So You Want Your Own Tech Start-Up?
In the 1990’s, there was a phenomenon called the dot-com boom. Basically, a lot of online businesses got started – proliferated, in fact. By the beginning of the 2000s, there was a dot-com bust – many of these companies failed and vanished from the business scene altogether. Perhaps because of that short but wild ride, people are a little more hesitant these days when it comes to starting their own businesses, online or off.
According to the U.S. Small Business Administration’s web page, in the year 2008 there were roughly 627,000 businesses that opened. Approximately 595,600 closed that year (not all of them had started and closed in the same year) and 43, 546 went bankrupt. A small business has a 69% chance of surviving for two years and a 51% chance of being around for five years.
What does all this mean? There are difficulties in starting any new business, not just those related to software. In fact, the process of starting any two different businesses is remarkably similar. Rather than focus on the hardships of starting your own software company, let’s discuss some decisions you need to make before you quit your current job and launch your own business.
Reasons to Have Your Own Software Company
So you want to have your own tech start up. The question is, should you? Here are some factors that will work in your favor.
- You Have Experience in IT and in Business. At the risk of sounding banal, there is nothing like real-world experience. Even if your tech skills are outstanding and your product is ingenious and flawless, you will still need business sense. This is because there’s more to do than just getting your product on the market – there’s finances to manage, people to contact, and many other things that usually fall under the heading of “business” rather than “technology”.
- You See a Need. This is pretty basic. If your software does something new, better, or faster, there’s a far better chance of it succeeding.
- You Have a Great Idea – and the Know-How to Carry it Through. You need more than just a good idea. You need to be able to see it through setbacks, figure out solutions to problems, and have the determination to overcome all of the many obstacles that will undoubtedly surface.
- You Are Self-Motivated, Self-Disciplined, and Versatile. See the above reasons – you’ll need these three attributes to persevere.
- You Can Afford It. You don’t have to be wealthy. Starting any business usually requires some form of financial outlay, and the money has to come from somewhere. Also, you should be aware that many businesses take a few years before they are profitable.
Reasons NOT to Have Your Own Software Company
- You Want to Work Less. Since you’ll most likely have to keep your current job for at least awhile, you’ll initially be working more, not less.
- You Don’t Want to Work at All. See the reason above. If you want to be rich instantly, you’ll have to look for another solution.
- You Need to Make a Lot of Money, Fast. As we discussed earlier, it takes money – saved, borrowed, loaned, or otherwise – to start a business. A new business takes some time to turn a real profit.
- You Have a Great Idea – and That’s All. If you have a great idea but not a single clue how to carry it out, you probably shouldn’t leap into your own business. Rather than give up completely, maybe you can form a partnership with a more business-savvy person.
So what should you consider before starting your own software company? Read the companion article Starting Your Own Software Company to learn more.