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How to Successfully Build a Bootstrapping Software Business

Ten tips for building up an independently financed software business

Every young software business is different. Yet regardless of niche, competitive pressures or economic conditions, all startups face the same key issues. It's possible to survive those hectic, early years as a bootstrapped business - even thrive during them. All you need is...

1) An idea for a software product that is needed on the market or a product that has passed its first function tests with flying colors. In other words, the market requires products that are great right from the start or that promise greatness.

This leads right into 2) out into the world. In order to put the product onto the digital sales counter, you need an informative website with a web shop. It's often a good idea to outsource the online shop to an external provider for the starting phase, and let them take care of sales in exchange for a low service cost. The benefits are obvious: you don't have to bother with the details of billing, European (or other) value-added tax rules, returns or charging credit cards. Instead, you receive a monthly invoice detailing each transaction. This gives you the freedom to concentrate on your core task - product development.

That's where we come in with tip 3). In the day and age of Google & Co., search engine optimization (SEO) and search engine marketing (SEM) are the easiest and quickest ways to gain range in today's market. Here, too, if you don't have the know-how or resources to start campaigns and to track conversions, outsource your SEM to an external provider. A mid-term goal, however, should be to take care of SEO and SEM within the company. As a side note, SEM is fantastic for sounding out the market potential of a product. If you don't get any hits that's a strong indication that there is no demand for the product, no matter how great it might be. And without venture capital, it'll be difficult to convince humanity otherwise.

To anyone who might think that phase 4) is the perfect time to present the product more actively, at a trade fair, for example - don't do it. It may be a good exercise in confidence and being true to yourself, but it's nothing more than wasted time and money. Big solutions from financially strong, traditional providers dominate these events; solutions with which no one - at least at this time - can compete, even if it's just because of the size of the stand.

With this in mind, consider tip 5): gather your strength for product marketing and invest it in building up your marketing strategy, in good press relations and in whipping company communication into shape. Social media cannot be left out. Rely on the strong, central features of your product and don't lose focus, because the judgment of the online community will strongly influence the success or failure of your product. This community will also leave valuable feedback for improving your product. Keep your eye on good sales and tech support that will act as the "lawyers" representing your customers and their service requests within the company. By doing so, your customers will be happy to help in return with error analysis or beta tests.

What's next, you ask, once your software is established in your region, all rollouts are working flawlessly and the acceptance is consistently high? Then it's time to reach out: EMEA, the Americas and APEC are waiting! In phase 6), it's time to actively expand in different markets, supported by business development managers who know the local marketing and business conventions. Based on your experiences and activity in your local market, your specialists will apply appropriate marketing measures for the target country, flanked by SEM/SEO and PR.

Tip 7) will keep your development team busy, because now it's time to localize your software. Your product should be designed from the beginning so that it can be translated into various languages. Anyone who hasn't thought of that in advance will have his work cut out for him. This phase can, of course, be carried out parallel to or before phase 6.

Keyword and tip 8): now's the time to consistently pursue channel business, that is, marketing through resellers and possibly distributors. You've probably sold through resellers in the previous phases already, but now this should be systematically supervised and established with a partner program, reseller agreements, organization of a retailer network in each region/country, etc. Do you want to hire more staff as well? This is a good time to advance your expansion with channel managers, who can be located at the company headquarters and/or in each region.

In phase 9), you've reached the prime time to send invitations to your customers, resellers and press contacts saying, "We are excited to see you at this year's Cisco live! In London: Hall 5, Stand 7B!" Now it will be worth your while, because people know your products and are talking about them. Now it's easy to stir up interest in potential new clients or marketing partners. By now, you also have the necessary budget and manpower for a professional trade fair appearance.

If, after phase 9, your local business is running smoothly and you believe that local representation would increase customer satisfaction, the acceptance of your products and your sales, then take the chance with tip 10): the branch. With one or more channel managers, you might even already have your first staff on location. Now it's time to build up other functions (presales, support, back office). The framework required for this is a branch, a daughter company, or the like.

Of course, this guideline can't be adopted 1:1 in every situation, but it should help you to set the right priorities. You will gather an abundance of personal experience and will have to make your own unique decisions in every phase. There is nothing more exciting than developing your product ideas into a successful business.

More Stories By Christian Twardawa

Christian Twardawa is the Chief Operating Officer for Paessler AG. Paessler AG leads the industry in providing the most powerful, affordable and easy-to-use network monitoring and testing solutions. The company’s suite of just-right software products deliver peace of mind, confidence and convenience for businesses of all sizes – from Small Office/Home Office (SOHO) to large enterprises, including more than 70% of the Fortune 100 companies. For more information, visit www.paessler.com.

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