how to make business plan for software company

How to write a business plan for a software development company?

Creating a business plan for a software development company is an essential process for any entrepreneur. It serves as a roadmap that outlines the necessary steps to be taken to start or grow the business, the resources required, and the anticipated financial outcomes. It should be crafted with method and confidence.

This guide is designed to provide you with the tools and knowledge necessary for creating a software development company business plan, covering why it is so important both when starting up and running an established business, what should be included in your plan, how it should be structured, what tools should be used to save time and avoid errors, and other helpful tips.

We have a lot to cover, so let's get to it!

In this guide:

Why write a business plan for a software development company?

• What information is needed to create a business plan for a software development company?
• What goes in the financial forecast for a software development company?
• What goes in the written part of a software development company business plan?
• What tool can I use to write my software development company business plan?

Having a clear understanding of why you want to write a business plan for your software development company will make it simpler for you to grasp the rationale behind its structure and content. So before delving into the plan's actual details, let's take a moment to remind ourselves of the primary reasons why you'd want to create a software development company business plan.

To have a clear roadmap to grow the business

Small businesses rarely experience a constant and predictable environment. Economic cycles go up and down, while the business landscape is mutating constantly with new regulations, technologies, competitors, and consumer behaviours emerging when we least expect it.

In this dynamic context, it's essential to have a clear roadmap for your software development company. Otherwise, you are navigating in the dark which is dangerous given that - as a business owner - your capital is at risk.

That's why crafting a well-thought-out business plan is crucial to ensure the long-term success and sustainability of your venture.

To create an effective business plan, you'll need to take a step-by-step approach. First, you'll have to assess your current position (if you're already in business), and then identify where you'd like your software development company to be in the next three to five years.

Once you have a clear destination for your software development company, you'll focus on three key areas:

• Resources: you'll determine the human, equipment, and capital resources needed to reach your goals successfully.
• Speed: you'll establish the optimal pace at which your business needs to grow if it is to meet its objectives within the desired timeframe.
• Risks: you'll identify and address potential risks you might encounter along the way.

By going through this process regularly, you'll be able to make informed decisions about resource allocation, paving the way for the long-term success of your business.

To get visibility on future cash flows

If your small software development company runs out of cash: it's game over. That's why we often say "cash is king", and it's crucial to have a clear view of your software development company's future cash flows.

So, how can you achieve this? It's simple - you need to have an up-to-date financial forecast.

The good news is that your software development company business plan already includes a financial forecast (which we'll discuss further in this guide). Your task is to ensure it stays current.

To accomplish this, it's essential to regularly compare your actual financial performance with what was planned in your financial forecast. Based on your business's current trajectory, you can make adjustments to the forecast.

By diligently monitoring your software development company's financial health, you'll be able to spot potential financial issues, like unexpected cash shortfalls, early on and take corrective actions. Moreover, this practice will enable you to recognize and capitalize on growth opportunities, such as excess cash flow enabling you to expand to new locations.

To secure financing

A detailed business plan becomes a crucial tool when seeking financing from banks or investors for your software development company.

Investing and lending to small businesses are very risky activities given how fragile they are. Therefore, financiers have to take extra precautions before putting their capital at risk.

At a minimum, financiers will want to ensure that you have a clear roadmap and a solid understanding of your future cash flows (like we just explained above). But they will also want to ensure that your business plan fits the risk/reward profile they seek.

This will off-course vary from bank to bank and investor to investor, but as a rule of thumb. Banks will want to see a conservative financial management style (low risk), and they will use the information in your business plan to assess your borrowing capacity — the level of debt they think your business can comfortably handle — and your ability to repay the loan. This evaluation will determine whether they'll provide credit to your software development company and the terms of the agreement.

Whereas investors will carefully analyze your business plan to gauge the potential return on their investment. Their focus lies on evidence indicating your software development company's potential for high growth, profitability, and consistent cash flow generation over time.

Now that you recognize the importance of creating a business plan for your software development company, let's explore what information is required to create a compelling plan.

Information needed to create a business plan for a software development company

You need the right data in order to project sales, investments and costs accurately in the financial forecast of your software development company business plan.

Below, we'll cover three key pieces of information you should gather before drafting your business plan.

Carrying out market research for a software development company

As you consider writing your business plan for a software development company, conducting market research becomes a vital step to ensure accurate and realistic financial projections.

Market research provides valuable insights into your target customer base, competitors, pricing strategies, and other key factors that can significantly impact the commercial success of your business.

Through this research, you may uncover trends that could influence your software development company.

You may discover that there is a growing demand for software that can be used across different platforms and devices. This could indicate that consumers are looking for more versatile and cost-efficient solutions. Additionally, your research might reveal that there is a trend towards more automated software, suggesting that customers are looking for ways to streamline their processes.

Such market trends play a significant role in forecasting revenue, as they offer valuable data about potential customers' spending habits and preferences.

By incorporating these findings into your financial projections, you can present investors with more accurate information, helping them make informed decisions about investing in your software development company.

Developing the sales and marketing plan for a software development company

As you embark on creating your software development company business plan, it is crucial to budget sales and marketing expenses beforehand.

A well-defined sales and marketing plan should include precise projections of the actions required to acquire and retain customers. It will also outline the necessary workforce to execute these initiatives and the budget required for promotions, advertising, and other marketing efforts.

This approach ensures that the appropriate amount of resources is allocated to these activities, aligning with the sales and growth objectives outlined in your business plan.

The staffing and equipment needs of a software development company

Whether you are at the beginning stages of your software development company or expanding its horizons, having a clear plan for recruitment and capital expenditures (investment in equipment and real estate) is vital to ensure your business's success.

To achieve this, both the recruitment and investment plans must align coherently with the projected timing and level of growth in your forecast. It is essential to secure appropriate funding for these plans.

A software development company might incur staffing costs such as hiring software developers, testers, and project managers. They might also incur costs for equipment such as computers, software licenses, and other development tools. Additionally, they might need to pay for office space, phone lines, and other associated costs.

To create a financial forecast that accurately represents your business's outlook, remember to factor in other day-to-day operating expenses.

Now that you have all the necessary information, it's time to dive in and start creating your business plan and developing the financial forecast for your software development company.

What goes into your software development company's financial forecast?

The objective of the financial forecast of your software development company's business plan is to show the growth, profitability, funding requirements, and cash generation potential of your business over the next 3 to 5 years.

The four key outputs of a financial forecast for a software development company are:

• The profit and loss (P&L) statement ,
• The projected balance sheet ,
• The cash flow forecast ,
• And the sources and uses table .

Let's look at each of these in a bit more detail.

The projected P&L statement

The projected P&L statement for a software development company shows how much revenue and profits your business is expected to generate in the future.

Ideally, your software development company's P&L statement should show:

• Healthy growth - above inflation level
• Improving or stable profit margins
• Positive net profit

Expectations will vary based on the stage of your business. A startup will be expected to grow faster than an established software development company. And similarly, an established company should showcase a higher level of profitability than a new venture.

The projected balance sheet of your software development company

The balance sheet for a software development company is a financial document that provides a snapshot of your business’s financial health at a given point in time.

It shows three main components: assets, liabilities and equity:

• Assets: are resources owned by the business, such as cash, equipment, and accounts receivable (money owed by clients).
• Liabilities: are debts owed to creditors and other entities, such as accounts payable (money owed to suppliers) and loans.
• Equity: includes the sums invested by the shareholders or business owners and the cumulative profits and losses of the business to date (called retained earnings). It is a proxy for the value of the owner's stake in the business.

Examining the balance sheet is important for lenders, investors, or other stakeholders who are interested in assessing your software development company's liquidity and solvency:

• Liquidity: assesses whether or not your business has sufficient cash and short-term assets to honour its liabilities due over the next 12 months. It is a short-term focus.
• Solvency: assesses whether or not your business has the capacity to repay its debt over the medium-term.

Looking at the balance sheet can also provide insights into your software development company's investment and financing policies.

In particular, stakeholders can compare the value of equity to the value of the outstanding financial debt to assess how the business is funded and what level of financial risk has been taken by the owners (financial debt is riskier because it has to be repaid, while equity doesn't need to be repaid).

The cash flow forecast

A projected cash flow statement for a software development company is used to show how much cash the business is generating or consuming.

The cash flow forecast is usually organized by nature to show three key metrics:

• The operating cash flow: do the core business activities generate or consume cash?
• The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
• The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?

As we discussed earlier, cash is king and keeping an eye on future cash flows an imperative for running a successful business. Therefore, you can expect the reader of your software development company business plan to pay close attention to your cash flow forecast.

Also, note that it is customary to provide both yearly and monthly cash flow forecasts in a business plan - so that the reader can analyze seasonal variation and ensure the software development company is appropriately funded.

The initial financing plan

The initial financing plan, also known as a sources and uses table, is a valuable resource to have in your business plan when starting your software development company as it reveals the origins of the money needed to establish the business (sources) and how it will be allocated (uses).

Having this table helps show what costs are involved in setting up your software development company, how risks are shared between founders, investors and lenders, and what the starting cash position will be. This cash position needs to be sufficient to sustain operations until the business reaches a break-even point.

Now that you have a clear understanding of what goes into the financial forecast of your software development company business plan, let's shift our focus to the written part of the plan.

The written part of a software development company business plan

The written part of the business plan is where you will explain what your business does and how it operates, what your target market is, whom you compete against, and what strategy you will put in place to seize the commercial opportunity you've identified.

Having this context is key for the reader to form a view on whether or not they believe that your plan is achievable and the numbers in your forecast realistic.

The written part of a software development company business plan is composed of 7 main sections:

• The executive summary
• The presentation of the company
• The products and services
• The market analysis
• The strategy
• The operations
• The financial plan

Let's go through the content of each section in more detail!

1. The executive summary

In your software development company's business plan, the first section is the executive summary — a captivating overview of your plan that aims to pique the reader's interest and leave them eager to learn more about your business.

When crafting the executive summary, start with an introduction to your business, including its name, concept, location, how long it has been running, and what sets it apart. Briefly mention the products and services you plan to offer and your target customer profile.

Following that, provide an overview of the addressable market for your software development company, current trends, and potential growth opportunities.

Next, include a summary of key financial figures like projected revenues, profits, and cash flows.

Finally, in the "ask" section, detail any funding requirements you may have.

2. The presentation of the company

In your software development company business plan, the second section should focus on the structure and ownership, location, and management team of your company.

