Being developers we do not have the benefit of taking basic marketing and finance courses. This quickly becomes a problem when developers want to start their own business. Developing the software is one thing, making financial gain and increasing your user base are the two problems everyone encounters during the course of their startup. It also is 90% of the reason why startups fail within their initial year. So what can we do about it to prevent this?

Well first off if you have the “next great idea” before you go to market with it, calculate the time it would take to develop the software and multiply it by 2. That is the amount of time you should take on top of the development cycle to explore your startup’s business plan and marketing strategy. No matter how good your software is it does not guarantee that it will be successful and more importantly, profitable. You see examples of this every day. If you read my Twitter post a few days ago, you can see that even a site that has no clear purpose can turn a profit. The only reason Twitter beat out its competition was not because they had higher quality software, it was their marketing strategy that allowed them to capture the community over their competition.

There is a quote that goes along the lines of, “Behind every successful business, there is a great crime.” Now many people take this in a negative connotation. However this can easily be applied to what we are talking about. If you look at any developing market, it always seems that the best product rarely wins. Look at Facebook and MySpace. Which is the better software? Well one would obviously say Facebook. Then why does MySpace have the larger market share? Was it because they were first? No. MySpace simply had the better business plan which allowed them to grab a larger portion of their target audience.

Now here is what you can do about it to help insure your next startup (or your first) has the best possible odds for success. Focus your software around your business plan/model. Do not go over the top of features and complexity than try to develop a business plan around what you created. You are creating your software for your audience. If this is true, then think of your business plan and consumers first, then when you figure those 2 things out sit down and start designing the product. My last tip of advice would be to know your limits. We are developers, no matter if you have some business experience or a minor in business know your limits. Having limited experience will quickly show through and doom your startup. If your a team of 3 developers creating the “next big thing”, stop where you are and hire someone with a strong business background. Also make sure that he has limited understanding of technical computing unless this is your target audience. This will aid you in the long run through the insight a dissenting opinion can have on your startup.

A few resources I recommend on the topic, don’t use the internet and instead use people. Go to workshops, every major city has them on a regular basis. Develop a human network so when your startup stumbles you have people you can call on for help. Investments will come if you follow the things outlined above as these guidelines are rarely followed which can provide understanding why 8 in 9 businesses fail.