Building A Software Business? 3 Things Software Entrepreneur’s Should Know

Following these fundamentals may not guarantee success, but they will lower your chance of failure by decreasing the room for error.

The software industry has proven itself over and over in terms of return on investment (ROI). Simply put, “The software industry has transformed the way organizations, businesses, and even people coordinate and work. Its impact on the global economy and across various industries can be gauged by the increase in innovations, technical progress, enhanced productivity, and the workforce (Market Realist).”

So, it comes as no surprise that “according to Gartner, worldwide IT spending on enterprise software totals more than 300 billion U.S. dollars per year (Statistic).” However, popular success stories, high software license prices and ROI may sometimes overwhelm developers, causing them to skip the basics, and shorten the life of their venture.


“Software development is a tiny subset of the skills an entrepreneur needs to launch and operate a successful software or web startup.”


As software entrepreneur Rob Waller puts it: “You’ve probably realized by now that software development and entrepreneurship are two very different things. Software development is a tiny subset of the skills an entrepreneur needs to launch and operate a successful software or web startup. If you’ve been writing code for years you’ve likely formed opinions that don’t quite hold true in the world of entrepreneurship.”

Selling licensed software can be a real pain if you don’t stick to these three fundamentals.



The ability to sell is the most valuable skill an entrepreneur can learn. Who are you selling to? Where are you selling? How are you selling?

Locate your audience and find an appropriate point of entry into the market. If you’re targeting moms, don’t run out to buy a national TV ad which could burn up all of your remaining capital. Start with cost-effective advertising solutions. For example, Facebook has an incredibly targeted ad system. Most Facebook moms likely play Farmville, so you could possibly target women over the age of 30 that play Farmville.


Photo: © Ivan Kruk, YFS Magazine
Photo: © Ivan Kruk, YFS Magazine

If you’re selling to businesses, you have many options. Besides the traditional cold calling sales approach, many businesses owners and managers are on LinkedIn. You could even offer existing happy customers a commission on new sales.

As John Tuld, in the movie Margin Call, explains: “There are three ways to make a living in this business: be first, be smarter, or cheat.” To take the smarter route, identify your market, find your market’s common interests and plan the proper approach.



Stable does not necessarily mean that every last bug is worked out. Of course when bootstrapping, it’s best to “ship” the product when it is ready, to recoup a portion of your investments as quickly as possible. However, your product should be debugged to a point where the important remaining touches you have planned will only take a week or so to complete.

Besides debugging, there is another component to stability—funds. If your licenses are being sold at a fixed rate, you may run out of capital. To avoid this, you will need to plan an upsell or downsell down the road, because in five years, when you are still coding updates for the software, sales may lower and you will eventually start to lose money.

The best way to avoid it? Charge a monthly or yearly fee. If you need money up-front, charge a setup fee.



Lastly, proper support or customer service, can of course drive more sales. A friendly, targeted and helpful email reply often ranks higher with a customer, over an automated or copy/paste response.

A real person answering the phone (over an automated system) is often more enjoyable for the caller. There is almost no better chance to repair or improve customer satisfaction than through your communication with them.

With social media soaring to new heights, a poor customer service experience could be detrimental to your brand, especially if a larger news network gets its hands on it. For instance, to avoid reputation damage by social media, many companies such as Payoneer and 2Checkout have been joining forums to kill brand-damaging discussions.

Remember, communication via customer support is your chance to revive or revamp customer satisfaction, which drives more sales.


In conclusion, selling skills will bring in customers, software stability will keep customers, and great support has the potential to multiply customers. Plan each three of these steps well in advance or dedicate a team member to each role for optimal results.

Following the three S’s may not guarantee success, but they will lower your chance of failure by decreasing the room for error.


This article has been edited and condensed.

Josh MacDonald is a Canadian Internet entrepreneur. He has built a number of SEO and B2B software applications throughout his time in high school and university. His software is used by thousands of people around the globe. Connect with @JoshMacDonald19 on Twitter. 


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