In the structure and ownership part, you'll provide an overview of the business's legal structure, details about the owners, and their respective investments and ownership shares. This clarity is crucial, especially if you're seeking financing, as it helps the reader understand which legal entity will receive the funds and who controls the business.

Moving on to the location part, you'll offer an overview of the company's premises and their surroundings. Explain why this particular location is of interest, highlighting factors like catchment area, accessibility, and nearby amenities.

When describing the location of your software development company, you could emphasize its access to a highly educated and highly skilled talent pool. The company may be located in a region with an abundance of universities and businesses in the technology sector, providing a robust employment market for software developers. You might also point out the area's access to affordable office space, and its proximity to major transportation hubs, making it easy for third-party financiers to visit and stay connected to the company. Additionally, you could highlight the area's vibrant culture and desirable quality of life, making it an attractive place for employees to live and work.

Finally, you should introduce your management team. Describe each member's role, background, and experience.

Don't forget to emphasize any past successes achieved by the management team and how long they've been working together. Demonstrating their track record and teamwork will help potential lenders or investors gain confidence in their leadership and ability to execute the business plan.

3. The products and services section

The products and services section of your business plan should include a detailed description of what your company offers, who are the target customers, and what distribution channels are part of your go-to-market. 

For example, your software development company might offer website design and development services, mobile application development and custom software development services to its customers. Website design and development services could help customers with creating an attractive, functional website. Mobile application development services could provide customers with the ability to design and develop mobile applications to reach their customers in new ways. Custom software development could help customers design and develop custom made software solutions for their specific needs. All of these products and services could help customers achieve their goals and stay competitive in their markets.

4. The market analysis

When presenting your market analysis in your software development company business plan, you should detail the customers' demographics and segmentation, target market, competition, barriers to entry, and any regulations that may apply.

The goal of this section is to help the reader understand how big and attractive your market is, and demonstrate that you have a solid understanding of the industry.

You should start with the demographics and segmentation subsection, which gives an overview of the addressable market for your software development company, the main trends in the marketplace, and introduces the different customer segments and their preferences in terms of purchasing habits and budgets.

The target market section should follow and zoom on the customer segments your software development company is targeting, and explain how your products and services meet the specific needs of these customers.

For example, your target market might include businesses who need custom software solutions for their operations. These businesses can be of any size that have a need for the development company to create a specialized software solution that fits their specific needs. These businesses may need software that is tailored to their industry, such as an accounting firm needing an automated accounting system or a retail store needing a custom point of sale system.

Then comes the competition subsection, where you should introduce your main competitors and explain what differentiates you from them.

Finally, you should finish your market analysis by giving an overview of the main regulations applicable to your software development company.

5. The strategy section

When crafting the strategy section of your business plan for your software development company, it's important to cover several key aspects, including your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

In the competitive edge subsection, clearly explain what sets your company apart from competitors. This is particularly critical if you're a startup, as you'll be trying to establish your presence in the marketplace among entrenched players.

The pricing strategy subsection should demonstrate how you aim to maintain profitability while offering competitive prices to your customers.

For the sales & marketing plan, outline how you plan to reach and acquire new customers, as well as retain existing ones through loyalty programs or special offers.

In the milestones subsection, detail what your company has achieved thus far and outline your primary objectives for the coming years by including specific dates for expected progress. This ensures everyone involved has clear expectations.

Lastly, in the risks and mitigants subsection, list the main risks that could potentially impact the execution of your plan. Explain the measures you've taken to minimize these risks. This is vital for investors or lenders to feel confident in supporting your venture - try to proactively address any objection they might have.

Your software development company could face the risk of running into technical difficulties that may delay project completion. These technical difficulties could arise from a lack of skilled personnel, insufficient resources, or unforeseen issues that occur during the development process. Your software development company might also face the risk of a security breach that could compromise confidential customer data. This could occur if the company doesn't have the proper security measures in place or if malicious actors are able to find vulnerabilities in the software.

6. The operations section

The operations of your software development company must be presented in detail in your business plan.

The first thing you should cover in this section is your staffing team, the main roles, and the overall recruitment plan to support the growth expected in your business plan. You should also outline the qualifications and experience necessary to fulfil each role, and how you intend to recruit (using job boards, referrals, or headhunters).

You should then state the operating hours of your software development company - so that the reader can check the adequacy of your staffing levels - and any plans for varying opening times during peak season. Additionally, the plan should include details on how you will handle customer queries outside of normal operating hours.

The next part of this section should focus on the key assets and IP required to operate your business. If you depend on any licenses or trademarks, physical structures (equipment or property) or lease agreements, these should all go in there.

Your software development company may have a number of key assets and IP. These could include proprietary software code and hardware designs. For example, your company might have developed unique software algorithms that are protected by copyrights or patents. It could also have hardware designs that are protected by trade secrets or trademarks. These assets and IP could be vital in helping the company maintain its competitive edge.

Finally, you should include a list of suppliers that you plan to work with and a breakdown of their services and main commercial terms (price, payment terms, contract duration, etc.). Investors are always keen to know if there is a particular reason why you have chosen to work with a specific supplier (higher-quality products or past relationships for example).

7. The presentation of the financial plan

The financial plan section is where we will include the financial forecast we talked about earlier in this guide.

Now that you have a clear idea of the content of a software development company business plan, let's look at some of the tools you can use to create yours.

What tool should I use to write my software development company's business plan?

In this section, we will be reviewing the two main solutions for creating a software development company business plan:

• Using specialized online business plan software,
• Outsourcing the plan to the business plan writer.

Using an online business plan software for your software development company's business plan

Using online business planning software is the most efficient and modern way to write a software development company business plan.

There are several advantages to using specialized software:

• You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can access a library of dozens of complete business plan samples and templates for inspiration
• You get a professional business plan, formatted and ready to be sent to your bank or investors
• You can easily track your actual financial performance against your financial forecast
• You can create scenarios to stress test your forecast's main assumptions
• You can easily update your forecast as time goes by to maintain visibility on future cash flows
• You have a friendly support team on standby to assist you when you are stuck

If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here .

Hiring a business plan writer to write your software development company's business plan

Outsourcing your software development company business plan to a business plan writer can also be a viable option.

Business plan writers are experienced in writing business plans and adept at creating financial forecasts without errors. Furthermore, hiring a consultant can save you time and allow you to focus on the day-to-day operations of your business.

However, hiring business plan writers is expensive as you are paying for the software used by the consultant, plus their time, and their profit margin of course.

From experience, you need to budget at least £1.5k ($2.0k) excluding tax for a complete business plan, more if you need to make changes after the initial version (which happens frequently after the initial meetings with lenders or investors).

You also need to be careful when seeking investment. Investors want their money to be used to grow the business, not spent on consulting fees. Therefore, the amount you spend on business plan writing services (and other consulting services such as legal services) needs to be negligible relative to the amount raised.

The other drawback is that you usually don't own the business plan itself: you just get the output, while the actual document is saved in the consultant's business plan software - which makes it difficult to maintain the document up to date without hiring the consultant on a retainer.

For these reasons, outsourcing the software development company business plan to a business plan writer should be considered carefully, weighing both the advantages and disadvantages of hiring outside help.

Ultimately, it may be the right decision for some businesses, while others may find it beneficial to write their business plan using online software.

Why not create your software development company's business plan using Word or Excel?

Using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write a software development company business plan is not advisable. Allow me to explain the reasons.

Firstly, creating an accurate and error-free financial forecast on Excel or any spreadsheet demands technical expertise in accounting principles and financial modelling. Without a degree in finance and accounting and significant financial modelling experience, it's unlikely that the reader will fully trust your numbers.

Secondly, relying on spreadsheets is inefficient. While it may have been the go-to option in the past, technology has evolved, and software now performs such tasks much faster and more accurately.

The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.

And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.

Moreover, software offers ease in comparing actuals versus forecasts and maintaining up-to-date forecasts for clear visibility on future cash flows, as we discussed earlier in this guide. Such tasks are cumbersome when using spreadsheets.

Now, let's address the written part of your software development company business plan. While it may be less prone to errors, using software can significantly boost productivity. Word processors lack instructions and examples for each section of your business plan. They also won't automatically update your numbers when changes occur in your forecast, and they lack automated formatting capabilities.

In summary, while some entrepreneurs may consider Word or Excel for their business plan, it's far from the best or most efficient solution when compared to specialized software.

• A business plan has 2 complementary parts: a financial forecast showcasing the expected growth, profits and cash flows of the business; and a written part which provides the context needed to judge if the forecast is realistic and relevant.
• Having an up-to-date business plan is the only way to keep visibility on your software development company's future cash flows.
• Using business plan software is the modern way of writing and maintaining business plans.

We hope that this practical guide gave you insights on how to write the business plan for your software development company. Do not hesitate to get in touch with our team if you still have questions.

Also on The Business Plan Shop

• In-depth business plan structure
• Key steps to write a business plan?
• Free business plan template

Know someone who owns or wants to start a software development company? Share this article with them!

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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How to Write A Software Company Business Plan?

Writing a software company business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready and summarizes each section of your plan.

Here are a few key components to include in your executive summary:

Introduce your Business:

Start your executive summary by briefly introducing your business to your readers.

Market Opportunity:

Products and services:.

Highlight the software company services you offer your clients. The USPs and differentiators you offer are always a plus.

Marketing & Sales Strategies:

Financial highlights:, call to action:.

Ensure your executive summary is clear, concise, easy to understand, and jargon-free.

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2. Business Overview

The business overview section of your business plan offers detailed information about your company. The details you add will depend on how important they are to your business. Yet, business name, location, business history, and future goals are some of the foundational elements you must consider adding to this section:

Business Description:

Describe your business in this section by providing all the basic information:

Describe what kind of software company you run and the name of it. You may specialize in one of the following software company businesses:

• Enterprise software companies
• SaaS companies
• Mobile app development companies
• Web development companies
• Cybersecurity companies
• HealthTech companies
• Describe the legal structure of your software company, whether it is a sole proprietorship, LLC, partnership, or others.
• Explain where your business is located and why you selected the place.

Mission Statement:

Business history:.

If you’re an established software company, briefly describe your business history, like—when it was founded, how it evolved over time, etc.

Future Goals

This section should provide a thorough understanding of your business, its history, and its future plans. Keep this section engaging, precise, and to the point.

3. Market Analysis

The market analysis section of your business plan should offer a thorough understanding of the industry with the target market, competitors, and growth opportunities. You should include the following components in this section.

Target market:

Start this section by describing your target market. Define your ideal customer and explain what types of services they prefer. Creating a buyer persona will help you easily define your target market to your readers.

