Software Business Tips How-to to run a software consulting business Mon, 06 Feb 2012 02:13:38 +0000 en-US hourly 1 Find your first customer Sun, 22 Jan 2012 18:04:57 +0000 shabda

If you are just starting your business, getting even that one customer can be a hard nut to crack.

  1. Are there any people in your contacts or friends who know you from your past jobs and will be ready to take you up on your personal reputation.
  2. Are you giving a discounted rate to these first customers. (But not free, you want to figure out how to sell the service, not how to give it away.)
  3. Are you willing to treat these first customers like kings, as a thank you for being the first customers? Do the customers know that you are ready to treat them as kings?
  4. Are you using marketing strategies like having a blog, a web presence, and contributing to open source to build a web presence so your first customer can get the trust signals to buy from you?
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Turning customers to repeat customers Sun, 22 Jan 2012 17:37:16 +0000 shabda

The best way to get business is by getting more work from an existing customer. New customers cost money to acquire. They need to be nurtured before they will get trust with you to let you work on the most important(and mot lucrative) area of their businesses.

A old customer costs nothing to acquire, they trust you with most intimate and important part of their business, and can be the most lucrative new opportunities.

  1. If a client hasn’t worked with you in last 12 months, have you asked them why? Maybe they just forgot about you, or are unhappy with their current vendor.
  2. For the clients you are working with, are they aware of all the services you sell? Maybe they need a related service and just aren’t aware that you sell that too?
  3. Have you made efforts to deeply understand your best customers. Can you tailor your services to better fit them?
  4. Are you making all efforts to keep your customers happy with each product and project so that they buy from you over and over again?
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Moving up the value chain Sun, 22 Jan 2012 17:00:40 +0000 shabda


If you want to grow the business without growing headcount the only way is the provide higher end services or to sell products.

  1. Do you sell services which can be productized?
  2. Do you have technology which can be sold as is without further support?
  3. Are you and your team consistently improving your skills, and can charge higher rates for your work?
  4. Can you move to billing on fixed price instead of by the hour and get the work done in shorter amount of time due to upgraded skills?
  5. Can you sell training, books and consulting around your skills?
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Keeping costs low Sun, 22 Jan 2012 16:47:42 +0000 shabda

As you start to scale the business, the overhead costs start increasing.

Eg. When you are self employed you maybe doing billable work 90% of the time. As your business grows, you will have to add admin staff, accountants and similar non billable staff. As a self employed person, you can afford to work from a really run-down office, but as you add employees it’s neither advisable nor fair to expect to ask people to work from such offices. Such costs can add to your overhead VERY quickly.

It’s possible to not be stingy, and still keep your costs low. The first step to keep costs low is know all your costs.

Ask these questions.

  1. Do you need to employ an accountant?
  2. Are all business expenses coming out of a centralized account?
  3. Are you keeping all your bills?
  4. If you are doing 3, what are the areas which cost you more than your expectations? What are your biggest expenses?
  5. Have you negotiated the biggest expenses? Can you move vendors to choose a lower priced expense for your biggest expenses?

Focus on the biggest and the least expected expenses. And you would be generally able to cut your costs while not skipping on the important items.

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Pricing depends on the attitude of the customer Sun, 22 Jan 2012 16:17:41 +0000 shabda

When people price one important thing which they don’t take into account is the pain-factor of the client. I always give a great rate to a client who I think I will enjoy working with.

Some things you should keep in mind when you decide pricing.

  1. Does this client pay on time?
  2. Does this client dispute every line items on the invoice?
  3. Does this client have technical expertise and would understand when things don’t go according to plan?
  4. Is this client courteous?
  5. Will this client would be a good addition to your portfolio?
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When should you fire? Sun, 22 Jan 2012 16:03:04 +0000 shabda

In spite of your best efforts, sometime you hire people who aren’t the right fit, don’t have the right skills or just don’t understand the culture of your company. Its important to let go of these people. It’s possible to do that in a way which protects your and the employee’s interest.

