6 Steps to Profitable Software (Part 2)

In the previous part, I outlined the process of preparing a new software idea in the best possible way for the development stage. As you remember, this process consists of three steps:

• Setting Your Idea Foundations
• Product Strategy
• and Project Roadmap

Now, after we did our homework and got Software Blueprint in place, we finally deserve to jump into actual development.

In this part, I’ll continue with the next three steps and show you what our proven process for building and launching software products is.

Every step deserves a standalone guide, and we dedicated a full module to each of these steps within our software acceleration program. But in this article, I’ll try to summarise it all with quick lists, examples, and insights.

As usual, I’ll compare the process of building a house for rent. Humans learn better by comparison 😉

Step 4: MSP Build

One of my friends was slowly building a house for his family and moved in when he only finished two bedrooms and the living room. They have been finishing other rooms while living there.

With software, we call this approach a Minimum Sellable Product (MSP) version.

We don’t build full-featured software for the first release but create a smaller version of it that can be sold. And then, we add more features after the first release.

Software is much more flexible in scope than a house, so opportunities there are endless. 

You don’t want to spend a fortune before initial release. Instead, it’s better to focus on something small, spend less, and learn from your users sooner.

Thus, the “MSP Build.”

To build a house, these are the necessary minimum of stages you’ll go through:

• Hiring Development Team. How to pick a team that would guarantee project completion according to the initial roadmap? What is the right project team size and role? What are pricing schemas? Agreements, pricing structure, post-project guarantees, etc.

• Project Kickoff. Where to start from? What do you need to provide your team with so they can start fast and with all the necessary tools? How to set the right expectations with your team at the very beginning?

• Development Process. How often would you check results? What kind of ongoing assistance do they need from you? What kind of checkpoints do you have in the middle of the process?

• Change Requests & Scope. If you want to change something midway, how would you do this? Would it influence the overall budget and timeline? How do you handle potential risks? Do you have Plan B for each of them?

Software product development process is also built on these same four core pillars:

• Hiring Development Team. What to look for when starting your first software project? Fixed Price or Time & Material model? How to evaluate a team’s portfolio if every software project is unique? How many team members and what roles do you need?

• Project Kickoff. What tools and environment do you need with your team to stay on top of everything? Code repository, demo instance, online project management system, etc.

• Development Process. What software development methodology to pick? Kanban or Scrum, Agile or Waterfall? How much time do you need to invest with the dev team weekly? Sprints, demo sessions, meetings, status updates, and overall team communication.

• Change Requests & Scope. Are you flexible with small changes in the middle of the project or set into the stone with your requirements? What is your Change Request process during the MSP Build phase?

You don’t want to stack the bricks yourself. You want to hire professionals, invest money, and get the job done fast and at a high quality.

Same with software.

You hire a team to help you out with the initial product version (MSP) and follow your software blueprint from Project Roadmap step as close as possible.

Unless it’s your first software product, I recommend keeping MSP scope within three months of delivery (max six months).

The bigger the MSP version, the higher your risks. You never know for sure if you’re building the right product for the right people until you ship it. So better to send something small, sooner.

Step 5: MSP Launch

I saw too many software projects being pushed to the public server and then not much story to add to it.

MSP Launch is not about pushing software to the production server and making it publicly available.

It’s about letting people know your new offer and asking them to signup.

It’s about getting your first 1-10-50 free or paid users on board.

So…

You don’t take a nap while your team builds MSP. You use this time to keep validating your idea, talk to more people, build an audience and try to pre-sell it.

That’s like you look for a renter while you’re still working on the house. 

These are three phases you need to go through to launch your newly built house:

• Pre-production Tech Checklist. Connecting electricity, gas, and water to your house. Getting an address from the city hall. And a bunch of extra things before you can rent it out.

• Pre-production Marketing Checklist. Publish ads, hire a real estate agent, and start showing the house to potential tenants.

• The first tenant. Finding proper tenant, signing an agreement and getting prepayment.

With software, the marketing part is more advanced, but the steps are similar:

• MSP Launch Tech Checklist. Preparing and launching a production server. Backups, domains, external APIs and dependencies setup. Payment gateways, etc.

• MSP Launch Marketing Checklist. Tactics and activities to get first early adopters (beta users). Building your pre-launch list. Figuring out top channels to get the first users.

• The first users. Signing your first 1-10-50 users. Collecting early feedback and numbers.

Important. You’re done with the MSP Launch phase only after you got your first user(s) signed up.

Step 6: Software Logistics

You might think after you’ve got five steps covered, you’re mostly done.

But this couldn’t be further from the truth.

It’s only the beginning of your software journey 🙂

You might be among lucky few that start growing and hit their Product-Market fit from day one. But most new software products spend months (sometimes years) finding it while making multiple direction switches (pivots).

So you need to understand what venture you’re stepping into and what obstacles you need to solve right after your launch it.

With house, it’s much more straightforward.

You find your tenants, support them, and do regular maintenance:

• Support & Maintenance. Tenant support, agreements with vendors, garbage collection, bills handling, regular updates, and interior refreshment.

• Switch Tenants. Once in a while, you find new tenants and evaluate how to add value and increase the price.

With software, it’s an entirely different story.

You need to balance between bug fixes and adding new features. It’s always finding the middle ground between acquiring new users and making existing users happy.

At some point, you’ll reach the place where you have enough revenue to not worry about development costs. But before that moment you’ll be primarily focused on the next things:

• Support & Maintenance. Monthly customer support & bug fixes by the development team. New feature development and balance between bug fixes.

• Growth. Find Product-Market fit. Grow the user base and lower the number of people leaving your software monthly (lowering churn rate).

In conclusion

As you can see, with a proper approach, building a profitable software business might be as simple (I’m not saying easy) as building a house for rent.

So when you decide to start the next great software, follow the above six steps formula, and I guarantee you’ll save yourself tons of nerves, time and money.

But, please, before you start, make sure you’re ready for the software business.

Homework

I can’t let you go without a small action guide:

• Download 6 steps formula in PDF format below
• Define where you might need some help from the experts
• And if you want to learn more about our process, check this free video training we put together with my partner Ethan

If you’re in software development space, please, share what your process is? Do you have any extra steps or skip any of those I listed above?