How to Start a Software Company

How to Start a Software Company



How to Start a Software Company

If you’re looking to start a software Company, you’ve come to the right place since we’re going to show you exactly how to do it.

We’ll start with key software publishing industry fundamentals like how big the market is, what the key segments are, and how revenues and profits are generated.

Then we’ll discuss keys to not only starting a software company, but succeeding in it!

History of Software Development

History of Software Development infographic


How Big is the Software Publishing industry?

There are 7,737 software companies in the U.S. and they generated $192.7 billion in revenue last year.This shows an annual growth rate of 3.6% in the past 5 years.

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What are the Key Segments of the Software Publishing Industry?

The main segments of the industry are Application software publishing and System software publishing. Other product segments include: Re-sale of computer hardware and software, Information technology technical consulting services, Custom application design and development and Information technology related training services.

6 Stages of Software Development Life Cycle

Stages of Software Development Life Cycle infographic


What External Factors affect the Software Publishing Industry?

A number of factors affect the performance of the software publishing industry. These drivers include:

  • Private investment in computers and software: When the demand for computers increase, the software publishing industry is positively affected. This year, investment for computers and software is expected to rise.
  • Number of mobile internet connections: An increase in the use of mobile internet connections make mobile devices more vulnerable to viruses, thus also increasing the need for security software and improving the industry revenue. The number of mobile internet connections continues to increasing.
  • Corporate profit: When profit of companies rise, they tend to upgrade IT systems which involves purchases of new software.
  • Demand from video games: An increase in sales from video games benefits the software publishers. This year, demand from video games will increase.
  • Government consumption and investment: Government spending benefits the software publishing industry and it is increasing this year.
  • Percentage of households with at least one computer: An increase in number of PC owners means there’s also higher demand for software. The percentage of households with at least one computer is increasing today.
  • Per capita disposable income: An increase in consumers’ per capita disposable income indicates that there is a high chance that they will purchase new software for personal use or entertainment.


Who are the Key Competitors in the Software Publishing Industry?

Oracle Corp.
Microsoft Corporation
International Business Machines Corp.

What are the Key Customer Segments in the Software Publishing Industry?

The largest customer segment in the software publishing industry is businesses. Households then make up about a third of all customers and government entities make up a small portion.

What are the Key Costs in the Software Publishing industry?

Wages – Over a third of revenue is comprised of wages.

Purchases, research and development – Over 10% of software publishing revenue is spent for purchases, research and development.

Other – The other costs in the software publishing industry which comprises of marketing costs, depreciation, rent, office supplies, furniture, etc.

What are the Keys to Launching a new Software Company?

1. Be an expert.
It is best to have a degree in Computer Science, Software Engineering, or other related courses. You can also take programming classes and learn different computer programming languages if you think you can develop enough skills to develop software with non-degree classes.

2. Undergo trainings.
Other software companies also offer trainings to their employees. You can apply for entry-level jobs and obtain skills from other companies’ training programs before starting your own business. This will not only improve your computer programming skills, but also your communication and team management skills.

3. Have a Software Publishing business plan.
Study all the aspects of the software publishing industry carefully before you invest and get into the business. This includes your business description, location, target market, competitors, operations, equipment needed, and costs. This will allow you to decide whether you can start a software company and keep it.

4. Determine the software you want to develop.
Identify the needs of your target market that has not yet been fully taken care of by other software. Study the existing software or products that are trying to provide a solution to this need and figure out how you can create a better product. Be sure to choose a need or problem that your potential clients will most likely want to fix first.

5. Comply with government requirements.
Know all the requirements that the national and local government needs to open a software company. Get licenses if needed. You will save time, effort, and money if as a business owner you personally process your documents and permits before you begin with your business operations.

6. Secure your software ownership.
It is important to secure your ownership over the software that you developed. However, not all software is qualified for a patent. Consult a patent lawyer to determine whether your product qualifies for a patent. If not, you may register a copyright to the U.S. Copyright Office.

7. Promote your business online.
Potential clients in the software publishing industry are looking for developers online. Maximize social media. Create social media accounts for your business and regularly post updates about your upcoming product. It is also a great help to utilize post boosts that different social media platforms offer like Facebook and Instagram to reach a specific set of audience for flexible rates, depending on your budget.

What are the typical startup costs for a new Software Company?

Startup cost for software company range from $30,000 to $150,000 depending on the business scale.

How much do Software Publishing Operators Make?

A software publisher earns an average of $61,000.

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Apps that Top Developers Use

Apps that Top Developers Use infographic


Measuring your SaaS success


SaaS Business Models – Keys to Success


What do Investors Look for in API Startups?


Helpful Videos

Code to Company: Lessons in Building a Software Company

How to Estimate in Software Development


Additional resources in the Software Publishing Industry

For additional information on the software publishing market, consider these industry resources:


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