Turning around a startup


7

A year ago, my friends and I started a company based on a big (relatively) project referred to us by a friend. Now the project is complete and we've gotten deals with several companies to build software for them. Though the deals aren't necessarily big, we get by day to day expenses and operations from the income from that.

My problem right now is, we've build several applications but we don't have a product at all. If I'd describe what we are all about in a sentence, it would be "we develop customized applications for small to medium companies."

We have some ideas but we haven't got the time to implement them due to several ongoing application development projects with clients.

Our plan is to reject all incoming projects so we could focus on our ideas. We thought of this only now, after a year from starting the business. It feels like we're only just starting.

What advice would you give me?

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asked Mar 13 '10 at 19:42
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Startup Struggler
77 points

5 Answers


4

Twenty years ago, a partner and I founded a small software company and we built custom desktop database apps for local clients. We hired a couple of employees to do coding for us and after a few years began to wonder about the same things that you are thinking about now.

We thought we were at a crossroads like the one that you are at: if you can afford to turn down custom app development work or consulting work for the sake of building a killer product, then you can conquer the world... IF your product really does succeed, and IF you don't run out of money first. It sounds exciting, being able to build your product and not having to deal with the details of hiring and supervising employees, marketing to gain new clients, etc. Of course, you'll have to eventually build a marketing program around your product(s) in order for them to be successful.

The other choice that you could pursue would be to put aside (or at least postpone) your dream of building your product(s), grit your teeth and face up to the task of building a company with employees and marketing needs and earn profits based on the markup on your employees' work. If done well, that can produce a viable consulting/app dev business that has some enterprise value a few years down the road.

At the time, twenty years ago, my partner and I decided to forego the product development route. Around the same time, the nation experienced a recession and our industry and our local economy were especially impacted. After a while, we closed the company and I went to work for a commercial software company.

To be honest, I believe that the dream of building products that take the market by storm and free you from having to do the day to day work of hiring, supervising and marketing is just wishful thinking for most people. Although it isn't as romantic, building a business by well-grounded assessments and observations, sound strategic planning, detail-oriented management and hard work, leading and building a great workforce is (to my biased point of view) a more likely path to success.

It may take longer than the seemingly overnight riches of an insanely successful product, but there are more examples of success based upon building good companies than upon building killer products.

My two cents' worth, anyway.

answered Mar 13 '10 at 23:56
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Tcolling
433 points
  • thank for that sound advice. i appreciate it – Startup Struggler 10 years ago

1

We are in a similar boat, and have been doing development work for clients for many years now. We've faced the same choice few times, as I am sure many companies in this industry have.

It's all personal choice of course, but I'd recommend first going through ideas and analyzing them. Reaching to your potential customers and first verifying that what you think will be useful for them is actually useful and how much money they'd be willing to pay. This exercise alone could save you from many fatal(for your business) mistakes. Once opportunity is confirmed, you have few potential client's who'd be willing to buy the product, only then proceed with building it(or better yet prototyping it to get better idea of what is that you're building and how much time it will actually take you do it). Once time and resource requirements are understood - either just do it(few extra hours of work a day perhaps? :) or get some financing and hire some folks to help you out. If idea is good, you have potential real customers - pull in some angel money and build the first version out. Alternatively - dedicate a day or two a week working solely on your product, while doing client work less, but don't cut it completely. Cashflow is the foundation of your business, weather it's cashflow provided by your investors or your operations doesn't matter that much... well all that of course is my humble opinion :) hope it is at least a little bit helpful ;)

answered Mar 14 '10 at 12:09
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Alex
262 points

1

One of the most successful companies I have ever served as a head of business operations was a software dev company. In two and a half years I was with them, we grew by a 100+ employees (yes, they are still in business and still growing). How did we do it? We did many things right, but one of the best choices we made was to not fall into the "dream" stuff. We discovered our mission (our "dream") was to build the best darn company for our employees, so they can turn it into best software dev shop in our market.

We hired best devs we could get and put them on the best clients we could find. We also hired younger guys and gals with a lot of potential and let the really smart guys/gals mentor the younger ones while they were building some pretty cool products. We ended up with a kick ass software dev shop that earned such great reputation with our customers, some chose to pay us to innovate/invent/develop new software products they got to use exclusively for a set period of time and we were free to sell it to others after.

What I have learned from this experience and several other ventures I was in: best solution is usually a hybrid one.

So do both: build your own product and build product for your clients.

answered Mar 14 '10 at 13:00
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Apollo Sinkevicius
3,323 points

0

Rejecting other incoming projects means refusing from new opportunities, from developing and as a result from getting an income. I reject other incoming projects you continue doing the same and getting the same. You have several way outs of it. You can outsource the part of your business or outsource (render other company to do something you do not manage to do thus cutting costs). One of clients had the same problem, and when he outsourced the part of his business, he "feels" better now.
I work for IT outsourcing company. If you want to chat or find out some opportunities, you can contact me.

answered Mar 17 '10 at 01:28
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Alena Shechkova
101 points

0

C'mon, you can make time. Pick the most exciting project with some marketing potential and beg, borrow, and steal some time to work on it. You may need to question how passionate you are about any of your ideas compared to the quick cash you're getting from your clients.

Sorry, I've been reading "Rework" by 37Signals.com.

answered Mar 14 '10 at 05:36
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Jeff O
6,169 points

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