Starting a software business with no start up capital

[DarrenMcCabe]

Afternoon all, am looking for a couple of pointers on a business idea I have had in my head for a long time that I need to do something with.

My current business is in IT support and maintenance and is my specialist area if you like.

However I worked in IT support for the car rental industry for over 8 years and in that time came up with an idea for a piece of software to (I hesitate to use the word revolutionise) improve their daily workings.

I wont go in to details of the software for obvious reasons.

The part I need your advice on is what to do with the idea.

I have done most of a plan for the business, but estimate needing start-up capital about £100k - £150k.

Now this is not the kind of money I have laying around. The money would be need to employ software developers to create the first working beta of the product.

Once the product went to market, the uptake will be quite high due to some fairly unique points within the software which the the industry is in dire need of.

The plan I have worked estimates a turnover of £1.3mil within 3 years with a profit of about 50 - 60%.

So I dont yet have a product (although have it well designed in my head and documented on paper) and I dont have the startup funds.

The 3rd issue is that ideally I dont want a business partner in this venture, however am aware this may not be possible.

Thoughts on how to get this off the ground?

 

[Faevilangel]

Hi Darren, nice to see you using the forums

You have a couple of options:

1) Investment from a bank - Not likely unless you can personally be liable for the funds and have a solid plan
2) Investment - Get someone in as a partner to invest, will mean giving up 50% of the business and you doing all the work.
3) Software Dev Co - Get a software dev co on board, they have the resources you need, and you wouldn't need the money to pay them. They would become partners in the business.

#2 or #3 is your best bet but you're going to have to give up some equity in the business, I prefer #3 as the costs would be lower but you would need an NDA to stop them using your ideas.

 

[Deleted member 138423]

Dragon's Den, Venture Capatalist, Business Angels, etc....,

Look to get in place a solid business plan and then start hawking your idea around the market place of the above. If you have created a good product, someone from the above will be interested!

Very best of luck.

 

[mobyme]

I think you could get your software developed for somewhere in the region of £80'000. There will be a number of companies that have already developed software along the lines you are thinking about. We developed software for the holiday industry that does everything except make the tea.

 

[JandJC]

Hi Darren,

I have some information that you may be very interested in.

I can educate you in developing your Software business without the need of external funds.

The business model I have has already developed Software businesses who are making 500,000 each year.

The only thing I ask is that you must be prepared to change your mindset.

Feel free to PM me if you want further information.

Br,

Martin

 

[JandJC]

I think you could get your software developed for somewhere in the region of £80'000. There will be a number of companies that have already developed software along the lines you are thinking about. We developed software for the holiday industry that does everything except make the tea.

God you would pay that much - what type of return of investment would anyone get paying that amount.


I'm in software to make money not lose it!

 

[businessfunding]

I would agree with Faevinangel

In reality you are not far enough evolved to raise VC on good terms - you would have to part with a l lot of your business.

Your best bet would be to partner with a developer.

 

[Moneyman]

or find an angel who can sort out some sort of plan where the investment depends on various stages or development points being hit. It aint easy but that is exactly where i am with an app that will be launched next month. £250k and three years it took.
pm me if you would like to have a chat.

 

[CSS1]

That's a lot of money and i'm sure you will find the banks will expect you to put up your house if they support you at all.
My biggest question would be - if the industry is in dire need of this revolutionary idea why have none of the other software companies that currently produce the software implemented it?

 

[garyk]

I think you could get your software developed for somewhere in the region of £80'000. There will be a number of companies that have already developed software along the lines you are thinking about. We developed software for the holiday industry that does everything except make the tea.

Im not sure how you can come up with a figure with no clue as to the requirements/required functionality???

For the OP you dont mention what the feedback from your target market is? Have you/can you run the idea by people to see just how viable it is? What competitor reesearch have you done to ensure something similar does not already exist?

Do you have to build out the full solution? Nowadays the trend is on MVP, minimum viable product, rather than spend years and tens of thousands get the bare minimum demonstrable product done, test and measure feedback from your market, react accordingly and then proceed from there.

If you have to use existing off the shelf solutions and add mock-ups of the specific functionality you are looking to deliver.

Good luck


Gary

 

[JandJC]

Im not sure how you can come up with a figure with no clue as to the requirements/required functionality???

For the OP you dont mention what the feedback from your target market is? Have you/can you run the idea by people to see just how viable it is? What competitor reesearch have you done to ensure something similar does not already exist?


Good luck


Gary

Hi Gary, great to see someone on a similar page to me.

You gave the OP some great advice...however Software businesses that I run and are in partnership with do things on a more productive scale; hence why we from a business perspective generate positive outcomes for our clients, by keeping them involved in the whole process.

Come on, how can you deliver a solution without understanding your clients pain!

 

[mobyme]

God you would pay that much - what type of return of investment would anyone get paying that amount.


I'm in software to make money not lose it!

I guess your post was supposed to read who would pay that much. I'm not pretending that we have people queuing up to buy it, but its a game changer for those that do. But that wasn't the point of my post, I was trying to tell the OP to approach software developers and get them to tender for whatever he has in mind as they may already have built something with much of the functionality he requires and that he doesn't have to pay someone to start from scratch.

 

[Carrots]

£100k - £150k would get you a lot of code written.

Why so much?

 

[mobyme]

Im not sure how you can come up with a figure with no clue as to the requirements/required functionality???
Gary

It wasn't a pitch for the business. I looked at his website and could tell at a glance that he wasn't a dreamer and that the budget he had set himself of £100k - £150k would be a realistic assessment on his part for what he had in mind if starting from scratch.

These days you rarely have to start from scratch and savings in the region of 35-40% are achievable if you put your project out to tender to software developers who have code libraries which already include much of the functionality your after.

 

[webgeek]

The complexity of the app has yet to be discussed, so costings and approach are purely WAGs.

A decade ago I worked with a company who developed a software system for the car hire industry which had to be effective with 10,000 simultaneous users. That project took 4 devs + 1 mgr a little over a year at a cost of $250k, though it sold for 7 figures when completed and 3rd party certified.

On the other hand, we probably all know one man bands who can whip out a software utility in their spare time over a single weekend at a cost of a couple hundred quid.

Without having some idea the scale and complexity, segment within the target market, etc, etc, cost guesses will remind wildly inaccurate.

Selling an idea to investors is much harder than selling a working prototype. You will give up more, period.

Getting a software company to listen to your pitch, trying to get them signed as business partners? NDA or not, it's all too easy for them to independently launch a unique company and similar, yet improved, version of what you pitch. After all, if it is a GREAT idea, why do they need you?

Great care needs exercised when you have the idea but not the means. Government innovation funding sure springs to mind. There's cash everywhere for high growth tech startups, at least in Scotland.

 

[garyk]

I was trying to tell the OP to approach software developers and get them to tender for whatever he has in mind as they may already have built something with much of the functionality he requires and that he doesn't have to pay someone to start from scratch.

Possibly, but just because they have frameworks/libraries to save time doesn't mean they will automatically pass on a big saving. I've built libraries for common code but that's primarily to improve efficiency, rapidly prototype and save time, not so I can go to market with cheaper offerings.

Getting a product out to market with basic functionality and tweaking based on actual customer experience is far better than ploughing a ton of money into a long development project and then finding out people don't like the way it works.

Gary