Advice for starting a business

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OhPinchy

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I have an idea for a business that I think could be very successful. It would involve creating a very large and powerful software application to fill a niche in the market and this would then be used by third-party companies who would renumerate us in some way (to be decided for it) for their use of it. I have total faith in the product, and it has been received positively by all friends I’ve mentioned it to (lame as this does sound).

I am a consultant for a technology/management consultancy firm so I have all the necessary skills to produce business requirements and functional specifications for this product. I have a friend from college who is a senior software developer/architect and would be willing to come on board and together we would create the technical specifications. It would be too large for two people to develop the code for, so at the moment I would perceive that we would need to take people on board (again I have good contacts in this field) at this stage.

At the moment the high-level plan is:

1. Research the market
2. Produce a concept/mission statement document (for explaining it to people)
3. Produce full business requirements document
4. Develop some rapid prototypes (for pitching)
5. Develop functional specs
6. Develop technical specs/detailed design
7. Hire developers and testers to implement and test design
8. Launch product

How does this sound as an outline? I think getting a company on board to be the guinea pig client would be very beneficial, and the earlier their input is gained the better, though obtaining such a client could be challenging.

My problem is where do I start? I have no actual background in business, though in my time in consultancy have been making the transition from IT background to business work, as senior management believe my strengths lie in dealing with people. I am a very quick learner but at this point I need to figure out where to devote my concentration. Once I know what needs to be done I am confident I can work at it to figure out how to do it.

I will check out the links in the key posts in this forum for details on the mechanics of setting up a company, but its not the nuts and bolts I need to focus on at this stage: I need to come up with a plan on how to start preparing for leaving my current job and starting the business. Things are complicated by the fact that I am working full time and also carrying out extensive renovations on my house and will be for the next 6 months, but until then I can try get as much preparation done as possible.

So I guess what I’m really looking for is any advice or recommendations of books or courses (I will check out the books in the MBA in Entrepeneurship thread) on the following areas:

-How to research a market (i.e. re-affirm that there is no similar product out there, gather info on the target market, which is a bit of a closed shop)
-How to start-up a business (both mechanics of it and also how to pitch for investment etc.)
-Managing a business (i.e. not the nuts and bolts of how to file tax returns etc, but higher level stuff like deciding strategy, decision making etc)
-Marketing

Many thanks for any help you can offer.
 
OhPinchy said:
I am a consultant for a large technology/management consultancy firm
Click to expand...

Have only gotten this far in your post, but does your employment contract have something in it regarding your employer owning all rights to anything you invent etc while you work for them?

If you're still working for them now then they technically own the rights to your new product. And if your product's as good as you say it is, then they may very likely insist on their rights.
 
Hi Ronan,

I can check the contract though I don't believe there is anything along these lines in it, as I seem to remember someone mentioning something similar a couple of years back.

At the moment this is an idea and nothing has yet been actualised, and will not be until I were to leave the current company, so for the purposes of the thread can we assume that this is not a factor, though thanks for the heads up and I will be sure to take this on board.
 
starting a business is a lot of hard work.

stop thinking so much and get on with step 1:Research the market
to ensure the idea has a chance of success
 
Go for it!

Theres always opportunities in business, you dont have to invent anything, just innovate.
 
thanks.

I'm a firm believer in the 'design hard, code easy', and 'measure twice, cut once' schools of thought. I don't like jumping into things without planning it properly as it leads to wasted effort at some point along the way.

That's why I'm trying to get advice here on the bigger picture before jumping into things. That said, it'll be a good while yet before I get to focus on this full time so in the meantime I will defo be looking to learn as much about the market as possible.

So, do you have any advice on how to go about this research or is your view that its best to jump straight into it? I'm sure its a balance between these so I'd like any nuggets of info people might have like maybe a good site they came across etc.
 
The main thing I would worry about is will it sell or not.
I am in the IT game and I am introduced to innovative softwares and devices on a regular basis .They all do brilliant things but to fit them into the customers needs is what required. Everybody is looking for the killer application. Whats differant about yours that will make everybody want it.

Is it equal to the change Broadband has made or perhaps the Internet.
My suggestion would be to introduce it to somebody who will promote it and sing it prases Perhaps ICS, COMPUTER SCOPE.
Is it aimed at the Corporate or SME market.
You seem very confident in your application, I would look to partner with a Company who has access to a market, Legal agreements could be signed to protect you and your product. Failing that take on a hot Sale/ Marketing person.
 
Some other things to consider :

(1) Have you or your potential partner got any business knowledge of the area for which you will be developing this product ?

