Mar 10, 2020 | 6 min read

Greenhouses for Startups: How Early-Stage Companies Benefit From Software Development Companies

Pavel Kaplunou, Marketing Communications

Apparently, half a million businesses spring up every month. That is 6 million businesses yearly. Chances are, most of these startup companies will rely on software to accomplish one task or another, even if the company is not explicitly a tech one. That is where software development companies take on the figurative role of greenhouses for sprouting business ventures.

If we believe the widely-accepted startup failure rate of 90, from the 241,000 new startups formed in 2017, only 24,100 will still be around. The reasons behind such a number are plenty. We dig into the weeds some of the most widespread reasons startups fail.

In the weeds of startups

No startup company is an island. What that means is few people wear many hats. Employees can both set tasks and execute on their goals, being their own supervisor. Executives can juggle between managing the sales pipeline, building media relations and being the key business developer overall. 

Experience gap

The expression ‘people make the company’ is especially true for verdant companies. With every cent on the line, making the right hire is critical. That said, dishing out on one great employee might not be a smart strategic move, as, once again, ‘people make the company’, not ‘person’.

Many agencies such as Ernst and Young are reporting that major economies will need to upskill employees in a digital-first economy. Companies will need to prepare their coffers not only to hire skilled talent, but also train existing staff. Thus, hiring and upskilling will take up a large chunk of overall overheads.

Startup budgets

Too many startups come into being based on a great idea. While great ideas always sound fantastic on paper, building the budget required for launch can be genuinely tough. The overheads can be especially high when hiring the right people to get the job done, let alone establishing an office.

While forming a distributed workforce solves the latter problem, it can actually hold the answer for the former as well. Great employees do not have to be locals, or even residing within state borders for that fact. A lot of great talent comes from overseas and companies worldwide are benefiting from the opportunity.

When it comes to hiring talented IT talent, and software developers, companies can slash their monthly salary overheads by at least half thanks to offshoring and nearshoring. When the average monthly US software developer salary is around $8,000, you can definitely do the math.

Processes

Small teams are known to perform best, especially when the people involved are acquainted. The synergy that develops often comes down to a system of communication and processes, acknowledged or tacit, on which the members of the group rely.

As the team grows, the system becomes more difficult to manage and, like it or not, some kind of workflow process needs to be set up. For lack of prior business experience, organizational skills or simply time, startups head into battle virtually unarmed.

The burden of building processes becomes incremental if the business grows and none or few processes exist.

Ongoing product development

Getting a product to market can be one thing. However many hardships it takes, products can generally see the light of day. Seldom do they, however, fit the bill entirely from the start, when it comes to giving users the experience that they expect from it.

Building a great product or a service built around a product, particularly a digital one, can spell two distinctly different things. Products on the market need to adapt, reiterate and develop with the sway of the market so as not to tank and fall into oblivion.

What startups face is the challenge of managing a live product and implementing changes on the fly or in time for the next market shift. App development companies are acutely aware of the problem. Not only does it take analyzing a lot of data, but it also requires a lot of hands doing work productively to cover a lot of ground in a short period of time.

Stakeholder pressure

And then there are the stakeholders, or, rather, even the shareholders. When it comes to startups the venture capital apparatus can fairly quickly launch a company into the limelight, for a share of its profits.

To break even, startups will juggle a lot of demands, from stakeholders, to actual users of their products and services. This might result in demands towards employees hired, product features developed, or partnerships made.

Whatever the case, making choices will often mean satisfying as many, or attempting to anyway, demands as possible. There will not be a silver bullet or magic button that does that for you, however, they may be things that come close.

A typical startup scenario

In Smart IT’s experience, software development services for startups have mainly consisted in:

  1. Finding the right software engineers
  2. Balancing teams, process building and budgeting
  3. Testing hypotheses
  4. Managing ongoing development and product updates

Depending on where you sit, any variation of these requirements can be true for your company. We like to think that these are but a few of the more pressing challenges that early-stage companies face, be they traditional businesses or digital ones.

Software development and application development for startups from any industry has taught us that the cases they face can often be quite similar, despite the vast differences in domains and industries. How can they address the problems they face?

Cultivating growth

No person is an island. Neither is a startup company.

Outside help can often come in the form of consultants. What startups do not always realize is that software development houses are a great source of expertise. These on-demand development companies can boast knowledge from a vast range of industries and have actionable insights for up-and-coming startups.

Sometimes even more obscure is the type of service they can offer. If your challenges are not in the list above, it may be hard to know what kind of solution to look for. 

On the subject of budget, working with a remote distributed software development team to solve business needs is rather beneficial. The dedicated team can even work in sync with your own time zone and speak the same language, while you have extra coin in the piggy bank.

Executive as a service, or the so called fractional executive, is essentially the equivalent of an IT or business consultant. The part-time executive dedicates time, knowledge and own resources towards a burgeoning business, helping them figure out experience gaps, reduce overheads on full-time senior staff hire and build bridges in the industry.

Dozens of green startups or even top-level enterprises rely on outsourced software development services from professionals beyond borders. Companies such as GitHub, Alibaba, and Slack have relied on outside talent to build solutions and contribute ideas for growth.

Takeaways

Both technology-oriented startups and businesses that use technology to address business needs can drastically reduce spend, bridge the skill gap and onboard employees for a fraction of the effort they might presume.

A connected world offers many opportunities to work with companies nationwide and overseas. To no use these opportunities would mean skipping out on prospects for growth. Do not be afraid to plant the seeds of partnership to help your sprouting ideas grow.

10 March 2020

WRITTEN BY

Pavel Kaplunou , Marketing Communications

Pavel is Smart IT's Marketing Communication Manager. He oversees content creation and is in charge of the official Smart IT blog. Contact Pavel to learn about potential media and content collaborations. p.kaplunou@smart-it.io

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