand colors, and logos with little to no design knowledge. For UpKeep founder Ryan Chan, spending some time on the branding process helped set his company apart from the competition.

However, we have been able to differentiate [ourselves] and also excel by making enterprise software fun and enjoyable. Our biggest differentiator has really been our design, from the ease of use to our playful tone. If you want to learn more about how to develop your own unique tone of voice, check out this article by branding expert Elicia Putnam. This also helped validate the premise of the software, since people were eager to buy it before they had even laid eyes on it.

Let's talk about skills for a second in this walk-through of expenses, because skills can offset costs. The more you can do on your own, as a founder or cofounder, the less you have to spend on contracting those skills out. Sometimes it makes sense to outsource skills if it'd take too much of your time to learn or even do certain tasks. But for larger ticket items, knowing how to do something is almost always cheaper than paying someone else to do it.

The main skills we used to create and now operate ofCourseBooks are:. It's not just the skills that are important though, it's also the overlap and how well they work together. Heroku--free We use Heroku for a staging server for now, since it's free and was the easiest place for Zack to code the app where Jason and I could see his progress and test. One for ofcoursebooks.

We wanted our app and site to be unique and stylish, and those two fonts pair perfectly together. That's why I only buy photos from Stocksy--search for "Business" or "Marketing" on any other stock site and then again on their site. Limited liability company LLC — To start an LLC, you must, at a minimum, choose a name and file articles of organization with your state, often for a fee.

LLC owners pay taxes on their proportion of profits through their individual income tax returns and have to pay self employment tax, but are protected from personal liability for the decisions and actions of the company. To register your corporation you must choose a company name and file articles of incorporation with your state.

Corporations file taxes separately from their owners. This may prove advantageous, allowing owners to take advantage of the corporate tax rate, but it may also lead to double taxation which refers to your corporation's income being taxed, followed by your income from the corporation being taxed when the company pays a dividend or makes a distribution.

You should speak with your lawyer or accountant to see if this form of business will benefit you. This structure is generally not appropriate for smaller businesses. Register your business name with your state government, if necessary. Registering a DBA name is typically done through your state government or county clerk's office.

This process typically only takes a few minutes to complete. This is typically useful for sole proprietorship, since not using a DBA name means that your business name will automatically default to your personal name. Note that a DBA name is also required if you are starting a corporation.

Determine if you need to get a tax identification number for your business. Become knowledgeable about licensing, taxes and insurance. Once you determine the legal structure for your business, research the requirements of your locality for licensing, paying sales tax and income tax, liability insurance and other requirements. There are also permits and licenses that may be required by your city or county. The best way to find out if your particular business requires any unique permits is to contact your city, describe your business, and inquire about any requirements.

For example, many cities require "Home Occupation Permits", if you plan to operate a business from your home. Consult an accountant or attorney, if necessary. Raise funds for your software company. Software development requires time and resources. Make a complete list of the start-up capital you will need to finance your business.

Contact venture capital firms that have previously funded software companies to discuss the possibility of entering into an agreement. Do an online search to find companies that have provided early-stage funding for products similar to yours. Note that you will be giving up equity in your company if you accept venture capital funding.

Research grants and loans. Explore the availability of funding from local universities who may be interested in financing start-up companies. Discuss your software product idea with family and friends to explore the possibility of their investment in your business. Consider online funding sources such as the Lending Club and Kickstarter. Purchase the necessary equipment and applications. Equip your development team with computers, programming applications, data storage capability, servers and all of the necessary tools for creating and distributing the software.

Find office space to rent using a real estate broker who specializes in commercial real estate. You will need to hire a freelancer to design packaging if this is a product that will be offered on a store shelf. You will also need to hire a company to manufacture the CDs, if applicable.

Hire developers. When hiring developers, look for candidates who have the required programming skills and the desire to work in a software start-up environment.

Consider offering key employees stock in the company. Advertise on job boards such as Monster. Be very specific about the skills and number of years of experience you are looking for. In addition to knowing the right programming languages, look for those who have experience working on teams to bring a new product to market. Check all references carefully. Ask friends and colleagues in similar types of software industries for recommendations.

Create a development time line for the product. Allot a reasonable amount of time to the development of your software product. A complicated data management system may take much longer to develop than a simple mobile phone application.

Before creating the time line, get input from your development team and outside experts to make sure the time allotted is appropriate for the type of software you are brining to market. You want to beat any other potential competition, but you do not want to offer a product that is full of bugs because it was rushed.

Oversee the development process. Facilitate clear communication between you and your development team to ensure that everyone is operating under the same product vision. Hold status meetings weekly to make sure progress is being made according to your timeline.

Although it received enough funding and was based on a great business model, the company went out of business in The reason for it was that the founders did not take into account that broadband penetration was extremely low in , making it too hard for users to watch video content online. As you can see, Z. For instance, Kaltura, Inc.

Instead of covering the whole market, the founders decided to target several sectors, such as enterprise, education, and media. An opposite tactic can also bear fruit, if thought out carefully.

Masquerade Technologies, Inc. The application allows users to change their look selecting a filter mask or an effect from the library and then share it with their friends on Facebook and Instagram.

Although developed in Eastern Europe, this application quickly gained popularity in the US and Asia-Pacific and was bought by Facebook in In , Rdio, Inc. The service was popular in 85 countries. However, the company was constantly staggering behind its competitor Spotify, and eventually surrendered to them.

Rdio filed for bankruptcy and was acquired by its competitor Pandora Media, Inc. If users are fully satisfied with the solutions they are already offered, they may be reluctant to look for any alternatives. What is more, they will hardly switch to your solution if they can use similar services for free. The same situation happened to Rdio when they offered a paid version of their product while Spotify started offering free services in their ad-based product version.

Choosing the right stage to enter the market is vital for the success of your product. You should focus not on the software itself, but rather on your potential customers. If they are interested in your offering, you are more likely to succeed.

One more important thing is to decide how you will sell your product. If there are similar offerings on the market, study the way your competitors do it. Basically, you can either sell your software directly to the end user or allow users to download it through your website. In the case of direct sales, you will be dealing with big companies and SMEs. You may sell licenses for your software or charge for subscriptions, making the product available for a limited period while the subscription is active.

Your profit will depend on the uniqueness of your software and on the number of competitors on the market. Basically, selling a few expensive licenses to big companies may be as profitable as selling lots of cheap licenses to SMEs.

If you plan on selling your software through a website, you should start with offering users a free trial of your product to see if it works for them. Meanwhile, you may gain revenue from support and maintenance. Basically, you may own a successful software business without a technical partner. However, having someone more code-savvy may be useful. They can be involved part-time into your company and review the architecture and code. In return, you may offer them equity in your company.

However, you will have to share your growing profit with the co-owner in the future. One more option is to turn to a reliable vendor offering software as a service. However, you will depend on them a lot, as you will have less control over the software development. Besides, you should allocate some extra time and budget for communication with the vendor to make sure the software satisfies your requirements.

Once you have an idea, obtain the necessary patents and register trademarks to protect it. Make your collaborators sign a non-disclosure agreement at the product creation stage to prevent leakage of any project-related information.