When you’re building a software development company there are a lot of traps just waiting for you to fall into. Luckily they are things that you can plan ahead for and minimise the risk of them ruining your business.
I’ve been talking to my good friend who’s the founder of Arkency, and we isolated two huge problems that make software dev companies disappear from the market. I’m talking about working with big clients and managing your production and sales flow.
Big clients kill software dev companies
When your company is young, a big client can help stabilise your situation, kickstart growth and enrich your portfolio. You’re probably not in demand yet, so delegating most of your developers to one project won’t hurt you.
Further down the road, big clients can mess your workflow up:
- they limit your resources, because these projects usually require a big part of your team
- this puts you in a position of being financially dependent on one company
- these projects can get stretched out and a few month project can become a year-long one
Growth isn’t about one-off big wins, but about regular smaller wins. You want to be able to work with multiple clients and be able to accept new projects at the drop of a hat.
Avoid delegating too many developers to individual projects and betting your company’s future on big clients:
- don’t have more than 1/3 of your team working on one project
- 1/2 of your team can work only on special projects that can benefit you in more ways than just revenue
- if a project requires half of your team, you need to be able to trust the client and preferrably already have a great business relationship
If your team isn’t busy, you’re burning money
I’m sure you’ve had situations when you were paying your developers while they weren’t active because of a lack of projects and new clients. Burning money isn’t cool.
Are there any short-term solutions to this? Yeah, clever team management – delegate developers that aren’t on a project to:
- your company’s internal projects
- other projects for a small fee from the client
- running mentoring and training sessions – in-house or for clients as an additional service
- writing content for your blog, ebooks or answering questions on Quora to boost your company’s online visibility by simply sharing expertise
But you can minimise the risk of this happening by planning ahead and managing your sales pipeline according to your production capabilities.
“Managing your sales pipeline” is a fancy buzzword but it means:
- defining which clients are the best business partners for your company
- looking for, and regularly approaching potential clients that fit your description to offer your services
- negotiating deals and analysing how long it takes you to close deals and schedule new projects
To have a smooth workflow (developers finish projects and jump onto new ones without delays), you need a smooth flow of incoming deals.
But you don’t have to redefine your priorities and suddenly start spending most of your time on approaching new clients.
You can have this done for you “behind the scenes”:
- outside companies can find and approach new clients in your name and you don’t have to manage the process
- you’ll have more opportunities to discuss new projects as sales conversations will be opening up for you regularly
- predictable client acquisition will help you grow and minimise the risk of losing cash due to delays, as was the case for one of our big clients that’s still with us today – Divante
- it’s not a complex solution, you still need a sales process in-house but it minimizes risk of delays and having to take unfavorable deals under pressure
Working with a company that approaches new clients for you can minimise the risk of delays, and in turn improve your production workflows.
Instead of putting out fires, don’t let them happen
As the founder of a software development company, you’re facing a huge responsibility – your developers want to work, increase skills and get paid, and clients need solutions delivered on time.
Predictability is always better than having to constantly put out fires, so plan ahead for the possible pitfalls that lay ahead because they’re very real – and might be waiting for you just around the corner.