Before you let go, have to tried fixing the problems?

  1. What is the reason you want to let go of the person? Is this due to lack of skill? Lack of aptitude? Lack of work ethics? Can these be fixed?
  2. If it is lack of skill, have you tried training the person?
  3. If it is lack of aptitude have you tried giving a different responsibility to the person?
  4. Have you told the person that their work is not satisfactory and given them a plan to improve?
  5. It the person work affecting other people on the team? Is the person aware of this?

If these do not help, then its time to let go.

  1. Can you find an alternate place which can better use this person’s skill. Maybe one of your client’s or vendor’s companies can benefit from this person’s skills.
  2. Did your provide objective and honest review of what this person needs to do better at their next job.
  3. Can you provide letters of introduction, references to help this person find the next job.
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Getting to closure on the project Sun, 22 Jan 2012 14:57:14 +0000 shabda

If you are working on a fixed price project, there is a very real risk of scope creep. You need to actively manage client expectations so both of the parties end up happy with the transaction.

  • Make sure you are tracking as tickets are getting closed, you don’t start getting new tickets being opened.
  • If you are 50% of the way in the project, 50% of the tickets have been closed and 50% of the milestones completed.
    (And have a client sign up on them)
  • Always be talking to the client, to understand their estimate of what percentage of work has been done.
  • When you are 2 weeks away from projected completion date, get a confirmation of the hand off date from the client and
    ensure that the both of you agree with what current state of project looks like, and that the target date looks achievable to both of you.

Fixed price projects are riskier but with managing expectations and with a bit of give and take you can ensure both you and your client end up happy with the project.

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Setup legal structure and banking Sun, 16 Oct 2011 11:29:50 +0000 shabda


What legal structure you will setup depends on various factors depending on your place of residence and business. I can’t give you advise (We are a Indian Private Limited Company) without knowing your place of business. Here are the things to keep in mind though. (Ordered by approximate order of importance)

  • Does it minimize your taxes payable
  • Does it have not-too-onerous accounting and reporting requirements
  • Does it allow you to deduct business expense easily
  • Does it allow you to additional equity holders
  • Does it allow you to close the legal entity without too much hassles.

As soon as you have the legal entity, I suggest opening a bank account for this. This allows you to keep your personal and business account separate from start, and keep all your tax deductible expenses at a single place.

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Getting office space Sun, 16 Oct 2011 11:07:41 +0000 shabda

You need to decide whether you will get a dedicated office or use your home as a home-office. If you are planning to hire getting a dedicated office space is a necessity.

  • If you are just starting using your home as a office is a good idea. But ensure you are including office expenses in your cost of doing business calculation.
  • Don’t take office in a commercial area. You probably won’t have a lot of clients visiting your office on a regular basis, so it is a un-necessary expense.
  • Take office space a little away from the main high-streets as they tend to be too noisy which is not the best environment for software development.
  • Try keeping your rent to between 10-20% of your total expenses. Anything more and you are taking a office larger/flashier than you need.
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Investing in your business Sun, 16 Oct 2011 10:31:36 +0000 shabda

So your business is all setup, you have grown your team and your business is making money. You should reinvest in your business to keep it growing, here are some ideas

  1. Do you have the perfect domain for your business? If not consider buying one. (We started as, and bought later)
  2. Build links to your site. You already have a headstart in this by blogging and your open source work. Now is the time to take this a notch up. You should ask your team to guest post, and build relationships with other sites to build links.
  3. Build relationships with other related businesses. You have been doing this, but be proactive now. Use linkedin, twitter to find people in related industry.
  4. Upgrade your equipment (computers, printers and such)
  5. Invest in advertising in paid media(Google Adwords, Facebook) and check if you get a positive ROI. (I did not get a ROI but I ran a test.)
  6. Is a website or a business related to your business being sold? Why not buy it?

These are just some ideas. The key takeaway is that there can be lot of areas where you can spend money to build a stronger business. Investing in your business is the best investment you can do.

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