Market size and growth potential:

Describe your market size and growth potential and whether you will target a niche or a much broader market.

Competitive Analysis:

Market trends:.

Analyze emerging trends in the industry, such as technology disruptions, changes in customer behavior or preferences, etc. Explain how your business will cope with all the trends.

Regulatory Environment:

Here are a few tips for writing the market analysis section of your internet software company business plan:

• Conduct market research, industry reports, and surveys to gather data.
• Provide specific and detailed information whenever possible.
• Illustrate your points with charts and graphs.
• Write your business plan keeping your target audience in mind.

4. Products And Services

The product and services section should describe the specific services and products that will be offered to customers. To write this section should include the following:

Describe your products & services:

Mention the software company products or services your business will offer. This list may include:

• Custom Software Development
• Commercial Off-the-Shelf (COTS) Software
• Software as a Service (SaaS)
• Software Development Tools
• Software Consulting
• Software Maintenance and Support
• Software Testing and Quality Assurance
• Training and Documentation

Industry focus:

Quality measures, additional services.

In short, this section of your software company plan must be informative, precise, and client-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

Unique Selling Proposition (USP):

Define your business’s USPs depending on the market you serve, the equipment you use, and the unique services you provide. Identifying USPs will help you plan your marketing strategies.

Pricing Strategy:

Marketing strategies:, sales strategies:, customer retention:.

Overall, this section of your software company business plan should focus on customer acquisition and retention.

Have a specific, realistic, and data-driven approach while planning sales and marketing strategies for your software company, and be prepared to adapt or make strategic changes in your strategies based on feedback and results.

6. Operations Plan

The operations plan section of your business plan should outline the processes and procedures involved in your business operations, such as staffing requirements and operational processes. Here are a few components to add to your operations plan:

Staffing & Training:

Operational process:, software & tools:.

Include the list of software & tools required for a software company, such as cloud services & infrastructure, project management tools, Version Control Systems, collaboration & communication tools, etc.

Adding these components to your operations plan will help you lay out your business operations, which will eventually help you manage your business effectively.

7. Management Team

The management team section provides an overview of your software company’s management team. This section should provide a detailed description of each manager’s experience and qualifications, as well as their responsibilities and roles.

Founders/CEO:

Key managers:.

Introduce your management and key members of your team, and explain their roles and responsibilities.

Organizational structure:

Compensation plan:, advisors/consultants:.

Mentioning advisors or consultants in your business plans adds credibility to your business idea.

This section should describe the key personnel for your software company services, highlighting how you have the perfect team to succeed.

8. Financial Plan

Your financial plan section should provide a summary of your business’s financial projections for the first few years. Here are some key elements to include in your financial plan:

Profit & loss statement:

Cash flow statement:, balance sheet:, break-even point:.

Determine and mention your business’s break-even point—the point at which your business costs and revenue will be equal.

Financing Needs:

Be realistic with your financial projections, and make sure you offer relevant information and evidence to support your estimates.

9. Appendix

The appendix section of your plan should include any additional information supporting your business plan’s main content, such as market research, legal documentation, financial statements, and other relevant information.

• Add a table of contents for the appendix section to help readers easily find specific information or sections.
• In addition to your financial statements, provide additional financial documents like tax returns, a list of assets within the business, credit history, and more. These statements must be the latest and offer financial projections for at least the first three or five years of business operations.
• Provide data derived from market research, including stats about the industry, user demographics, and industry trends.
• Include any legal documents such as permits, licenses, and contracts.
• Include any additional documentation related to your business plan, such as product brochures, marketing materials, operational procedures, etc.

Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your software company business plan should only include relevant and important information supporting your plan’s main content.

This sample software company business plan will provide an idea for writing a successful software company plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready business plan to impress your audience, download our software company business plan pdf .

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Frequently asked questions, why do you need a software company business plan.

A business plan is an essential tool for anyone looking to start or run a successful software company business. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your software company.

How to get funding for your software company?

There are several ways to get funding for your software company, but self-funding is one of the most efficient and speedy funding options. Other options for funding are

• Bank loan – You may apply for a loan in government or private banks.
• Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
• Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your business, usually online.
• Angel investors – Getting funds from angel investors is one of the most sought startup options.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your software company?

There are many business plan writers available, but no one knows your business and ideas better than you, so we recommend you write your software company business plan and outline your vision as you have in your mind.

What is the easiest way to write your software company business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any software company business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software .

How do I write a good market analysis in a software company business plan?

Market analysis is one of the key components of your business plan that requires deep research and a thorough understanding of your industry. We can categorize the process of writing a good market analysis section into the following steps:

• Stating the objective of your market analysis—e.g., investor funding.
• Industry study—market size, growth potential, market trends, etc.
• Identifying target market—based on user behavior and demographics.
• Analyzing direct and indirect competitors.
• Calculating market share—understanding TAM, SAM, and SOM.
• Knowing regulations and restrictions
• Organizing data and writing the first draft.

Writing a marketing analysis section can be overwhelming, but using ChatGPT for market research can make things easier.

How detailed should the financial projections be in my software company business plan?

The level of detail of the financial projections of your software company may vary considering various business aspects like direct and indirect competition, pricing, and operational efficiency. However, your financial projections must be comprehensive enough to demonstrate a complete view of your financial performance.

Generally, the statements included in a business plan offer financial projections for at least the first three or five years of business operations.

What key components should a software company business plan include?

The following are the key components your software company business plan must include:

• Executive summary
• Business Overview
• Market Analysis
• Products and services
• Sales and marketing strategies
• Operations plan
• Management team
• Financial plan

Can a good software company business plan help me secure funding?

Indeed. A well-crafted software company will help your investors better understand your business domain, market trends, strategies, business financials, and growth potential—helping them make better financial decisions.

So, if you have a profitable and investable business, a comprehensive business plan can certainly help you secure your business funding.

What's the importance of a marketing strategy in a software company business plan?

Marketing strategy is a key component of your software company business plan. Whether it is about achieving certain business goals or helping your investors understand your plan to maximize their return on investment—an impactful marketing strategy is the way to do it!

Here are a few pointers to help you understand the importance of having an impactful marketing strategy:

• It provides your business an edge over your competitors.
• It helps investors better understand your business and growth potential.
• It helps you develop products with the best profit potential.
• It helps you set accurate pricing for your products or services.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Software Company

Back to All Business Ideas

How to Start a Software Company

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on May 31, 2022 Updated on April 3, 2024

Investment range

$3,550 - $8,100

Revenue potential

$130,000 - $520,000p.a.

Time to build

0 – 3 months

Profit potential

$117,000 - $156,000p.a.

Industry trend

If you’re a software developer, congratulations — your industry is going through the roof! 

The US software market has more than doubled in the last decade and shows no signs of slowing down. If you think you have the “next big thing” in software, or want to develop software for others, you could start your own software company and haul in serious dough in a booming market.

But before you put on your developer’s hat, you’ll need to learn the business side of things. Fortunately, this step-by-step guide has all the business bases covered and will prepare you to launch a successful software company. 

Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.

Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .

Step 1: Decide if the Business Is Right for You

Pros and cons.

Starting a software company has pros and cons to consider before deciding if it’s right for you. 

• Massive Market – The US software industry is worth nearly $430 billion
• Good Money – Hundreds per hour to develop software
• Ridiculous Potential – Create the next big tech tool and the sky’s the limit!
• Education Required – Specialized skills are necessary to develop software
• Crowded Market – Lots of big players in the software industry

Software industry trends

Industry size and growth.

• Industry size and past growth – The US software publishing industry is worth $427.9 billion in 2022 after more than doubling in the last decade.(( https://www.ibisworld.com/industry-statistics/market-size/software-publishing-united-states/ ))
• Growth forecast – The US software publishing industry is projected to expand 4.1% in 2022. 
• Number of businesses – In 2022, 15,452 software publishing businesses are operating in the US.(( https://www.ibisworld.com/industry-statistics/number-of-businesses/software-publishing-united-states/ )) 
• Number of people employed – In 2022, the US software publishing industry employs 865,580 people.(( https://www.ibisworld.com/industry-statistics/employment/software-publishing-united-states/ ))

Trends and challenges

Trends in the software industry include:

• Low-code and no-code software development products are becoming more popular, which allow software developers to handle the process more easily.
• Thanks to Big Data, data management software is in high demand.

Challenges in the software industry:

• As technology evolves, developers often struggle to keep up with new trends.
• Because software is such a huge industry, it’s becoming more and more competitive, which means software companies must find a way to stand out.

Demand hotspots

• Most popular states – T he most popular states for software developers are Washington, California, and Oregon . (( https://www.zippia.com/software-developer-jobs/best-states/ ))
• Least popular states – The least popular states for software developers are Alaska, Hawaii, and Oklahoma.

What kind of people work in software?

• Gender – 20.7% of software developers are female, while 79.3% are male.(( https://www.zippia.com/software-developer-jobs/demographics/ ))
• Average level of education – The average software developer has a bachelor’s degree.
• Average age -The average software developer in the US is 39.5 years old.

How much does it cost to start a software business?

Startup costs for a software company range from $3,500 to $8,000. Costs include a computer, programs for development projects, and a website.

If you’re not already a software developer, you can get an online software engineering degree from a place like SNHU . 

How much can you earn from a software business?

Software development companies charge about $250 per hour, sometimes more, for developing software to a company’s specifications. If you’re going to develop software to be sold directly to consumers or businesses, you’ll likely charge a monthly subscription fee. This is the software as a service (SaaS) model, and subscriptions cost anywhere from $10 to $400 per month, or even more. 

These calculations assume you’re going to start with the first option, charging $250 per hour. Your profit margin should be about 90%. In your first year or two, you could work from home for 10 hours a week, bringing in $130,000 in annual revenue. This would mean $117,000 in profit, assuming that 90% margin. 

As your company gains traction, you could work 40 hours a week. At this stage, you’d rent a commercial space and hire staff, reducing your profit margin to around 30%. With annual revenue of $520,000, you’d make an outstanding profit of $156,000.

If you get to the point where you’re developing software to sell directly to consumers, the sky’s the limit to how much you can make if your products are successful.

What barriers to entry are there?

There are a few barriers to entry for a software company. Your biggest challenges will be:

• The education necessary to be a software developer
• Facing a market that is crowded with software development companies

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Step by Step Business values real-life experience above all. Through our Entrepreneur Spotlight Series , we interview business leaders from diverse industries, providing readers with firsthand insights.

