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How to Grow a Software Business

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How to Grow a Software Business

April 16, 2014
By Miguel Leiva-Gomez, TMCnet Contributor

Software companies are like elevator shafts. They need to get past the highest ceiling in order to grow another floor. Maybe it happens once you've got $15 million in revenue. Or perhaps the breaking point is slightly later. But the ceiling is always a specific rage of revenue or number of employees. This is because, in order to break through a ceiling, you have to change how your software is priced, packaged, and delivered.

It's more a matter of presentation and less a matter of the software development process itself. In a way, this is how we can also explain how some software companies that make awesome products fail while others with mediocre – but very well-presented – software succeed.

To make things a little bit clearer, let's dive into a more simple explanation: Some software producers market their software to certain niche markets. Once they've gained a foothold, they can start broadening their potential customer base by re-branding their products. However, the other market segments you cater to expect your software to “feel” differently. For example, the average consumer needs to have a very user-friendly GUI, so having a terminal or command-line application meant for IT administrators might not cut it.

Similarly, you might get away with having a site that seems from the 90s presenting software specifically meant for an IT crowd, but don't expect consumers to come your way without a delicious Web 2.0 packaging around the “Download” or “Buy” buttons.

If you're catering to businesses and want to expand onto more sectors of a particular industry or more industries altogether, you must make sure that your software is as scalable as possible. It must have flexible licensing and delivery. A “one price per license” approach might work with the small business sector, but to attract bigger fish, you need to give special prices for, say, working with up to 100 licenses.

Just as a Flexera blog mentions, the one thing you must take from here is that, despite Steve Ballmer (News - Alert)'s “developers” chant back in 2006, building software is about more than just development. It's also about making sure that everything on the operations end of the business matches what you're planning to do with the company.

Edited by Alisen Downey

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