Starting a software development company isn’t an easy venture for any entrepreneur as more start-ups in his industry usually fail. A software development company is one that develops and distributes computer software that can be used for a variety of purposes such as learning, instruction, assessment, calculation, entertainment or the performance of a multitude of other tasks. Starting a software development company usually requires funds, a knowledge of programming, marketing expertise, and technical support skills.
These kinds of companies usually operate under a variety of business models, like charging license fees, charging by transactions, or offering subscriptions. Software products that are offered for free usually get their revenue from advertisements or through other related services such as training or technical support.
Before starting a software development company, you would need to obtain a degree in computer science, and be well versed in programming and other related computer languages. You would also need to take business courses in accounting, finance, human resource management, and marketing. If you do not want to go through this route, you could start with an entry-level job at a software company, where you can learn the ropes by training with a software development mentor.
Software development companies that thrive always have an innovative product or their own niche in the market, so you would need to develop an innovative product idea based on what you see as a gap in the market through what you have learned and observed. This requires a lot of market research though, since you would need to find out if there is any exiting or potential competitor in the niche you want to go into.
Consult with experts on the field by setting up focus groups that would help provide feedback on your innovative idea, also, speak with experienced software developers to find out if your product idea is viable but ensure that they sign a non-disclosure agreement (NDA) so as to protect your idea from getting stolen.
Before launching your product idea to the public, ensure that you get the necessary patents and trademarks, by hiring an intellectual property attorney to determine if your product qualifies for a patent. If you are going to trademark your product’s name, it means others cannot use your product’s name. The team you have worked with will also need to sign a non-disclosure agreement
Create a business plan so your business could have a purpose, and the short and long term strategies for your company, such as start-up funds, branding approach, market audience, and financial needs and plans completely mapped out. Another thing you would need to worry about is the legal structure you intend to use for your business, as this will imply how you will file your taxes, and how much you might need to pay.
Starting a Software Development Company from Home
- Software Development Industry Overview
The software development industry has grown rapidly from 2010 to 2015, as more businesses and consumers have increased their investments in computers, software, mobile devices, and video games. There is bound to be more increase in the use of software in day to day activities as well as the rise of predictive analytics and artificial intelligence that will characterize the industry.
- Interesting Statistics About the Software Industry
The software market has grown in less than a century from a non-existent industry to a multi-billion dollar industry. Software forms the basis of many modern devices, such as, navigation systems, computers, smart phones, watches, cars and tablets that we use daily. Even though the industry is characterized by the big players such as Microsoft, IBM; there has also been an increase in freelancers working independently to develop software.
The industry is one that is intensively technological and geographically clustered, especially as most employees in this industry come from top universities. The industry generates revenue of $193 billion, with a projected growth of 3.6% from 2010 to 2015.
As at 2010, there were 7,737 businesses that employed 447,488 people in the industry. The industry is fragmented, with the 50 largest companies accounting for 40% of the industry’s revenue. 35% of the industry’s revenue comes from systems design, development, and integration services; 25% from development services and 10% from technical support.
In 2013, an estimated $542 billion was spent on software, which was 25% of the total expenditure of IT. As at 2012, the value development software market globally was $82.2 billion. According to IDC, subscription revenue including SaaS is projected to a 175% compounded annual growth, reaching 24% of total software revenue in 2016. In 2007, the software sector experienced a real annual growth rate of 14% in the US industries, compared to other industries growth of 2%. The sector has outpaced other sectors each year since 2003.
However in the 3rd quarter of 2015, the industry had an above average revenue deterioration of -6.53%; sequentially revenues, for software and programming industry fell by -11.12%. The highest revenue year on year growth statistics was in the fourth quarter of 2007 at 27.91%, while the lowest revenue year on year growth statistics was in the second quarter of 2009 at -11.33%.
States such as California, Massachusetts and Texas have a greater percentage of the software development industry than other states. California alone accounts for 24% of the industry’s workforce, with most of the workforce working in the Silicon Valley region outside of San Francisco.
Even though demand for IT services such as software development is largely driven by rapid technological advances, spending in this industry depends on the state of the United States economy. Companies’ profitability depends on technical expertise, effective marketing and innovative services. Large companies in this industry have more advantage, due to that fact that their service offerings is often broad and has a global reach, which allows them outsource some of their services. Small companies can only effectively compete when they specialize in a niche or partner with larger companies.
Starting a Software Development Company – Market Feasibility and Research
- Demographics and Psychographics
When it comes to the demographic and psychographics composition of those who uses software and its related services, there are a handful of them. Here are some of them;
- Home owners
- Baby boomers
- Corporate organization
- Educational institutions
- Entertainment industry
- IT firms
- Accounting firms
- Agricultural sector
Most people, male and female, especially young adults and the middle aged who are of the working class and own their own devices, even dependants and retirees who own devices, either working or not make use of software or its related services.
List of Niche Ideas Within the Software Development Company Industry
The software development industry is a unique one, as much as most companies offer uniform services to clients, there are others who have created a niche for themselves in the industry, specializing in just one area of software development or its related services.
Some of the areas of specialization in the software development industry are; programming, business function outsourcing, data warehousing, enterprise resource planning, systems planning, customer relation management and training. One thing to note in these areas of specialization, it is easier for smaller companies to specialize in one of these fields, but larger companies can specialize in more than one area.
The Level of Competition in the Software Development Company Industry
Software is now regarded as critical for the performance of every company. 20 years before, the use of software within an organization was mostly confined to big transactional systems in the data center, but now it underpins nearly every function in every industry. The software development industry have been driven by developers, plug-ins, software development kits an application programming interfaces, and add-ons that drive added value while increasing loyalty to a product.
This reality has introduced new competitive dynamics for software development companies in the industry. Companies now have to think on how to make their revenue streams and customer retention incrementally better, while striving to stay proactive and agile in an industry that takes no prisoners. The level of competition has caused more companies to fling their doors open so as to include a wide range of developers just so as to remain relevant in the industry.
List Of Well – Known Brands in the Software Industry
The software development industry has existed for a long while now, and while most companies have continued to excel throughout the years, others have failed miserably. It is for this reason, that those who have had successes within the year and strive to remain relevant have been known as brands in the industry. Listed below are a list of some of the major well known brands in the software development industry in the United States, the list does not attempt to name all, save for few:
- HP Inc.
- Microsoft Corporation
- Oracle Corporation
- Symantec Corporation
- Owen Software Development Company Ltd
- Progress Software Corporation
- PTC Inc
- Cerner Corp.
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