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How to Start a Software Company

How to Start a Software Company

Starting a software company is no easy task. It takes a lot of hard work, dedication, and planning. But with the right tools and resources, it can be done. In this article, we will outline the steps necessary to start a software company and make it thrive in today’s competitive market. 

Here are the ten steps you can take to get started on building your very own software business.


10 Steps to Launching a New Software Business

1. Choose Your Type of Software Business

The first step in launching a software business is to identify the type of software business you want to launch. You might choose from the following types, among others:

  • Application software businesses – These businesses develop and sell apps for mobile devices or computers.
  • Web software businesses – These businesses develop and sell software that is accessed via the internet.
  • Systems software businesses – These businesses develop and sell software that helps run computers or other systems.


2. Name Your Software Business

Give your software business an identity so people will consider it a well-known and respected brand. You can take the name of your software business from your industry, focus on a geographical location, or use your own name among other options.

The main goal for naming your software business is to make it sound appealing and trustworthy so that potential customers will want to do business with you.


3. Determine Your Software Business Model

There are several possible types of business models for a software business, including:

  1. Selling software licenses – In this model, you sell customers the right to use your software.
  2. Selling software subscriptions – In this model, you sell customers access to your software for a monthly or annual fee.
  3. Selling support and maintenance services – In this model, you provide customers with support and maintenance services for your software.
  4. Selling software as a service – In this model, you provide customers with access to your software over the internet.

No matter which model you choose, ensure that it aligns with your business goals and the products and services you offer.

Read more about choosing the right business model for your software business.


4. Choose a Legal Form for Your Business

By incorporating your software business, you will limit your liability. You can incorporate as a Limited Liability Company (LLC), a C Corporation (C-Corp), or an S Corporation (S-Corp). Or you can operate as a sole proprietorship.

The business structure you choose for your software business will determine the taxes you pay and which state or federal tax forms you need to file.

Read our article comparing the most common software business structures.


5. Write a Software Business Plan

All software business owners should develop a business plan. 

A business plan is a document that outlines the goals, strategies, and operations of a business. It can be used to secure funding from investors or lenders, as well as to guide the day-to-day operations of the business. The business plan should include information on the company’s products or services, market analysis, financial projections, and management team among other things.

When developing your software business plan and strategy, you should think about the following questions your customers might have:

  1. What type of software business should I launch?
  2. How can I name my software business so it sounds appealing and trustworthy?
  3. What business model should I choose for my software business?
  4. How can I incorporate my software business?
  5. What are the goals and strategies of my software business?
  6. Who is my target market?
  7. How will I reach my target market?
  8. How much money do I need to launch my software business?
  9. How will I generate revenue with my software business?
  10. What are the day-to-day operations of my software business?
  11. What are the long-term goals of my software business?
  12. How can I protect my software business ideas?

Answering these questions will help you develop a clear and concise business plan for your software company.

Read our article about how to write a software business plan.


6. Apply for the Necessary Permits and Licenses

You may need to obtain required licenses and permits before launching your software business.

For example, if you are selling software that handles sensitive customer data, you may need to obtain a security clearance from the government.

You must also register your software business as a legal entity with the state where you plan to do business. You can simply file an online form through your Secretary of State website.

Registering with the federal government is also essential so you can properly pay taxes for your business. You will also need an Employer Identification Number (EIN), which you can apply for at the IRS website, if you plan to hire employees.


7. Determine Your Budget & Apply for Funding as Needed

In developing your software business plan, you will figure out how much funding you need to start and grow your business.

If you have funds to invest in your software business, you may consider taking advantage of that. In addition to your funds, other forms of potential funding for your software business include traditional bank loans, SBA loans, credit cards, angel investors, and family and friends.

Read our article about the costs associated with starting a software business to help you determine if funding is needed. 


8. Get the Technology & Software Needed to Run Your Business Efficiently

When you start your software business, it’s essential to have the right technology in place to maximize efficiency. You definitely need a computer with Internet access, and accounting software for tracking expenses and revenues. 

You may also want to invest in project management software to help you keep track of deadlines and progress on your various software projects. Other software programs you may need include a customer relationship management (CRM) system, human resources (HR) system, and marketing automation software.

Read our article about the technology and software you need to run a software business.