Read our interview with InvoZone’s CEO for essential insights on navigating the software industry successfully.

Dive into the world of low-code/no-code and gain insights for your entrepreneurial path from Jesus Vargas .

Gain insights on thriving in software development and remote team management from Nikita Sviridenko’s interview.

Read our interview with Alex Duchenchuk to learn how Moai Team is reshaping the landscape of AI and big data, and what it means for the future of tech.

Unlock insights into nearshore software development and staff augmentation – read our interview with Brett from BairesDev now !

Unlock insights into AI’s transformative role in software development by reading our interview with Jonathan Harel, VP R&D of Fine.dev .

Step 2: Hone Your Idea

Now that you know what’s involved in starting a software company, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research software companies in your area to examine their products and services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the market is missing a company that offers a software solution for financial management, or a custom delivery app software company.

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as software for retailers or software products for startup companies.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

You’ll probably start out by developing software solutions for businesses and charge an hourly rate for software engineering. For example, if someone wants to start a delivery service similar to DoorDash, you’ll develop the software for them. You can also offer web development and mobile app development. 

Later, you may want to develop your own proprietary software that you can sell, such as business management software. When you do so, you might want to start with a minimum viable product (MVP), which is a basic version of your product that you can use to test the market and then determine features to add based on customer feedback.

How much should you charge for software?

Hourly rates for a software development company are about $250. Your profit margin when you’re working by yourself should be about 90%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be businesses or aspiring entrepreneurs. You can connect with both on LinkedIn or find business owners on Google and Yelp and call them directly. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Software Company Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “software” or “software development”, boosts SEO
• Name should allow for expansion, for ex: “NextGen Tech” over “HealthSoft Solutions”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator . Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Find a Domain

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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Software Company Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Summarize your software company’s mission, highlighting the innovative software solutions you plan to offer and your strategies to address specific market needs.
• Business Overview: Describe the focus of your software company, including the development of custom software applications, mobile apps, or SaaS (Software as a Service) products.
• Product and Services: Detail the range of software products and services offered, like cloud-based solutions, enterprise software, or customer relationship management (CRM) systems.
• Market Analysis: Evaluate the demand for software solutions in your target markets, identifying key industries or consumer segments.
• Competitive Analysis: Assess the landscape of competing software companies, highlighting your products’ unique features, user experience, or technological innovation.
• Sales and Marketing: Outline your strategy for reaching potential customers, using methods like digital marketing, trade shows, or partnerships with technology firms.
• Management Team: Highlight the expertise of your management team in software development, project management, and business strategy.
• Operations Plan: Describe the software development lifecycle in your company, including design, development, testing, and deployment processes.
• Financial Plan: Provide an overview of the financial aspects, such as startup costs, revenue models (e.g., subscriptions, licenses), and funding strategies.
• Appendix: Include supplementary documents like technical specifications, market research data, or key partnership agreements that support your business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to software companies. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your software company will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have. 

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2023

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a software business. You might also try crowdfunding if you have an innovative concept. 

If you have a unique idea for a software that you can develop to put on the market, you may be able to attract angel investors or venture capital. Tech startups are considered very investable because they have the potential for huge growth.

Step 8: Apply for Business Licenses/Permits

Starting a software business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your software business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use project management software such as Azure DevOps , Zoho , or FunctionFox , to manage your projects, workflows, and collaboration. 

• Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your clients are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. Regularly update content with industry insights and success stories to engage visitors and improve search engine rankings.

To thrive in the competitive tech industry, a software company must employ strategic and innovative marketing approaches. Here are the most effective ones:

• Content Marketing – Create valuable and informative content (blogs, whitepapers, webinars) that addresses customer pain points and showcases your software’s unique features.
• Social Media Engagement – Actively engage with your audience on platforms like LinkedIn, Twitter, and Facebook to build community and brand awareness.
• Email Marketing – Use targeted email campaigns to nurture leads and keep your audience informed about updates, offers, and industry insights.
• Customer Testimonials and Case Studies – Share success stories and testimonials to build trust and demonstrate the impact of your software.
• Partnerships and Collaborations – Collaborate with other businesses or influencers in your industry to reach new audiences and add credibility.
• Free Trials and Demonstrations – Offer free trials or live demonstrations to let potential customers experience your software firsthand.
• Paid Advertising – Invest in targeted ads on search engines and social media to reach a wider audience quickly.
• Trade Shows and Conferences – Participate in industry events to network, build relationships, and showcase your software.
• User Experience and Feedback – Continuously improve the user experience based on customer feedback and stay responsive to their needs.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your software company meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your software business could be: 

• Custom software for your hot startup 
• Streamlined management software to keep your business running smoothly
• Manage your finances with our custom software solutions

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a software business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in software for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in software. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a software business include:

• Software Engineers – assist with software development
• General Manager – scheduling, accounting
• Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Software Company – Start Making Money!

As a software developer, you know how in demand your services are. The software industry in the US has taken off in the last decade, more than doubling to reach well over $400 billion. Your own software company could open up a world of opportunity for you and allow you to build great software solutions for businesses all over the world. You could even grow your company into the next Microsoft!

You’ve added business knowledge to your resume now, so it’s time to get to work and launch your successful software company. 

• Software Business FAQs

For software companies, the sky’s the limit in terms of profitability. Software is a massive and growing industry, so if you’re a developer, there’s plenty of opportunity.

Software development companies charge about $250 per hour, sometimes more, for developing software to a company’s specification. If you’re going to develop software that you’ll sell directly to consumers or businesses, you’ll generally charge a monthly subscription fee of $10 to $400 or more.

Starting a software company can be challenging due to the competitive nature of the industry, the need for technical expertise, and the ever-evolving technology landscape. However, with careful planning, market research, and a solid business strategy, it is possible to overcome these challenges and build a successful software company.

To protect intellectual property and ensure data security in your software company, it is crucial to implement several measures. These include obtaining appropriate patents or copyrights for your software, implementing strict access controls and encryption methods, regularly updating security protocols, conducting thorough employee training on data protection, and employing robust backup and disaster recovery systems.

To differentiate your software company from competitors, you can focus on various strategies. This includes providing a unique and innovative software solution that solves a specific problem or meets an underserved market demand. Additionally, offering exceptional customer support, continuous software updates and improvements, competitive pricing, and cultivating a strong brand identity can help set your company apart in the market.

The future of software is incredibly promising. Advancements in artificial intelligence, machine learning, and automation are expected to play a significant role in shaping the industry. Software will continue to permeate various sectors, from healthcare to finance, with increased focus on cybersecurity, cloud computing, and mobile applications. Additionally, emerging technologies such as blockchain, Internet of Things (IoT), and virtual reality (VR) present new opportunities for software development and integration. 

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How to Write a Winning Software Company Business Plan + Template

Creating a business plan is essential for any business, but it can be especially helpful for software businesses who want to improve their strategy and raise funding.

A well-crafted business plan not only outlines the vision for your company but also documents a step-by-step roadmap of how you will accomplish it. To create an effective business plan, you must first understand the components that are essential to its success.

This article provides an overview of the key elements that every software business owner should include in their business plan.

Download the Ultimate Business Plan Template

What is a Software Business Plan?

A software business plan is a formal written document that describes your company’s business strategy and its feasibility. It documents the reasons you will be successful, your areas of competitive advantage, and it includes information about your team members. Your business plan is a key document that will convince investors and lenders (if needed) that you are positioned to become a successful venture.

Why Write a Software Business Plan?

A software business plan is required for banks and investors. The document is a clear and concise guide of your business idea and the steps you will take to make it profitable.

Entrepreneurs can also use this as a roadmap when starting their new company or venture, especially if they are inexperienced in starting a business.

Writing an Effective Software Business Plan

The following are the key components of a successful software business plan:

Executive Summary

The executive summary of a software business plan is a one- to two-page overview of your entire business plan. It should summarize the main points, which will be presented in full in the rest of your business plan.

• Start with a one-line description of your software company
• Provide a short summary of the key points in each section of your business plan, which includes information about your company’s management team, industry analysis, competitive analysis, and financial forecast among others.

Company Description

This section should include a brief history of your company. Include a short description of how your company started, and provide a timeline of milestones your company has achieved.

If you are just starting your software business, you may not have a long company history. Instead, you can include information about your professional experience in this industry and how and why you conceived your new venture. If you have worked for a similar company before or have been involved in an entrepreneurial venture before starting your software firm, mention this.

You will also include information about your chosen software business model and how, if applicable, it is different from other companies in your industry.

Industry Analysis

The industry or market analysis is an important component of a software business plan. Conduct thorough market research to determine industry trends and document the size of your market. 

Questions to answer include:

• What part of the software industry are you targeting?
• How big is the market?
• What trends are happening in the industry right now (and if applicable, how do these trends support the success of your company)?

You should also include sources for the information you provide, such as published research reports and expert opinions.

Customer Analysis

This section should include a list of your target audience(s) with demographic and psychographic profiles (e.g., age, gender, income level, profession, job titles, interests). You will need to provide a profile of each customer segment separately, including their needs and wants.

For example, a software business’s customers may include small, medium, and enterprise businesses. Each of these customer segments will have different needs and wants.

You can include information about how your customers make the decision to buy from you as well as what keeps them buying from you.

Develop a strategy for targeting those customers who are most likely to buy from you, as well as those that might be influenced to buy your products or software services with the right marketing.

Competitive Analysis

The competitive analysis helps you determine how your product or service will be different from competitors, and what your unique selling proposition (USP) might be that will set you apart in this industry.

For each competitor, list their strengths and weaknesses. Next, determine your areas of competitive differentiation and/or advantage; that is, in what ways are you different from and ideally better than your competitors.

Below are sample competitive advantages your software business may have:

• Superior customer service
• Strong brand recognition
• Proven track record of success
• Robust product feature set
• Well-funded and experienced management team
• Innovative technology
• Scalable business model
• Strategic partnerships or alliances
• Favorable locations
• Access to important resources, like talent or capital

Keep in mind that your competitive advantages will change over time as your business grows and as new competitors enter the market. It is important to regularly review and update.

Marketing Plan

This part of the business plan is where you determine and document your marketing plan. . Your plan should be clearly laid out, including the following 4 Ps.

• Product/Service : Detail your product/service offerings here. Document their features and benefits.
• Price : Document your pricing strategy here. In addition to stating the prices for your products/services, mention how your pricing compares to your competition.
• Place : Where will your customers find you? What channels of distribution (e.g., partnerships) will you use to reach them if applicable?
• Promotion : How will you reach your target customers? For example, you may use social media, write blog posts, create an email marketing campaign, use pay-per-click advertising, or launch a direct mail campaign. Or you may promote your software business via a mix of these channels.

