Software industry is growing day by day. If you are planning to jump into the IT/Software business and want to start your own company, here are 10 most important points to consider and follow.
You must have an idea.
You must have an idea regarding the IT company that you are about to start. A basic idea comprises on, from where you will get projects, you have an existing customer base or not and in which technology you want to work. How much employees you have to hire?. On which unique concept you want to work?. You must have an idea for all of these before you even start a new IT related company. You can say, an idea is, a thing you are very passionate about or your dream or your goal that you want to achieve. There must be a sort of uniqueness in your idea and you must have a vision about your company. You should also possess a potential knowledge about your market.
Write a Business Plan
A business plan is indeed a roadmap for your business success and specially if we talk about IT. There are many portions of a business plan but the most important one is the Executive Summary. It tells the location of your company, what are your plannings to develop it and why you think, your business idea will be successful. If you want to attract potential investors, the executive summary is also a best opportunity for you.
While talking about te business plan, you must consider the following points.
- The Mission Statement – This gives an overview of your business goal.
- Company Information – It gives information about when the business was formed, who is its owner or founder, where is it located and how much number of employees it have.
- Company Growth – All history of company growth including the financial snapshot.
- Your Products/Services — Describe the services your IT company is offering.
- Financial Information – If you are in search of investors, this portion majorly includes your bank statements.
- Summarize future plans – Your future business plans and goals.
Protecting your business idea.
It is a natural phenomenon that your idea can be stolen. But it is also a reality that you cant turn your idea into a reality without the help of others. There are some valuable ways to protect your idea from being stolen. If you are hiring professionals or dealing with any other IT company regarding building your website or developing a software for you, check their track record first. That how they deal and what are their preferences. What their previous clients say about them, or in short, how is their feedback.
To protect a business idea, please use the following tools.
Non-disclosure agreement (NDA): As you are sharing information about your idea with them, an NDA is an agreement between two parties not to share information with third parties, or it can go one-way (sin). You can also set the expiration date to infinity.
Non-compete agreement: If you hire someone to help you, have him or her sign a non-compete agreement. A non-compete agreement prevents an individual or entity from starting a business that would compete or threaten yours within an established radius.
Work-for-hire agreement: If you hire someone to develop your product, make a work-to-hire agreement to ensure that you own all of the customization to your idea. You own anything that comes up.
Determine the risks associated with an IT company.
You must have an intensive knowledge and working experience in the IT industry as a programmer / developer or a designer, before you even think of starting a software company. You must be a perfect project manager as well. After that, a lot of risks are also associated with a software company as with other businesses. If you cant find the ideal staff, best clients and if you don’t have a constant flow of projects then all your efforts can go into vain.
There is also a second scenario, if your company grows well, you are earning best profits but what happens when a few top level employees leave your company. When they will leave, your 10% employees that like those people will also leave and the whole scenario will be changed. I think you have got the point. Similarly, you cant guarantee the constant flow of projects or if you have launched your own products, still you cant have a constant flow of sales through which you are funding your company. So, as a CEO of your company, you also have to tackle and go through all these obstacles.
Determine your pricing
Now this is the most important portion of your business, the pricing. On what price you will be offering your services and what quality standards you are offering. Pricing differs from region to region and complexity of work. You will have different pricing if your company is situated in USA and different, when it is in India.
To determine your pricing, first analyze your competitors and what they are offering for their services. Again, the thing comes, if you have an extensive experience in the software industry you will have a valid idea for this.
Choose a Business Location or Virtual office could be a best choice.
Your company location would be such that, it could be easily accessible. Your clients could reach to you easily. Today, a virtual office concept is extensively expanding. People find this, as a most reliable and cost effect way of starting a company because it has a very low associated risk factor. There is a very limited equipment cost and you also don’t have to hire professionals to maintain the working state of networks and computers.
You will find a lot of such agencies on freelancing sites like Upwork, Elance and freelancer.com. They hire programmers / designers remotely and pay them per work basis. If they don’t have work, they don;t have to pay. The second advantage is, they built up a client base as well, by getting the projects from these sites.
Finance Your Business
Calculate the cost to start the company, the amount of money it is required to establish and run a basic setup. By going through the previous steps, you might have an idea what it can take, in terms of money. There are also a variety of loan programs to finance your business, like Premier Business Capital, offering best and reliable Merchant Cash Advance services in USA. Following is a list of most used financing options.
You will definitely want to reach out to more and more potential customers in ways that make them want to use your services. This is very important specially when you are starting your setup from scratch, before you have an established name.The first thing you should have, in terms of marketing your IT company, is a website. You can have a look at some established company’s sites and can observe how they have set it up, what SEO strategies they are using and what sort of marketing related people they have hired. You can then set your marketing plan on the basis of your past experience and your research in the same market.
Getting your first project and maintaining a client base.
Now, after that you have completed all the previous steps, now its time to get your first project. If you are a software engineer or designer by profession, then you might have a previous customer base through which you can get projects or you can get this through freelancing sites. You can also have an idea regarding developing and launching your own software product. Getting a project is not a major thing, but what the best is, to deliver best results. This is the point where your project management and quality assurance skills will come into play.
Maintaining a client base and a constant flow of projects is a major thing to run and grow your IT business. Delivering best and on time results is a key to success in the software field. Some companies also additionally provide on going and long term support in order to maintain a healthy client base.
Understand Employer Responsibilities
You must know your legal responsibilities as an employer. While your business is expanding, its the time to hire a professional or employee. If you are in US, you also have to obtain an Employer Identification Number (EIN) or TAX ID from the U.S. Internal Revenue Service. IRS states that you must keep a record of employment taxes upto a time period of 4 years. You must be aware of the following three type of taxes, typically in USA.
Federal Income Tax Withholding
Federal Wage and Tax Statement
After that, maintaining a healthy and better working place is also your responsibility as an employer. You should inform your potential employee about your company policies and environment, before hiring him.