9. Market Your Software Business to Potential Clients

Before you start selling your products and services, you have to let the world know you exist. The first step is to create a website so people can learn more about your products and services and how they benefit them.

After you launch your website, start promoting it through social media channels like Facebook, LinkedIn and Twitter. Also consider networking with other people in the software industry through social media and blogs so they can help share your business. 

You also need to start gathering the materials needed to execute on your promotions strategy, which is your strategy for attracting new customers. Software businesses should consider the following promotional strategies:

  • Host webinars or online workshops to teach potential clients about the benefits of using your software.
  • Create demonstration videos or case studies of your software in action to show potential clients how it can help them.
  • Make a list of the top reasons why someone would need your software and use that as a selling point in all of your marketing materials.
  • Speak at industry conferences or events to get your name and your business out there.
  • Offer free trials or coupons for your software to encourage people to try it out.
  • Give away free information products like e-books or whitepapers about topics related to your software to attract leads.

Read our article about how to market your software business for more tips.


10. Get New Clients & Grow Your Business

When you promote your products and services, you’ll start to get interest from potential clients

Make sure you’re ready to serve these clients. Also, be sure to establish systems to ensure consistency and reduce costs. And be sure to find and train the right people to help you grow your software business.

Read our article about how to effectively grow your software business to learn more.


Starting a Software Business FAQs

Starting a software business has many benefits. First, it’s a very profitable industry with high margins. Second, it’s a relatively easy business to get into since you don’t need any brick-and-mortar locations or expensive inventory. Third, there’s a lot of room for growth since the demand for software is always increasing.

To start a successful software business, you need a great idea for a software product or service, the skills to develop or market it, and the drive to succeed. You also need to create a marketing plan and build a website to promote your business. Finally, you need to get new clients and grow your business.

Starting a software business from home is a great option for many entrepreneurs. It’s relatively low-cost and you can often work on your schedule. To get started, establish a home office and workspace. Set up your computer and internet connection. Then, start promoting your business online and offline.

Starting a software business online is a great option for many entrepreneurs. It’s relatively low-cost and you can often work on your own schedule. To get started, create a website to promote your business. Then, start promoting your business through social media channels and other online marketing channels. You can also consider selling your software products or services online.

Here are some tips for starting a software business:

  1. Create a great product or service. Your software business will only be successful if you have a great product or service that people want to buy.
  2. Do your research. Be sure to research the competition and understand the needs of your target market.
  3. Develop a marketing plan. You need to promote your business effectively if you want to succeed.
  4. Build a website. Your website is often the first impression potential customers will have of your business, so make sure it’s good.
  5. Get new clients. You need to get new clients regularly to keep your business growing

A simple checklist to use when starting a software business is as follows:

    1. Choose Your Type of Software Firm: This should be based on what you are best at and how much experience you have. Remember to always keep your interests, skills, and experience in mind.
    2. Name Your Software Business: This should be done carefully, as your brand is important for attracting the right customers. A simple, memorable name will go a long way.
    3. Choose a Legal Form for Your Business: Whether you become a sole proprietorship, partnership, LLC, corporation or another option will depend on your business. Ensure that you are aware of all the implications of each type.
    4. Determine Your Software Business Model: Determine how your business will make money. Will you sell products, services, or a combination of both?
    5. Write a Software Business Plan: Your business plan will also help you determine what your start-up costs will be and will provide a roadmap with which you can launch and grow.
    6. Apply for the Necessary Permits and Licenses: In most locations you will be required to apply for a business license and/or permits before you can begin operations.
    7. Determine Your Budget & Apply for Funding as Needed: You will need to know how much money you have to spend on all of your business-related expenses before opening any doors. If needed, apply for a small business loan or other funding options.
    8. Get the Technology & Software Needed to Run Your Business Efficiently: You need to have the right tools in place to succeed. Implement software that will help you manage your time, contacts, and business operations in general.
    9. Market Your Software Business to Potential Clients: A solid marketing plan will be crucial to your success. It should focus on attracting the right customers so that you can provide them with the products and services they truly need. 
    10. Get Clients & Grow Your Business: Once you have a solid marketing plan, it's time to actively pursue and secure those who could benefit the most from your products and services



Starting a software company can be a great way to turn your entrepreneurial dreams into a reality. By following the tips we’ve outlined, you can give yourself the best chance of success. Remember to research the market, build a great product or service, and promote your business effectively.

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