(2) Why has noone else done it (possibly because it's too hard, the market is too small or they just haven't thought of it)

(3) What is there to prevent someone else doing the same thing and 'stealing' your market i.e. what are the barriers to entry into the market

These are not meant to put you off - just food for thought.

I would get on with researching the market and feasability. Can you partner with anyone already working in this area - this could be an individual rather than a company.
 
I mean "go for it" in terms of trying to encourage you but not start advertising things or anything just yet :) .

Market research is probably the most important thing you can do at this stage. Find out your competitors, download their evaluation products to see whats currently on offer. Find out if any of the research companies have produced research reports in your product area (at least they will give you an indication).

Try to find out from some customers on what may be missing from the current offerings. You need to define what is your competitive advantage, what you offer that others do not. Can you offer consultancy around the product (depends on what kind of product it is). Is your product going to be easily copied and replicated by other companies?

You could look to bring your idea\prototype to an existing company and see if you can get it to market that way.
 
Thanks for the interesting feedback folks. There's some very good points raised there and though I'm not going to address them one by one as my answers would reveal too much about the idea, I can assure you I'm taking them on board.

I am going to wrack my brains to dig out all the contacts I may have in the chosen market and get as much info as possible.

I think the value would lie in licensing the product so I think it would need to be developed before bringing it to client, or else write a contract that the trial client are essentially getting it free for X amount of time, and they have no rights to the ownership of the product, or something along those lines (lucky for me my sis is in contract law!).

SteelBlue - I was replying to 'hhhhhh''s point that I should just get into it gung-ho without any thought - I see thought spent up front as a valuable investment that will yield benefits down the road.

tyrell - what role could ICS and COMPUTER SCOPE play (not very familiar with them)?

euroDilbert - good points raised there, I'll be sure to cover those bases, and its made me think of someone I know in the industry that might be a useful contact.

One delicate matter I will have to discuss with my potential partner is ownership of the potential company. I'm comfortable with going into business with him as we are friends, but not that close, kind of a mixture between a friendship and professional relationship: we always did projects and studied together back in college and also did some contract development work together for a company while in college and our working relationship is top notch as theres no major emotional involvement and we could be brutally honest with each other.

We often said we'd go into business together, though the assumption would be that it was a 50-50 deal. However, this is my idea, and though he will bring a lot to the table along the lines of innovative features and clever and high performing implementation, I'm thinking it might be foolish to hand over half of the company for that. Half of me thinks just go 50-50 to avoid any issues uneven ownership might cause down the line, while the other half is saying this might be a mistake. Meeting next week and I'll get his thoughts on it then but from the outside what would you think is reasonable in such a situation?
 
OhPinchy said:
SteelBlue - I was replying to 'hhhhhh''s point that I should just get into it gung-ho without any thought
Click to expand...
I said get going on stage 1. Research the market
which is a very simple step

if there is no market, then you are wasting your time with all this thinking

this is a start up venture not steering a big multi national into a new market you have one goal get sales its that simple, despite what ever consulting bulls**t you might have heard.

How can you say that you are putting any serious effort into this venture if you are unsure of this "re-affirm that there is no similar product out there"
 
Best advise I can give is to go to your local Enterprise board and sign up for one of their start your own business courses. They cover a lot of what you asked in your original post and are quite reasonably priced.

C
 
Hi 'hhhhhhhh' - I take your point and don't worry, having worked for a startup during the dotcom boom (ding lightbulb goes off in head cos there's a whole bunch of people involved in that I reckon I can ask advice from), I can assure you that I have seen what happens when the focus is not on keeping costs in line with sales that are not just being booked, but are being completed.

I can see the pressure being on to get those sales in asap after setting it up cos we'll start incurring expenses at that point so I'm keen to get as much preparation done before that stage as possible as the more clued in we are the quicker we'll be in a position to make and deliver on sales.

As for whether any similar products are out there its not quite as simple a question as you make out. It's a big world out there and its difficult to get information on products that companies may be using in-house but are not publicly available. As yet I have found no evidence of a similar product, and this is an issue I need to get a definitive answer on as early as possible when I do move into putting serious effort into this.

Capaill - an enterprise run course does seem like a great idea. I'm in D12 so how do I find my local Enterprise board (i.e. is it Enterprise Ireland)?
 
It's not enough just to do market research. You should do a feasibility study. This will include items such as:

It is commercially viable?
- it's not enough just to ask friends what they think. They may just feel 'sorry' for you or say what you want to hear. It's a totally different story when it comes to customers parting with cash. You need a hard-nosed experienced business person to give you an opinion.

