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When Should You Start a Software Product?

by Vitaliy Podoba
Vitaliy Podoba avatar

At the end of 2009, I quit my first (and the last) full-time job position and started freelancing.

I got a couple of client projects and paid bills from it.

After a bit more than a year in freelancing, I got bored and started dreaming about selling my software products… instead of selling my time working on client projects.

At that time, it looked to me like a no-brainer cheesy-pizzi idea.

You build it once and then scale while lying down on the beach and have your server handling thousands of paying users.

At that time, I served two long-term clients on web development retainers.

I didn’t have any kind of audience. And I had no specific product ideas to start with.

So I started asking my friends what they do, what they want, what things they are missing in their day to day activities…

After just a few conversations, I made a quick decision, and four months later, I finished the first version of revenue management software for hotels and vacation apartments.

During these four long months, I served my clients every workday and then spent every night and weekend to build my startup.

So I put tons of effort and sleepless nights just to realize that only my friend is going to use it.

I wasn’t able to market and sell it. I couldn’t even wholly validate this idea.

Don’t get me wrong. I love building new things, and that was a joyful road. But that wasn’t a great experience getting it to the market.

In the next three years, I built another two products and found myself in the same situation — two more failures. Yes, I’m a slow learner…

You Need to Start Backwards with Software

I finally realised my approach to launching software products doesn’t work, and there should be some better way around.

At that time, there was a local marketing-related event here in my Lviv city. I decided to give it a try.

There I learned some fundamental things about digital marketing and how it’s essential to start with the market first.

This was a painful realization…

I wanted to build something cool and hope it’ll sell on its own just because it’s a great product. And here, on this digital marketing workshop, they told me I have to talk to real people first. At that time, this was a pretty uncomfortable task for me. They told me I need to build a list of contacts, provide a lot of value for free at first, find out their pain points, and only then sell something.

I also learned a lot of practical steps on product pre-launch strategy, market research, and content marketing.

So, I picked my audience one more time

But this time, I had to be an expert within that niche. The audience where I was among my people. People that I understand pretty well and know what their pain points are.

At that time, my closest professional network were programmers. So I began building newbie programmers contacts list.

I started blogging, and within the first six months, I grew it all to 5000 subscribers, 20k in monthly blog readers, and about 6k in total social media followers from all my social channels. All without paid ads.

Only then I started thinking about some paid products and how can I help these people on a deeper level.

So I authored and self-published a book for newbie programmers (Web Development with Python and Django for Beginners) and sold a few thousands of copies to my existing audience. Again with zero paid ads.

Finally, I launched a small software platform for programmers and quickly grew it 100 paid users.

That was a big win for me, and things turned out completely different compared to the previous three software apps.

Software is Hard

And even with my existing audience, it was still challenging to grew software product revenue month after month.

Software products, SaaS, tech startups have shared things that make this business challenging at first:

  • It takes time to build and time to grow to any substantial monthly revenue and then profit from it. You need to be prepared for the long-term. Not months, but years.
  • It takes money to build and then support it monthly. Both, from technical and customer support perspectives.
  • You need to adapt your product to an evolving customer base regularly. There is no point when you build it and forget it. Your product will be changing all the time.
  • Software biz will demand skills you don’t’ have yet like any other business type.
  • Hiring agency to help you build and launch your first software version might also be challenging and requires some trial and error.
  • Any software needs regular updates and fixes. By default, all software is terrible at first. It gets better, more polished, and well defined over a long period.

Are Your Ready for Software Business?

So what it takes to start and run profitable software, and are you ready for it yet?

Here’s a quick list from me. I call it Software Entrepreneur Readiness Checklist:

  • You’ve got time, money, and energy to work on it.
  • You’re ready to learn new skills and keep learning it all the time. Here I don’t mean learning to program. I would never build a house with my own hands. But hiring and managing the development team is also a tricky part and requires it’s own skills and experience.
  • You’ve got marketing and selling experience under your belt.
  • You mastered customer stuff and, ideally, have a high-quality audience you’re going to serve. And you are aware of their pains.
  • You got an audience who bought something from you and eager to purchase from you again.

You probably know that only 1 out of 10 tech startups succeed at most. That’s true. Building software is one thing, but selling it is an entirely different story.

But there is a much better success ratio among those that start development after they cover the above checklist.

Most of them have an audience they are experts in and know how to market and sell stuff.

If you don’t have anything from the above checklist then what?

Whenever I have a strategy session with someone who lacks most of the items from the above checklist, I’ll usually turn such a potential client down.

In most cases, such side projects won’t turn into success. That’s too big a challenge for that person and too many things to learn at once.

We prefer iterative progression, and small wins step-by-step.

So, what if you miss most of the things from that checklist?

In that case, I’d pick one of the next two routes. One is longer but more affordable, the other one – shorter and more expensive.

1. Franchise

I’d buy a small local business franchise.

It can be a small restaurant, cafe, store, or services-based agency.

I’d try to manage it all by myself with some help from the franchisor. That way, I’d learn marketing, sales, all the business logistics, people management, and client support related skills.

With that experience, I’ll improve my odds of success in software. Also, I’d become a kind of an expert within a couple of different audiences: biz owners, my clients base, franchisees.

Obviously, there is a relatively high entry-level as for finances. But this will be a good test for me on raising the money.

2. DCC (Done-for-You Services, Consultation, Coaching)

This road is more time-consuming but more affordable. You can start basically with one hundred bucks in your pockets.

It’s about providing some services or doing 1:1 consultation. It can also be about building and selling some training or online courses.

Here I’d pick an audience where I’m an expert already. And start building my list of people that I can help with my educational content and expertise (this is exactly what I’m doing with this article you’re reading right now).

And I’d provide a lot of value to my people for free. Upfront.

As soon as I grow my list to couple hundred people, I’d come up with some paid offer: product or service (e.g., workshop, 1:1 consultation, ebook).

Only after these first sales, I’m ready to think about software ideas that will serve my existing audience.

But if you pass all criteria for Software Entrepreneur Readiness…

In that case, you need to start working on your idea and go over 6 phases to build, launch, and grow a profitable tech product.

If it’s your first time building software, and if you’re like me, then you’d like to get some help from an expert. In that case, I’ll be glad to help.

Your Homework

Now, if you find this article helpful and would like to act now – I have real quick homework for you:

  • Check if you satisfy every criterion in the Software Entrepreneur Readiness Checklist
  • If yes, start working on your software idea (or ask for help and we can do this together with you)
  • If no, find out what’s missing on your list
  • And pick one of those two options to fill the gap: Franchise or DCC

So, what’s your situation? Are you ready for software business yet?

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