Operations Plan

This part of your software business plan should include the following information:

• How will you deliver your product/service to customers? For example, will you do it in person or over the phone only?
• What infrastructure, equipment, and resources are needed to operate successfully? How can you meet those requirements within budget constraints?

The operations plan is where you also need to include your company’s business policies. You will want to establish policies related to everything from customer service to pricing, to the overall brand image you are trying to present.

Finally, and most importantly, your Operations Plan will outline the milestones your company hopes to achieve within the next five years. Create a chart that shows the key milestone(s) you hope to achieve each quarter for the next four quarters, and then each year for the following four years. Examples of milestones for a software business include reaching $X in sales. Other examples include acquiring X number of customers or launching a new product line.

Management Team

List your team members here including their names and titles, as well as their expertise and experience relevant to your specific software industry. Include brief biography sketches for each team member.

Particularly if you are seeking funding, the goal of this section is to convince investors and lenders that your team has the expertise and experience to execute on your plan. If you are missing key team members, document the roles and responsibilities you plan to hire for in the future.

Financial Plan

Here you will include a summary of your complete and detailed financial plan (your full financial projections go in the Appendix). 

This includes the following three financial statements:

Income Statement

Your income statement should include:

• Revenue : how much revenue you generate.
• Cost of Goods Sold : These are your direct costs associated with generating revenue. This includes labor costs, as well as the cost of any equipment and supplies used to deliver the product/service offering.
• Net Income (or loss) : Once expenses and revenue are totaled and deducted from each other, this is the net income or loss.

Sample Income Statement for a Startup Software Business

Balance sheet.

Include a balance sheet that shows your assets, liabilities, and equity. Your balance sheet should include:

• Assets : All of the things you own (including cash).
• Liabilities : This is what you owe against your company’s assets, such as accounts payable or loans.
• Equity : The worth of your business after all liabilities and assets are totaled and deducted from each other.

Sample Balance Sheet for a Startup Software Business

Cash flow statement.

Include a cash flow statement showing how much cash comes in, how much cash goes out and a net cash flow for each year. The cash flow statement should include cash flow from:

• Investments

Below is a sample of a projected cash flow statement for a startup software company.

Sample Cash Flow Statement for a Startup Software Business

You will also want to include an appendix section which will include:

• Your complete financial projections
• A complete list of your company’s business policies and procedures related to the rest of the business plan (marketing, operations, etc.)
• Any other documentation which supports what you included in the body of your business plan.

Write a Winning Business Plan for Your Software Company

Writing a good business plan gives you the advantage of being fully prepared to launch and/or grow your software company. It not only outlines your business vision but also provides a step-by-step process of how you are going to accomplish it.

A business plan is a critical document for any new software company. If you are seeking funding, your business plan will be a key component of your pitch to investors .   

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How to Write a Winning Tech Company Business Plan (+ Template)

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Creating a Winning Business Plan for Your Software Development Company

This comprehensive guide provides the steps to creating a winning business plan for any type of software development company. Learn how to craft a financial services business plan, develop a winning business plan for mobile app development, create a profitable business model for social media companies, write a successful interior design business plan, and more. Plus, discover the best practices for creating an event planning business plan.

What You Will Learn:

• How to develop a comprehensive business plan, from understanding the basics to crafting a presentation and finalizing the plan
• Establishing your company goals and objectives, including identifying your target market and developing a marketing strategy
• Defining your financial and operational plans, as well as creating an organizational structure
• Strategies for successful implementation of your business plan

Understanding the Basics of Business Plans

Creating a business plan is essential for success in any venture. It is a comprehensive guide to crafting a plan for a digital marketing agency, creating a financial services business plan, developing a winning business plan for mobile app development , creating a profitable business model for social media companies , writing a successful interior design business plan , and creating an event planning business plan.

A business plan is a roadmap that outlines the strategies and actions necessary to achieve the goals of the venture. It should include a detailed description of the business, its products and services, a market analysis, financial projections, and a strategic plan for growth. It should also explain the mission and vision of the business, its organizational structure, and the resources needed to make the plan successful.

Establishing Your Company Goals and Objectives

Before you can create a successful business plan, it is important to establish your company's goals and objectives. These goals should be realistic, measurable, and achievable. The objectives should be specific, achievable, and tailored to meet the needs of the business. Additionally, you should consider any external factors that could impact the success of your plan, such as the competitive landscape, economic conditions, and customer needs.

Identifying Your Target Market

Identifying your target market is essential for creating a successful business plan. You need to understand who your customers are and what they need. This helps you create a plan that will appeal to them and meet their needs. Additionally, you should consider any external factors that could impact the success of your plan, such as the competitive landscape, economic conditions, and customer needs.

Developing Your Marketing Strategy

Your marketing strategy should focus on reaching and engaging your target market. This includes creating effective messaging, identifying the most effective channels for reaching your target market, and developing a comprehensive plan for executing the strategy. Additionally, you should consider any external factors that could impact the success of your plan, such as the competitive landscape, economic conditions, and customer needs.

Defining Your Financial Plan

The financial plan of your business plan should include detailed projections for income and expenses, as well as a plan for managing the company's debt and cash flow. Additionally, you should consider any external factors that could impact the success of your plan, such as the competitive landscape, economic conditions, and customer needs.

Outlining Your Operational Plan

The operational plan of your business plan should include a detailed description of the day-to-day operations of the business, including processes, procedures, and policies. Additionally, you should consider any external factors that could impact the success of your plan, such as the competitive landscape, economic conditions, and customer needs.

Crafting Your Organizational Structure

The organizational structure of your business plan should define the roles, responsibilities, and accountabilities of each employee. Additionally, you should consider any external factors that could impact the success of your plan, such as the competitive landscape, economic conditions, and customer needs.

Creating Your Presentation

Your presentation should be concise, clear, and compelling. It should include an overview of the business, its products and services, a market analysis, financial projections, and a strategic plan for growth. Additionally, you should consider any external factors that could impact the success of your plan, such as the competitive landscape, economic conditions, and customer needs.

Finalizing Your Business Plan

Once the business plan is complete, it should be reviewed and revised to ensure that it accurately reflects the goals of the business. Additionally, you should consider any external factors that could impact the success of your plan, such as the competitive landscape, economic conditions, and customer Below we answer common questions entrepreneurs have about these topics.

1. Understanding the Basics of Business Plans

What are the key components of a business plan.

This is a very important question to answer. The key components of a business plan are always changing, depending on what industry you are looking to get into. The key components that are always there are the executive summary, your company overview, products, marketing and sales, and financials. These are the elements that you need to incorporate into your plan. Other elements can also be key depending on what industry you are looking to get into, so you need to be sure you are researching that industry before you start working on your business plan.

How important is a business plan when starting a new venture?

A business plan is a living document. It is your playbook for success, but it is not a substitute for action. Without action, you will never be able to judge if your plan is feasible or not. You can spend too much time on the planning stage, and you can also spend too little time. It is a balancing act. Know that you will have to pivot, but only after you have given your plan a shot.

2. Establishing Your Company Goals and Objectives

What long-term goals do you hope to achieve with your company.

The most important long-term goal that an entrepreneur should be aiming for is to create a self-sustaining company. This means that the company will be able to generate enough revenue to cover all its expenses without needing any outside help. Ideally, the company would also be able to produce a profit that can be used to grow the business even further.

What short-term objectives will you need to reach to achieve your long-term goals?

Sometimes, the hardest part of being an entrepreneur is just getting started. There are so many things to consider and so many things that can go wrong. It can be easy to get discouraged, but it's important to remember why you're doing it in the first place.

For me, it's always been about creating a life I love. I love working on my own terms and setting my own hours. I love being able to travel and spend as much time with my family as I want. I love being able to help other women find success on their own terms.

That's why I keep going, even when things get tough. If you can remember what you're working for, it's easier to get through the hard times.

3. Identifying Your Target Market

Who is the primary customer for your product or service.

Every business needs customers to survive, but who are those customers? Is it the target audience you've identified? Is it a group of people outside that audience? The answer to this question will shape your marketing efforts and help you create better products.

What needs or wants does your target market have that your product or service can fulfill?

One of the first things an entrepreneur must do when answering the question of what needs or wants their product or service can fulfill is to understand their target market. The entrepreneur must be clear on exactly who they are trying to serve with their product or service. They must then determine what the needs and wants of that target market are, and whether or not their product or service can fulfill those needs and wants. If their product or service can fulfill those needs and wants, then they have a good chance of success.

4. Developing Your Marketing Strategy

What is your target customer demographic.

Your target customer demographic is the group of potential buyers who will most benefit from your business's products or services. The first step in finding your target customers is to identify your ideal customer. Your ideal customer is someone who will benefit most from your products or services and is willing to pay the price you are charging.

What tactics will you use to reach your target market?

Think about how you can use your network to reach your target market. Establishing a strong network is essential for any entrepreneur because it can help them connect with potential customers and collaborators. You can leverage your social media following, for instance, to spread the word about your products or services. You can also collaborate with other entrepreneurs on projects, which can help you both reach a wider audience.

5. Defining Your Financial Plan

What are your short-term and long-term financial goals.

An entrepreneur should think about answering the question, "What are your short-term and long-term financial goals?" by first determining what they hope to achieve in the next year and the next five years. They should also determine how they will achieve these goals, and how they will measure their success along the way. Finally, they should share their goals with others in order to stay motivated and connected with their network.

How will you make sure you stay on track with your financial plan?

An entrepreneur must make sure their company is profitable. It is easy to get caught up in the day-to-day operations, so it is important to remember to measure your company's success. Measure your company's financial performance to see if you are making the right decisions. You can do this by using ratios such as the current ratio, the profit margin, and the return on assets. If your ratios are low, it may be time to make some changes to your business plan.

6. Outlining Your Operational Plan

What is the timeline for completing the operational plan.

An entrepreneur should think about answering the timeline for completing the operational plan by starting with a detailed outline of the essential components and their order of appearance. The process of outlining each component, including every step of the process, and the order in which it will be completed, will help you determine the timeline for each component and, ultimately, the timeline for the entire operational plan.

What resources will be needed to successfully execute the operational plan?

As an entrepreneur, you must be confident in what you're selling. Often times, this question can be answered with confidence if you have a track record of success. If you haven't been in business for too long, you'll have to answer this question with the potential for your business to grow. The more confident you are in your business, the better you will sell your idea. The more resources you will need.