- Is there indirect competition? - can people solve the 'problem' already? Why should people buy it, presumably they're getting along fine at the moment without your product. Who's going to buy it, companies, individuals - is it just for Ireland or global?

Is it Financially viable?
- can you support yourself for the design and development phase of the project? - you'll need to live on something.

- can you afford to bring the product to market? - Have a finished product is just the beginning. No one will know about it without marketing. Can you afford the marketing? You'll also need money to sustain yourselves during this stage. Don't underestimate this. Thousands could be leaving you account with little coming in from sales in the initial period.

Is it technically viable
This is the one area you probably know most of the answers to.

Do a google search on 'feasibility study'.
 
OhPinchy said:
Capaill - an enterprise run course does seem like a great idea. I'm in D12 so how do I find my local Enterprise board (i.e. is it Enterprise Ireland)?
Click to expand...

Contact Enterprise Ireland or your local council.

C
 
The only advice I would give is to make sure you get the percentages right in your company. You mentioned 50/50 which is more to keep your friend happy rather than the value he (or she) is bringing to the table. In a years time when you have a software product and are making money with plenty more to come that's when you will look back and begrudge your partner because you've put in most of the work and came up with the idea. So you really really need to consider seriously what is fair. You said the main area he will help in is the technical side, that's the easy bit. You could find a replacement for him and keep 100% of the company...if that doesn't fit well with you I'd sit down with your friend and tell him that it's your idea and if he wants part of it you're prepared to give him 5% now with the potential to increase this shareholding to 10% over the next couple of years depending on his contribution.

It might sound a bit cruel now but we're talking about your business and this will be one of your most important decisions so think long and hard about it. If you split the company 50/50 it's highly likely that you will regret this in the future.

Also, if I were you I would get a prototype up and running quickly and get one or two businesses using it. Then it will be much easier to get funding.
 
computer scope and ics are possible ways to market one is a body which could promote your product and the scope is a magazine read by both customers and businesses in the IT industry.
Maybe talk to some distributers in Ireland that have a UK outlet as well, they will market it for you to re-sellers who have the customer base.
Once the margin or re-ocurring revenue is attractive .
Regarding partnerships!!!! keep control, if your potential partner has anything to offer give them a percentage and allow them more for reaching a target. No free rides ???

Hope
 
computer scope and ics are possible ways to market one is a body which could promote your product and the scope is a magazine read by both customers and businesses in the IT industry.
Maybe talk to some distributers in Ireland that have a UK outlet as well, they will market it for you to re-sellers who have the customer base.
Once the margin or re-ocurring revenue is attractive .
Regarding partnerships!!!! keep control, if your potential partner has anything to offer give them a percentage and allow them more for reaching a target. No free rides ???

Hope it
 
Really appreciate the feedback.

Capaill, I'll be looking into those courses very shortly.

Yep, I see the management of the ownership issue as perhaps the first hard business decision that I'll have to take. At the end of the day I could hire in a contracted developer to do it and the real value is in the idea and management of the business so I'll put this to my mate and see where he stands on it. It may not be worth his while in the short-term.

umop - I like the idea of a feasability study to analyse things in the cold light of day. I'm trying to think of a hard-nosed business person I know who I could trust to explain the idea to and get their feedback on it.

With regards to funding ourselves during the design and development phase, how do start-ups usually manage this? I do have my half of a mortgage to pay so thats a hassle. As far as I know, start-ups usually seek venture capital to help them through this stage, and in return the investor gets a stake in the company. Obviously I'd try keep costs as low as possible to ensure as little as the company as possible needs to be handed over to investors. Does anyone have any experience or advice on seeking venture capital, and determining what the company is worth in order to determine how much investment is required for a certain stake? I've seen things like people on that Dragons Den show where they work this stuff out from some very amateur basic calculations and I imagine there should be more of a science to it.
 
Does your product/company have export potential?
If it does then Enterprise Ireland will jump all over it. They have a "High potential start up" programme that basically pre-approves a lot of grant aid in advance. This can help with start up costs. They will also help you with protecting your intellectual property. The best way of stopping anyone from copying your product is to register the IP in some way (Patents, copy right, trade makes etc). If they take a stake in your company you can structure it in such a way they can only sell it back to you so in reality it is a low interest loan.
As you have stated above your first step is market research, EI can help you with that as well. If your potential partner is in the BMW region then use his address on all applications as you can get more grants if you are located in a disadvantages area of the country.
If you would like more detail on this you can PM me.

Good luck either way.
 
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