Eric Sink on the Business of Software

In his book, “The Business of Software“, Eric Sink talks about small ISVs, which are small independent software vendors who dream up a software product and then build it with the intent to market and sell it. He defines “small” as a company with fewer than 50 employees. There are a ton of small independent software vendor companies out there, but the fact of the matter is that most of them didn’t start out in the “small” category. 

I’m willing to bet that most small software companies start out as what he coined in his writings as a “Micro-ISV“. A Micro-ISV is a company of one. It’s a company started by one software developer who not only develops the software product but also markets and sells the it.

That’s exactly how my company, SherWare, Inc., started out. Like most vertical software providers, I stumbled into my niche while providing other services. 

A Software Company of One

I started out on my own in June of 1992. I had left a job as systems programming manager for a large grocery chain based out of Albuquerque, New Mexico and moved my family to Ohio to start a computer consulting business. At first, like most struggling businesses starting out, I took on any computer related job that came my way. I sold hardware and did hardware and network installations. I setup small companies with personal computers and installed accounting software such as PeachTree, DacEasy and QuickBooks. Then I provided training and consulting to these companies. Most were switching from paper ledgers to keeping their accounting on the computer. It was an exciting time.

Along the way I did some work for a couple of oil & gas producers. These are the companies that find promising drilling locations and then raise the money from their investors to drill a new oil or gas well. These companies were both using QuickBooks to keep track of their accounting but needed more specialized software to keep track of the oil & gas production and and to calculate the split of the revenue and expenses produced and consumed by the wells. They asked if I could write a software application to do the hard work of the oil & gas allocations and of course I said yes!

Once the software was written and in production at these companies, word started getting out that there was oil & gas accounting software that people actually liked to use and which produced reports that the mineral owners and investors could easily understand. Other companies started asking about purchasing the software and that’s when my software company was born.

I was the developer who loved the coding, but now I had to figure out how to market and sell the software.  

The marketing wasn’t too difficult for me. But as a geek, who like most geeks tended to be introverted, sales was not my thing. I would much rather sit at my keyboard than call prospective clients or stand at trade show booth meeting and talking to new people. 

The other aspect of business that I wasn’t good at was finances. Starting a small company is tough. Your bank account usually has pretty thin pickings most of the time and finances should be watched closely. I avoided my finances like the plague. I guess it was a way to avoid depression at first, but it quickly became a habit.

If you’re a company of one, you’re not alone! There are many other software companies out there that consist of a single employee and they have the same struggles that you have in dealing with the business side of their companies. 

If this is you, I have good news. It doesn’t have to be hard. The business side of your company can be as much fun as the development side. 

Making Business Fun

How, you ask, can the business side of the company be as much fun as the coding?

I know, coding is your craft. You love how you can manipulate the code and craft it in such a way to accomplish amazing things. I get that. Coding is a form of art. You need to be creating. If this is your mindset, and it probably is, then you can definitely make the business side of your software company more fun.

Take your marketing for example. Instead of thinking about marketing as just a sunk cost, start thinking about it as another form of your craft. Just like there are creative ways to code a certain method or class to make it work, there are creative ways to craft your marketing. You can create whole story lines around your products. You can test to see which perform better and continually make incremental adjustments.  In other words, once you have your marketing up and running, you’ll want to refactor it from time to time.

When it comes to sales, think about all the value your customers are going to get from your software. It’s more fun to sale on value because that means something to your customers. We understand features and they understand value. It’s much easier to sell when you see real problems being solved because you created your code.

I’ve since moved from a software company of one to having several employees. I’ve learned to love the business side of my software company. It hasn’t always been this way. What I’m saying is that if I can do it, you can do it. 

Leave me a comment and let me know what you think or if you have any questions.