The Old Joel on Software Forum: Part 4 (of 5)

How to decide on a business

For those who own their own businesses, what was the major factor in deciding what kind of business to start? Was it your passion for what you wanted to do or the potential to make a profit on what you wanted to do? Some stories I read about successful entrepreneurs seem to indicate that they just had an idea and ran with it and became very successful. I never read about their gory details of failures, setbacks and the like. Maybe those stores are just implied for entrepreneurs.

Example, there are a couple of business that I would like to start. I can’t make a decision of starting an ISV or start a freelance tech support service (they seem to be popular nowadays). I start to think about the potential for profits and usually talk myself out of each one for both.

Any thoughts for some motivation or ideas on how make the decision?

Thanks.

AnonX
Wednesday, May 5, 2004

I'm in the process of starting a non-IT related services company (in other words, not selling software of any kind) but instead using my technical/development knowledge to develop our e-commerce site. In other words, try to mate your software development skills with another knowledge/service domain and put them together....

What are you knowledgeable about? Web development? That's not enough. I've created a few custom document management systems, so I could in theory start a small DMS ISV - but it doesn't interest me. Find your interests outside of IT, then mate them...and go for it.

Q
Wednesday, May 5, 2004

"Find your interests outside of IT, then mate them...and go for it."

I second that.

If you can do something for a customer faster, better, cheaper, or easier (ideally all 4) than they can do it themselves, then you might have a business.

I got started because I thought my programs might help people (their educational). Once we determined they DO, then we had to figure out how to "position" them: to communicate the benefit to the user.

SERVICE company will let you get started quickly. But you're always selling your TIME, and thus always running out of inventory.

PRODUCT company is much trickier and has a longer lead time, but bigger payoff in the end.

GREAT ARTICLES on SW business:
http://www.dexterity.com/articles/

Mr. Analogy
Wednesday, May 5, 2004

Think about starting a business because you have a passion for what the business will do. Actually start the business only after you've put together a solid business plan and have realistically estimated that you'll be able to make money and grow. If you can find something that you love to do, and it will support you (and your family), then you've hit the mark.

Running a business that you love, but is failing, will make you miserable, as will running a successful business that you don't care about (although, your level of misery is indirectly proportional to the amount of $$$ you are making) :-)

smallbiz
Wednesday, May 5, 2004

The one I'm starting is actually kind of a blend of product and service. Its a web-based application (essentially a product) that we host and provide as a paid service to interested parties. Kind of like how you might look at Hotmail. A complicated application that is hosted by Microsoft, you use it with your own data for your own needs. The situation provides us with the best of both worlds, because since its an app, we don't actually have to spend our time in order to perform the service, and since its not a shrinkwrap product, we don't have to worry about the overhead of manufacturing/distribution/etc.

I also must agree with "Q". Its a very congested market for independent IT services. It seems like everyone has a neighbor or friend who "knows about computers" and people are often willing to take the cheap route on IT services. Big companies don't usually do that, but then they have their own IT staff. But if you can partner up with a trustworthy person who has legitimate business talents and you have an idea that "has legs", you can leverage your IT skills to MAJOR savings.

We have a guy in our group who is one of those "idea people". When he goes about his daily business and encounters some little annoyance or inconvenience, his brain immediately starts thinking of how that thing could be improved, whereas the average person is just annoyed. I (along with a partner) am using IT skills to create the application from scratch. The amount of time and effort invested so far would cost us well over $10,000 (USD), but all we have spent so far is <$50 in webhosting and our time. Once the app is finished, our time will be spent in building something else that will make money, and this app will produce revenue almost entirely on its own (remember, its an app that hosts THEIR data, which they are responsible for). We have put in sweat equity, but we are equal partners, so we have direct link to the profits.

From that initial product, if successful, we plan on launching a full development company which will have a singular flexibility, because our bills will be paid by a low-maintenance product that is already built. So we will have the opportunity to pick and choose which projects we would like to take on. At this point, we are a couple weeks away from our launch of version 1. Perhaps it will all collapse, but damn if it works, it'll be friggin sweet.

Clay Whipkey
Wednesday, May 5, 2004

Read Barry Moltz's book "You need to be a little crazy". Unlike the books that always paint a beautiful rosy picture, Barry tells you the reality of things based on his own experiences (He started various companies). His stories are a little on the gloomier side, but that side needs to be mentioned too.

According to his experience, it is not so much what kind of business you do that really matters. What matters is who you go into business with. Even if you are going to work alone, you are still going to drag your friends and family into it in one way or another (emotionally, financially, etc...)

I think your passion has to do with it too obviously. When times are hard, you will need that passion and the will to go on. Otherwise, you'll quit before you even get a chance to survive your first storm.

grunt
Wednesday, May 5, 2004

I started a web design company about 4 months ago. Put an ad in the yellow pages and have been getting calls ever since...It's a nice industry to work in, man: no boss, own hours, working with clients, it's not bad!

Conor MacLeod
Wednesday, May 5, 2004

Conner:

What city are you in ?

doodist

op
Wednesday, May 5, 2004

I'm in San Francisco.

Conor MacLeod
Wednesday, May 5, 2004

rule: do what you know. point.

Evgeny Gesin /Javadesk.com/
Wednesday, May 5, 2004

>rule: do what you know. point.

Not necessarily. YOU don't have to know anything about real estate, or medicine, or construction... to use your technical knowledge to build a product that serves those markets (they just happen to be stable and lucrative markets). What you MUST have is at least a partner who knows your market well. I think small businesses that have a combination of specialized people focusing on what they are good at, as opposed to one person who has IT skills and mediocre accounting/business/marketing skills trying to do everything himself.

So the above rule may apply to what function you set yourself up to be performing in your business, but it doesn't necessarily determine what the business should be. Maybe its more like:

1. YOU do what you know for your business.
2. Your BUSINESS does what will be profitable.

Clay Whipkey
Wednesday, May 5, 2004