7. Crafting Your Organizational Structure

What type of organizational structure is most suitable for our business.

When an entrepreneur is deciding what organizational structure to use, they should look at the strengths and weaknesses of each type of structure. For example, a hierarchical structure is good for controlling operations, but it can be slow to make decisions. A matrix structure is good for collaboration, but it can be confusing for employees. An entrepreneur should choose a structure that fits the needs of their business and that will allow the business to operate most efficiently.

How can we ensure that our organizational structure is meeting our company's needs and goals?

If your organization is having trouble with its organizational structure, you should consider if you are having issues hiring qualified candidates to fill your open positions. This can be a sign that your job descriptions are too narrow, or you are asking for qualifications that are too high. You should also make sure that you are not limiting your job posting to just your own company website or internal network.

8. Creating Your Presentation

How long should my presentation be.

The first piece of advice I'd give to a new entrepreneur is to read up on the art of public speaking. There are many books out there on the subject and all of them will have some pointers on how long your presentation should be. I'd suggest starting with Dale Carnegie's How to Win Friends and Influence People. The book has been around for ages, but it's one of the best resources to read on becoming a more charismatic speaker.

What elements should I include in my presentation to make it engaging and informative?

I'm a big believer in the power of storytelling when it comes to making a pitch. Stories have the power to engage people on an emotional level and can help to illustrate a point in a way that is much more memorable than a series of cold facts. So when preparing a presentation, try to think of ways in which you can incorporate stories into your presentation to help bring your message to life.

9. Finalizing Your Business Plan

What resources do you need to effectively implement the plan.

This question is a great opportunity to show off your ability to be self-sufficient. While it's great to get help and support from others, you want to make sure that you're also prepared and ready to handle things on your own.

That's how you show that you're a capable and confident leader who knows what they're doing. Be honest when you answer this question, and show that you're willing to take on the challenge of doing everything on your own, if need be. That's a great way to show off your resourcefulness and self-sufficiency.

Are there any contingencies you need to plan for in case the plan does not go as expected?

In the event that your plan doesn't go as expected, it's vital to reassess your priorities and priorities. If you're planning to start a new business, you shouldn't feel the need to rush out and find a contingency plan. Instead, consider your options and the impact your decision may have on your business. If you feel that you need to make changes to your business plan, be sure to reassess your priorities and take the time to make the necessary adjustments.

10. Strategies for Successful Implementation

How can your team ensure a successful implementation of the new strategy.

When working on a strategy, I am often focused on the outcome I want to achieve, sometimes at the expense of the path to get there. As a result, the question of how to implement the new strategy often feels complex, and I can get stuck.

In response, I have found it helpful to work backwards, starting with the smallest unit, and working my way up to the strategy. In doing so, I create a clear path to follow, and ensure that every part of the journey has been thought through, and is manageable.

For example, if I am working on a new content strategy, I will ask myself, How will I plan content? What are the key content types I want to publish? How often will I publish? How will I get the content to the right people? and so on. By working back and forth between the strategy and implementation, I am able to ensure a successful implementation of the new strategy.

What are the potential obstacles that may impede the successful implementation of the new strategy?

An entrepreneur should approach this question with an open mind and admit that they may have missed some crucial information that could impede their implementation. They need to ask their team to answer this question and look at the implementation from the perspective of their customer and implementer. They need to ask open-ended questions that will force them to think outside of the box. The goal of this question is to make entrepreneurs think outside of their comfort zone and make them consider every aspect of their business.

Key Takeaways:

• A business plan is a detailed document that outlines your company's goals, objectives, target market, marketing strategy, financial plan, operational plan, organizational structure, and presentation.
• Establishing your company goals and objectives is essential for creating a successful business plan.
• Identifying your target market and developing a marketing strategy are important for understanding the needs of your customers.
• A financial plan is necessary to understand and manage your company's finances.
• Outlining your operational plan and crafting your organizational structure will help you to effectively manage your business.

Creating a business plan is an essential step for any entrepreneur who wants to be successful in their venture. It is a comprehensive document that outlines a company's goals, objectives, target market, marketing strategy, financial plan, operational plan, organizational structure, presentation, and implementation strategies. Understanding the basics of a business plan and the various components will help you create the best plan possible for your new business. With a clear plan in place, you can be sure that your business will be well-positioned to succeed. Taking the time to follow the steps outlined in this blog post will ensure that your business plan is as effective as possible and that it will help you achieve the success you are looking for.

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How to Start a Software Company

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How To Start a Software Company

How to start a software company faqs, additional resources in the software publishing industry.

Starting a software company can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful software company.

Importantly, a crucial step in starting a software company is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.

Download our Ultimate Business Plan Template here

15 Steps To Start a Software Company

• Choose the Name for Your Software Company
• Develop Your Software Company Business Plan
• Choose the Legal Structure for Your Software Company
• Secure Startup Funding for Your Software Company (If Needed)
• Secure a Location for Your Business
• Register Your Software Company With the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Software Company
• Buy or Lease the Right Software Company Business Equipment
• Develop Your Software Company Marketing Materials
• Purchase and Setup the Software Needed to Run Your Software Company
• Start Building Your Team
• Open for Business

1. Choose the Name for Your Software Company

The first step to starting your own software company is to choose your business’ name.

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your software company:

• Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
• Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
• Think about marketing. Come up with a name that reflects the desired brand and/or focus of your software company.

2. Develop Your Software Company Business Plan

One of the most important steps in starting a software company is to develop your business plan. The purpose of a business plan is to ensure that you fully understand your market and your software business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your software publishing business plan should include the following sections:

• Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your software company.
• Company Overview – this section tells the reader about the history of your software company and what type of software company you operate. For example, are you an enterprise software company or a software as a service company?
• Industry Analysis – here you will document key information about the software industry. Conduct market research and document how big the industry is and what trends are affecting it.
• Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, do they have a specific job title or work in a particular industry?
• Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
• Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
• Product : Determine and document what products/services you will offer
• Prices : Document the prices of your products/services
• Place : Where will your business be located and how will that location help you increase sales?
• Promotions : What promotional methods will you use to attract customers to your software company? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
• Operations Plan – here you will determine the key processes you will need to run your business operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
• Management Team – this section details the background of your company’s management team.
• Financial Plan – finally, the financial plan answers questions including the following:
• What startup costs will you incur?
• How will your software company make money?
• What are your projected sales and expenses for the next five years?
• Do you need to raise funding to launch your business?

Finish Your Business Plan Today!

3. choose the legal structure for your software company.

Next you need to choose a legal structure for your software company and register it and your business name with the Secretary of State in each state where you operate your software business. Below are the five most common legal structures:

1) Sole Proprietorship

A sole proprietorship is a business entity in which the owner of the software company and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a software company together. The partners share in the profits and losses of the business.

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a software company include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a software company is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your software company, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

4. Secure Startup Funding for Your Software Company (If Needed)

In developing your software company business plan, you might have determined that you need to raise funding to launch your business. If so, the main sources of funding for a software business to consider are venture capital funds, personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a software company that they believe has high potential for growth.

5. Secure a Location for Your Business

You have some flexibility in deciding whether you want to secure an office space for your software company, build a remote team, or a combination of the two.

If you choose to buy or rent a physical location, consider:

• Driving around to find the right areas while looking for “for lease” signs
• Contacting a commercial real estate agent
• Doing commercial real estate searches online
• Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space

6. Register Your Software Company With the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your plan and financial model in hours.

7. Open a Business Bank Account

It is important to establish a bank account in your software company’s name. This process is fairly simple and involves the following steps:

• Identify and contact the bank you want to use
• Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
• Complete the bank’s application form and provide all relevant information
• Meet with a banker to discuss your business needs and establish a relationship with them

8. Get a Business Credit Card

You should get a business credit card for your software company to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.

9. Get the Required Business Licenses and Permits

Every state, county and city has different business license and permit requirements.

Nearly all states, counties and/or cities have license requirements including:

• General Business License – A business license is typically required to operate a business in a particular state. The requirements and fees for a business license vary by state, so it is important to research the requirements in your state. Some common requirements for a business license include having a registered name for your company and filing articles of incorporation.
• Sales Tax License – A sales tax license is typically required to collect and remit sales tax in a particular state. The requirements and fees for a sales tax license vary by state, so it is important to research the requirements in your state. Some common requirements for a sales tax license include registering with the state department of revenue and applying for a seller’s permit.

Depending on where you launch your software company, you will have to obtain the necessary state, county and/or city licenses.

10. Get Business Insurance for Your Software Company

Some common types of insurance to consider include:

• General Liability Insurance – General liability insurance is a type of insurance that provides coverage for a business in the event that it is sued for negligence or other wrongful acts. This type of insurance can help protect a software company from lawsuits related to product liability, property damage, or personal injury.
• Errors and Omissions Insurance – Errors and omissions insurance, also known as professional liability insurance, is a type of insurance that provides coverage for a business in the event that it is sued for negligence or other wrongful acts. This type of insurance can help protect a software company from lawsuits related to software development, consulting, or other professional services.
• Product Liability Insurance – Product liability insurance is a type of insurance that provides coverage for a business in the event that its products cause harm to consumers. This type of insurance can help protect a software company from lawsuits related to product defects, design flaws, or improper instructions.
• Workers’ Compensation Insurance – Workers’ compensation insurance is a type of insurance that provides coverage for a business in the event that an employee is injured while working. This type of insurance can help protect a software company from lawsuits related to workplace accidents.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.

11. Buy or Lease the Right Software Company Business Equipment

To start, a software company really only needs reliable computers and basic office supplies. If you are opening a physical location for your software company, you might also need desks and other office furniture for your team, as well as reception furniture. If you plan to do many virtual meetings, be sure to invest in a decent webcam.

12. Develop Your Software Company Marketing Materials

Marketing materials will be required to attract and retain customers to your software company.

The key marketing materials you will need are as follows:

• Logo – Spend some time developing a good logo for your software company. Your logo will be printed on company stationery, business cards, marketing materials, and may even be seen when users load your products. The right logo can increase customer trust and awareness of your brand.
• Website – Likewise, a professional software company website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how your target market perceives you.
• Social Media Accounts – Establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your software company.

13. Purchase and Setup the Software Needed to Run Your Software Company

Your team will need a good software development platform. This can be something like Microsoft Visual Studio, Eclipse, or Xcode. The company also needs a good source code control system, like Git or Subversion. Finally, the company will need some good software development tools, like a compiler, an editor, and a debugger.

