MBA1406 3 Golden Rules When Starting a Software Company

Let me tell you about Intuit QuickBooks. When I was starting out my business, I remember sitting at my desk late at night, not working on my business, but cleaning up numbers, tracking and reconciling payments and wondering how this became my life. But once I automated the admin side of things, of my finances, those nights had disappeared and I felt a whole lot better. Outdo it with Intuit QuickBooks. QuickBooks is the trusted end to end solution that businesses rely on for getting paid, managing finances, paying employees, finding new customers, and more. QuickBooks provides a team of AI agents and trusted experts. So doing it yourself no longer means doing it alone. Their payment agent gets you paid faster, their customer agent finds leads, follows up and secures more sales, and the accounting agent automates and categorizes transactions. Get your critical business jobs done with QuickBooks on the Intuit platform. Ready to save on new tech? It's time for Dell Tech Day's annual sales event celebrating our customers with fantastic deals and benefits. Product perks include Dell rewards, free shipping, premium Support and more. PCs like the Dell 14 with Intel Core Ultra processors will help you do more faster and with a premium suite of monitors and accessories, you can upgrade your whole setup with amazing savings. Visit Dell.com deals. Hey oh. Welcome to the $BA show where your business gets better by the minute every day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar mba, a complete business training and community online. And in today's episode you will learn the three Golden Rules when starting a software company. Starting a software business has become a trend these days because of the potential of reoccurring revenue. Most software businesses are SaaS which are software as a service to charging their customers a monthly or annual fee. That's reoccurring to access the software. This allows you to have a predictable income which increases the value of your company. Many people start software companies so they can then sell them later on for 3, 5, even sometimes 10x their annual revenue. But if you're just getting started and you're thinking about starting a software company, I got three golden rules that I want to share with you and these are from experience. As you know, I have a software company myself with my team over@webinar ninja.com and when I'm asked from those who are just getting started what they should focus on, I tell them these three golden rules. So even if you're not thinking about software right now, Maybe down the line you'll find this helpful. All right, let's get into it. Let's get down to business. Follow the market and not your idea. This is probably the most useful piece of information or tip I can give anybody who's starting any kind of business really, but particularly software businesses. Many of us come up with a great idea and think it's going to be fantastic because we have such a great opinion of the things that come out of our brain. It's very hard to grow a business and to continue to grow your revenue and your sales when you're trying to convince your audience that they need this product, the best scenario to be in is to be creating a product that people are begging for. Not because you're extra special, you created some crazy innovation, but because you solved a big problem that they're having. You filled a gap. Recently I heard an interview with Noah Kagan on the Fizzle Show, a great podcast if you want to check out the Fizzle show. And he talked about push and pull businesses. He says you don't want to be a push business where you're pushing your product on people, convincing them, begging them to buy the product. What you want is you want people pulling the business, pulling the product from you. Please give it to me and can I have more? That's really what you want to do. Now, obviously not every business is going to be so black and white, one or the other, but you're going to be somewhere on the spectrum and you want to be closer to the pull side of the spectrum because this is going to make your life a whole lot easier. You have other challenges in a software company. You don't have in other companies that you're going to face to deal with the technology and manpower and getting the right talent. You're making it a lot harder on yourself if you have to convince your customer they need it. So the best software products out there fulfill a need already that's out there in the market. They usually do something that somebody else does, but just a little bit better. Look at Spotify, for example. Huge SaaS business. They're not without their competitors, but they just pulled it off better. Like they just did a better job than what Pandora did with streaming music. You know, Apple is actually late to the game on many things. They didn't create the first personal computer, but they improved upon it, made it more user friendly, made it easy to use for the common person, the common household. So really what I'm trying to say is go where the need is, go where the Money is what are people spending money on or willing to spend money on already? Make your life a little easier. Make your business a little easier by going to markets with people that are ready to buy, that are looking for solutions that you can offer. So rule number one, follow the market, not your idea. Rule number two, keep it simple and iterate. The best apps, the best software options out there are all easy to use. They're simple and they may get better over time. They iterate, they improve, but they stay elegant and they stay focused. Often when we start a software product, we want it to do everything under the sun because we think we need to compete with the household names and brands and competition that's out there. No, a lot of people love simplicity. Prefer it. Remember, a software that you use is a software that people are going to see the benefit in and continue to pay for. Take a look at some of the apps you use on your phone. They usually are single purpose apps, apps that really just do one thing very well and you use them over and over and over. I have an app called Strong and it's a health app. Basically it allows me to track my workout to the gym. It's incredibly simple. It has a menu of exercises I could just choose and it logs how many sets and how many reps and the way I'm doing every single set. And it's very, very easy to follow. It just saves my workout from the last time, loads up the information and I track it manually. And the reason why I use it is because it's simple. I don't want something over complicated. I actually downloaded a couple other apps before I found Strong and it was just too much, too many bells and whistles. It was confusing. It made me go through all these hoops before I can actually do the workout and actually track. Was giving me all kinds of other advice that was kind of irrelevant. It was just bloated and cumbersome. And the reason why I love Strong and I'm happy to pay for it and happy to even be upsold to a lifetime membership. They offer that to you if you use the app a lot is because it's useful, it's simple, it's easy, it doesn't waste my time. I'm in the gym, I want to get my workout, I want to get out. I just want to start the app and log the information, log the the reps and the sets and the way I'm doing for my workout so I can know what I do next time so it remembers my workouts. I can increase the Weight next time and track my results. Once you analyze the apps on your phone and see what you love about it, and usually it's the simplicity, the ones you use the most. So do not make the mistake of making your software over complicated at the start. This does a lot of things. One, it complicates your code base. It makes it very hard for you to pivot or to change if you find out customers don't like a certain thing, have a lot of code debt. It delays your launch because you have so many moving or spinning plates going on that you want to finish everything before launch. And it makes it harder on the user to use. You want to make it easy. I'm sure you could say, hey, I have this great onboarding system. I walk them through it, you know, it's really cool. The best onboarding is no onboarding. If you don't need any onboarding and if you're in the first iteration of your product, there should be no onboarding. In terms of tutorials and things like that, it should be pretty simple to use. So try your best to simplify as much as possible. Do the bare minimum to validate your idea and to give your customers a solution to your product. You don't have to solve all their problems at once. Take one problem, one pain point at a time and each of those solutions can be more products and upsells and upgrades and plans and bundles. That's the beauty of business, that's the beauty of software. So rule number two, keep it simple. Rule number three, profit first. It's very important for you at the store, especially if you're self funded and even if you're not self funded, if you're getting some sort of funding or using your savings or you're, you know, getting a loan is to start out profitable, be as lean as possible. If you can code it yourself, you can learn how to code. I've learned how to code on my own. I've taken some classes and yes, I'm not an expert, but I was good enough to get started. And then once I got the ball rolling and I had an MVP and had some customers, I was able to hire somebody better than me to be the developer on the project. So keep your costs low so you can stay profitable. From day one, you want to be as profitable as possible. Why? Because not being profitable is a bad habit. And it's something that a lot of tech companies go through with their just interested in growing and they're just interested in hiring as many people as possible. And before they know the Runway is gone and they implode. So what you want to do is make sure you're profitable all along the way. Even if you're just $1 profitable after, like paying yourself. That's good. And as you grow, as you start making more revenue, more profit, you can make hires based on that. You can use some simple software like ProfitWell. ProfitWell is absolutely free to track your, your growth, your MRR, your churn, but it's not going to track your profitability. But at least you'll have your income tracked. And then you can take those numbers into a spreadsheet and cross reference them with your expenses. So you can make sure your expenses number is always lower than your income or revenue number. When you think profit first, you're always thinking of ways to make more money with your app. Different kinds of packages, different kinds of plans, monthly annual, year, two year contracts, different sister products down the road, add ons, paying extra for premium support, phone support. These are all options for you to make other income or what's called expansion revenue for you to keep profitability as high as possible. I learned a lot of this the hard way. I try to give away a lot. I try to give. I really honestly gave too much value at the start of Webinar Ninja. I gave too much away and didn't charge enough, not nearly enough as I should. I didn't really have enough expansion revenue bill built into my product and we had to kind of build that in over time. And it has its, you know, hiccups, it has its challenges when you do that because your customers get used to certain things and not having to pay extra for certain things. But you got to do what's best for the business. And this is why I say at the start, have profitability as the forefront. Yes, you want to win over your customer, but you're going to win them over with your solution to their problem. And if it's good enough, they're going to be willing to pay and they'll be happy to pay more for more solutions and ease of use or ease of implementation or support. Whatever you deliver, make sure it's high quality. The basic support or the tutorials or the actual app itself. But always have something extra, something more for them to go for so you can keep profitability up. And that way you're always growing month over month.

Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know. In the business world, we'll teach professional skills to help you pursue your goals, like business management, strategic planning, and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.

To wrap up today's lesson, the three golden rules for starting a software company. Number one, go after the market and not your idea. Number two, keep it simple. And number three, profitability. First, make sure you're profitable. Yes, there are other things you need to do. Yes, there are other challenges along the way, but those are the basic things you need to get right. Everything else you can pretty much get wrong and you'll still be okay. Don't quote me on that, but this is just my experience. This is what's really important. If you love today's episode, let me know with an itunes rating and review. I'd love to hear from you. I read every single itunes rating and review. Also, make sure you hit subscribe and share the show with your friends on social. Go ahead and do that right now on your phone. That'd be so nice of you. Screenshot your phone and send it to those friends and family on social, on Twitter, on Instagram, on Facebook, on whatever you like. Thank you in advance for that. Before I go, I want to leave you with this Software is an interesting business model. One of the things I actually enjoy the most about the challenge of starting and building and growing a software business is that it relies on a strong team. You have to have great team members on your team. You can't do this alone. You can't do this by yourself. To some extent, you know, you can probably start a small software company on your own, but at some level you're gonna need experts in different areas. You're going to need project managers, you're gonna need marketing specialists. You're gonna know their area of expertise very well, that all work together, understand the product, understand their customers, understand what they're trying to achieve, and work towards your common goal. It's a great feeling when you put it all together. Thank you so much and I'll check you in tomorrow's episode Freeride Friday. I'll see you then. Take care.

At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.