Slack is another popular tool among software development teams that allows members to keep in touch and help to build workplace morale among virtual workers. You should also explore bookkeeping and payroll software.

14. Start Building Your Team

Your team should be composed of individuals with the necessary skills and experience to help you build your product and grow your company. When assembling your team, it’s important to find people who share your vision and are passionate about your product.

It is a good idea to hire at least one product manager who can be responsible for creating and managing your product roadmap, defining product features, and coordinating development efforts

Any software development business relies on having a strong development team. You will need software engineers to actually design, build, and maintain the products you create. Likewise, your should plan on hiring sales and marketing team members to spread awareness about your products and make sales.

15. Open for Business

You are now ready to open your software company. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.

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Is It Hard To Start a Software Company?

Yes, it can be hard to start a software company. One of the biggest hurdles will be coming up with a great idea for software that people will want to use. Attempting to raise money needed to start a software development company can also be difficult. Owning a software company can also be a lot of fun and a rewarding experience, however, and the steps we have outlined above will help put you on the path to success. Just be sure to understand the needs of your particular business before you begin.

How Can I Start a Software Company With No Experience?

One of the most important things you can do to start a new software company with no experience is research. Look into the software industry as a whole, as well as how much it typically costs and the time needed to develop software. You might also consider connecting with experienced software development business owners who can give you their insights into the dos and don't of opening and running a successful software company.

What Type of Software Company Is Most Profitable?

There is no easy answer to this question, as the profitability of a software company depends on a variety of factors, including the type of software it produces, the size and location of the market it targets, and the level of competition it faces. However, some types of software companies are more likely to be profitable than others.

Generally speaking, an enterprise software development business can charge more for its products as the target market is often large organizations. Companies that make custom software may also charge more since they create tailor-made solutions for their customers, which often requires more resources and time than selling a premade software product. 

How Much Does It Cost To Start a Software Company?

The amount you will need to spend to start a software development business will depend on the type of company you want to create, the services you offer, and the location where you plan to operate. 

You will need to pay for office space, computers, software, and marketing materials. You may also need to hire employees or contractors. It is important to remember that you will also need to pay taxes on your income, so make sure you have enough money set aside to cover your expenses.

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

What Are the Ongoing Expenses for a Software Company?

One of the biggest expenses for any software company is employee salaries. You'll need to pay your employees a livable wage in order to keep them happy and productive. In addition, you'll also need to budget for things like office supplies, marketing, and of course, taxes. Key expenses include:

• 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 comprise marketing costs, depreciation, rent, office supplies, furniture, etc.

How Does a Software Company Make Money?

There are a few ways that a software company can make money. The most common way is to sell licenses to the software that they create. This can be a one-time purchase or a fee charged on a subscription basis. In the case of SaaS, customers often pay a regular fee to access software over the internet instead of installing it on a local device. Another way to make money is to create add-on products or services that complement the software. These could be additional features or support plans.

Is Owning a Software Company Profitable?

The answer to this question largely depends on the specific industry and market conditions. However, in general, companies that produce and sell software can be quite profitable. The key is to have a unique and valuable product that meets the needs of your customers.

How Much Do Software Publishing Operators Make?

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

Why Do Software Companies Fail?

One of the main reasons software companies fail is that they do not have a clear vision and strategy. A company without a clear vision will lack focus and direction, which can lead to missed opportunities and failure. Additionally, a lack of strategy can doom a company to failure because it means they are not taking the necessary steps to succeed. Other reasons software companies fail include poor marketing, inadequate funding, and no customer base.

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.

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.

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 increases, the software publishing industry is positively affected. This year, investment in 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 industry revenue. The number of mobile internet connections continues to increase.
• Corporate Profit - When the profit of companies rises, 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 for 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 the 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.

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

• The Software & Information Industry Association: www.siia.net
• US Census Bureau: www.census.gov
• The Entertainment Software Association:  www.theesa.com
• US Bureau of Labor Statistics: www.bls.gov
• Software Mavericks: www.softwaremavericks.com

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Other Helpful Business Plan Articles & Templates

Step-by-Step Guide to Writing a Simple Business Plan

By Joe Weller | October 11, 2021

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A business plan is the cornerstone of any successful company, regardless of size or industry. This step-by-step guide provides information on writing a business plan for organizations at any stage, complete with free templates and expert advice. 

Included on this page, you’ll find a step-by-step guide to writing a business plan and a chart to identify which type of business plan you should write . Plus, find information on how a business plan can help grow a business and expert tips on writing one .

What Is a Business Plan?

A business plan is a document that communicates a company’s goals and ambitions, along with the timeline, finances, and methods needed to achieve them. Additionally, it may include a mission statement and details about the specific products or services offered.

A business plan can highlight varying time periods, depending on the stage of your company and its goals. That said, a typical business plan will include the following benchmarks:

• Product goals and deadlines for each month
• Monthly financials for the first two years
• Profit and loss statements for the first three to five years
• Balance sheet projections for the first three to five years

Startups, entrepreneurs, and small businesses all create business plans to use as a guide as their new company progresses. Larger organizations may also create (and update) a business plan to keep high-level goals, financials, and timelines in check.

While you certainly need to have a formalized outline of your business’s goals and finances, creating a business plan can also help you determine a company’s viability, its profitability (including when it will first turn a profit), and how much money you will need from investors. In turn, a business plan has functional value as well: Not only does outlining goals help keep you accountable on a timeline, it can also attract investors in and of itself and, therefore, act as an effective strategy for growth.

For more information, visit our comprehensive guide to writing a strategic plan or download free strategic plan templates . This page focuses on for-profit business plans, but you can read our article with nonprofit business plan templates .

Business Plan Steps

The specific information in your business plan will vary, depending on the needs and goals of your venture, but a typical plan includes the following ordered elements:

• Executive summary
• Description of business
• Market analysis
• Competitive analysis
• Description of organizational management
• Description of product or services
• Marketing plan
• Sales strategy
• Funding details (or request for funding)
• Financial projections

If your plan is particularly long or complicated, consider adding a table of contents or an appendix for reference. For an in-depth description of each step listed above, read “ How to Write a Business Plan Step by Step ” below.

Broadly speaking, your audience includes anyone with a vested interest in your organization. They can include potential and existing investors, as well as customers, internal team members, suppliers, and vendors.

Do I Need a Simple or Detailed Plan?

Your business’s stage and intended audience dictates the level of detail your plan needs. Corporations require a thorough business plan — up to 100 pages. Small businesses or startups should have a concise plan focusing on financials and strategy.

How to Choose the Right Plan for Your Business

In order to identify which type of business plan you need to create, ask: “What do we want the plan to do?” Identify function first, and form will follow.

Use the chart below as a guide for what type of business plan to create:

Is the Order of Your Business Plan Important?

There is no set order for a business plan, with the exception of the executive summary, which should always come first. Beyond that, simply ensure that you organize the plan in a way that makes sense and flows naturally.

The Difference Between Traditional and Lean Business Plans

A traditional business plan follows the standard structure — because these plans encourage detail, they tend to require more work upfront and can run dozens of pages. A Lean business plan is less common and focuses on summarizing critical points for each section. These plans take much less work and typically run one page in length.

In general, you should use a traditional model for a legacy company, a large company, or any business that does not adhere to Lean (or another Agile method ). Use Lean if you expect the company to pivot quickly or if you already employ a Lean strategy with other business operations. Additionally, a Lean business plan can suffice if the document is for internal use only. Stick to a traditional version for investors, as they may be more sensitive to sudden changes or a high degree of built-in flexibility in the plan.

How to Write a Business Plan Step by Step

Writing a strong business plan requires research and attention to detail for each section. Below, you’ll find a 10-step guide to researching and defining each element in the plan.

Step 1: Executive Summary

The executive summary will always be the first section of your business plan. The goal is to answer the following questions:

• What is the vision and mission of the company?
• What are the company’s short- and long-term goals?

See our  roundup of executive summary examples and templates for samples. Read our executive summary guide to learn more about writing one.

Step 2: Description of Business

The goal of this section is to define the realm, scope, and intent of your venture. To do so, answer the following questions as clearly and concisely as possible:

• What business are we in?
• What does our business do?

Step 3: Market Analysis

In this section, provide evidence that you have surveyed and understand the current marketplace, and that your product or service satisfies a niche in the market. To do so, answer these questions:

• Who is our customer? 
• What does that customer value?

Step 4: Competitive Analysis

In many cases, a business plan proposes not a brand-new (or even market-disrupting) venture, but a more competitive version — whether via features, pricing, integrations, etc. — than what is currently available. In this section, answer the following questions to show that your product or service stands to outpace competitors:

• Who is the competition? 
• What do they do best? 
• What is our unique value proposition?

Step 5: Description of Organizational Management

In this section, write an overview of the team members and other key personnel who are integral to success. List roles and responsibilities, and if possible, note the hierarchy or team structure.

Step 6: Description of Products or Services

In this section, clearly define your product or service, as well as all the effort and resources that go into producing it. The strength of your product largely defines the success of your business, so it’s imperative that you take time to test and refine the product before launching into marketing, sales, or funding details.

Questions to answer in this section are as follows:

• What is the product or service?
• How do we produce it, and what resources are necessary for production?

Step 7: Marketing Plan

In this section, define the marketing strategy for your product or service. This doesn’t need to be as fleshed out as a full marketing plan , but it should answer basic questions, such as the following:

• Who is the target market (if different from existing customer base)?
• What channels will you use to reach your target market?
• What resources does your marketing strategy require, and do you have access to them?
• If possible, do you have a rough estimate of timeline and budget?
• How will you measure success?

Step 8: Sales Plan

Write an overview of the sales strategy, including the priorities of each cycle, steps to achieve these goals, and metrics for success. For the purposes of a business plan, this section does not need to be a comprehensive, in-depth sales plan , but can simply outline the high-level objectives and strategies of your sales efforts. 

Start by answering the following questions:

• What is the sales strategy?
• What are the tools and tactics you will use to achieve your goals?
• What are the potential obstacles, and how will you overcome them?
• What is the timeline for sales and turning a profit?
• What are the metrics of success?

Step 9: Funding Details (or Request for Funding)

This section is one of the most critical parts of your business plan, particularly if you are sharing it with investors. You do not need to provide a full financial plan, but you should be able to answer the following questions:

• How much capital do you currently have? How much capital do you need?
• How will you grow the team (onboarding, team structure, training and development)?
• What are your physical needs and constraints (space, equipment, etc.)?

Step 10: Financial Projections

Apart from the fundraising analysis, investors like to see thought-out financial projections for the future. As discussed earlier, depending on the scope and stage of your business, this could be anywhere from one to five years. 

While these projections won’t be exact — and will need to be somewhat flexible — you should be able to gauge the following:

• How and when will the company first generate a profit?
• How will the company maintain profit thereafter?

Business Plan Template

Download Business Plan Template

Microsoft Excel | Smartsheet

This basic business plan template has space for all the traditional elements: an executive summary, product or service details, target audience, marketing and sales strategies, etc. In the finances sections, input your baseline numbers, and the template will automatically calculate projections for sales forecasting, financial statements, and more.

For templates tailored to more specific needs, visit this business plan template roundup or download a fill-in-the-blank business plan template to make things easy. 

If you are looking for a particular template by file type, visit our pages dedicated exclusively to Microsoft Excel , Microsoft Word , and Adobe PDF business plan templates.

How to Write a Simple Business Plan

A simple business plan is a streamlined, lightweight version of the large, traditional model. As opposed to a one-page business plan , which communicates high-level information for quick overviews (such as a stakeholder presentation), a simple business plan can exceed one page.

Below are the steps for creating a generic simple business plan, which are reflected in the template below .

• Write the Executive Summary This section is the same as in the traditional business plan — simply offer an overview of what’s in the business plan, the prospect or core offering, and the short- and long-term goals of the company. 
• Add a Company Overview Document the larger company mission and vision. 
• Provide the Problem and Solution In straightforward terms, define the problem you are attempting to solve with your product or service and how your company will attempt to do it. Think of this section as the gap in the market you are attempting to close.
• Identify the Target Market Who is your company (and its products or services) attempting to reach? If possible, briefly define your buyer personas .
• Write About the Competition In this section, demonstrate your knowledge of the market by listing the current competitors and outlining your competitive advantage.
• Describe Your Product or Service Offerings Get down to brass tacks and define your product or service. What exactly are you selling?
• Outline Your Marketing Tactics Without getting into too much detail, describe your planned marketing initiatives.
• Add a Timeline and the Metrics You Will Use to Measure Success Offer a rough timeline, including milestones and key performance indicators (KPIs) that you will use to measure your progress.
• Include Your Financial Forecasts Write an overview of your financial plan that demonstrates you have done your research and adequate modeling. You can also list key assumptions that go into this forecasting. 
• Identify Your Financing Needs This section is where you will make your funding request. Based on everything in the business plan, list your proposed sources of funding, as well as how you will use it.

Simple Business Plan Template

Download Simple Business Plan Template

Microsoft Excel |  Microsoft Word | Adobe PDF  | Smartsheet

Use this simple business plan template to outline each aspect of your organization, including information about financing and opportunities to seek out further funding. This template is completely customizable to fit the needs of any business, whether it’s a startup or large company.

Read our article offering free simple business plan templates or free 30-60-90-day business plan templates to find more tailored options. You can also explore our collection of one page business templates . 

How to Write a Business Plan for a Lean Startup

A Lean startup business plan is a more Agile approach to a traditional version. The plan focuses more on activities, processes, and relationships (and maintains flexibility in all aspects), rather than on concrete deliverables and timelines.

While there is some overlap between a traditional and a Lean business plan, you can write a Lean plan by following the steps below:

• Add Your Value Proposition Take a streamlined approach to describing your product or service. What is the unique value your startup aims to deliver to customers? Make sure the team is aligned on the core offering and that you can state it in clear, simple language.
• List Your Key Partners List any other businesses you will work with to realize your vision, including external vendors, suppliers, and partners. This section demonstrates that you have thoughtfully considered the resources you can provide internally, identified areas for external assistance, and conducted research to find alternatives.
• Note the Key Activities Describe the key activities of your business, including sourcing, production, marketing, distribution channels, and customer relationships.
• Include Your Key Resources List the critical resources — including personnel, equipment, space, and intellectual property — that will enable you to deliver your unique value.
• Identify Your Customer Relationships and Channels In this section, document how you will reach and build relationships with customers. Provide a high-level map of the customer experience from start to finish, including the spaces in which you will interact with the customer (online, retail, etc.). 
• Detail Your Marketing Channels Describe the marketing methods and communication platforms you will use to identify and nurture your relationships with customers. These could be email, advertising, social media, etc.
• Explain the Cost Structure This section is especially necessary in the early stages of a business. Will you prioritize maximizing value or keeping costs low? List the foundational startup costs and how you will move toward profit over time.
• Share Your Revenue Streams Over time, how will the company make money? Include both the direct product or service purchase, as well as secondary sources of revenue, such as subscriptions, selling advertising space, fundraising, etc.

Lean Business Plan Template for Startups

Download Lean Business Plan Template for Startups

Microsoft Word | Adobe PDF

Startup leaders can use this Lean business plan template to relay the most critical information from a traditional plan. You’ll find all the sections listed above, including spaces for industry and product overviews, cost structure and sources of revenue, and key metrics, and a timeline. The template is completely customizable, so you can edit it to suit the objectives of your Lean startups.

See our wide variety of  startup business plan templates for more options.

How to Write a Business Plan for a Loan

A business plan for a loan, often called a loan proposal , includes many of the same aspects of a traditional business plan, as well as additional financial documents, such as a credit history, a loan request, and a loan repayment plan.

In addition, you may be asked to include personal and business financial statements, a form of collateral, and equity investment information.

Download free financial templates to support your business plan.

Tips for Writing a Business Plan

Outside of including all the key details in your business plan, you have several options to elevate the document for the highest chance of winning funding and other resources. Follow these tips from experts:.

• Keep It Simple: Avner Brodsky , the Co-Founder and CEO of Lezgo Limited, an online marketing company, uses the acronym KISS (keep it short and simple) as a variation on this idea. “The business plan is not a college thesis,” he says. “Just focus on providing the essential information.”
• Do Adequate Research: Michael Dean, the Co-Founder of Pool Research , encourages business leaders to “invest time in research, both internal and external (market, finance, legal etc.). Avoid being overly ambitious or presumptive. Instead, keep everything objective, balanced, and accurate.” Your plan needs to stand on its own, and you must have the data to back up any claims or forecasting you make. As Brodsky explains, “Your business needs to be grounded on the realities of the market in your chosen location. Get the most recent data from authoritative sources so that the figures are vetted by experts and are reliable.”
• Set Clear Goals: Make sure your plan includes clear, time-based goals. “Short-term goals are key to momentum growth and are especially important to identify for new businesses,” advises Dean.
• Know (and Address) Your Weaknesses: “This awareness sets you up to overcome your weak points much quicker than waiting for them to arise,” shares Dean. Brodsky recommends performing a full SWOT analysis to identify your weaknesses, too. “Your business will fare better with self-knowledge, which will help you better define the mission of your business, as well as the strategies you will choose to achieve your objectives,” he adds.
• Seek Peer or Mentor Review: “Ask for feedback on your drafts and for areas to improve,” advises Brodsky. “When your mind is filled with dreams for your business, sometimes it is an outsider who can tell you what you’re missing and will save your business from being a product of whimsy.”

Outside of these more practical tips, the language you use is also important and may make or break your business plan.

Shaun Heng, VP of Operations at Coin Market Cap , gives the following advice on the writing, “Your business plan is your sales pitch to an investor. And as with any sales pitch, you need to strike the right tone and hit a few emotional chords. This is a little tricky in a business plan, because you also need to be formal and matter-of-fact. But you can still impress by weaving in descriptive language and saying things in a more elegant way.

“A great way to do this is by expanding your vocabulary, avoiding word repetition, and using business language. Instead of saying that something ‘will bring in as many customers as possible,’ try saying ‘will garner the largest possible market segment.’ Elevate your writing with precise descriptive words and you'll impress even the busiest investor.”

Additionally, Dean recommends that you “stay consistent and concise by keeping your tone and style steady throughout, and your language clear and precise. Include only what is 100 percent necessary.”

Resources for Writing a Business Plan

While a template provides a great outline of what to include in a business plan, a live document or more robust program can provide additional functionality, visibility, and real-time updates. The U.S. Small Business Association also curates resources for writing a business plan.

Additionally, you can use business plan software to house data, attach documentation, and share information with stakeholders. Popular options include LivePlan, Enloop, BizPlanner, PlanGuru, and iPlanner.

How a Business Plan Helps to Grow Your Business

A business plan — both the exercise of creating one and the document — can grow your business by helping you to refine your product, target audience, sales plan, identify opportunities, secure funding, and build new partnerships. 

Outside of these immediate returns, writing a business plan is a useful exercise in that it forces you to research the market, which prompts you to forge your unique value proposition and identify ways to beat the competition. Doing so will also help you build (and keep you accountable to) attainable financial and product milestones. And down the line, it will serve as a welcome guide as hurdles inevitably arise.

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How to Start a Software Development Business

Software is ubiquitous in today’s world, and many people and organizations can no longer function without the programs they rely on. These programs, of course, must be created, distributed and maintained. That’s the work of software development companies.

The software development industry is both big and strong. According to IBISWorld , the software publishing industry has an annual revenue of $238 billion and a growth rate of 3.9 percent per year. In total, the industry employs more than a half-million people.

Learn how to start your own Software Development Business and whether it is the right fit for you.

Ready to form your LLC? Check out the Top LLC Formation Services .

Start a software development business by following these 10 steps:

• Plan your Software Development Business
• Form your Software Development Business into a Legal Entity
• Register your Software Development Business for Taxes
• Open a Business Bank Account & Credit Card
• Set up Accounting for your Software Development Business
• Get the Necessary Permits & Licenses for your Software Development Business
• Get Software Development Business Insurance
• Define your Software Development Business Brand
• Create your Software Development Business Website
• Set up your Business Phone System

We have put together this simple guide to starting your software development business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas .

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

What will you name your business?

• What are the startup and ongoing costs?
• Who is your target market?

How much can you charge customers?

Luckily we have done a lot of this research for you.

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Software Development Business Name Generator

If you operate a sole proprietorship , you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name , we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability .

It's very important to secure your domain name before someone else does.

Want some help naming your software development business?

Business name generator, what are the costs involved in opening a software development business.

The costs associated with opening a software development company can range from very little (i.e. less than $1,000) to extremely high sums (i.e. venture capital funds). The money invested in a business typically goes toward:

• website hosting expenses and data storage fees
• specialized programs that a project requires
• copyright, trademark and patent fees
• additional employees or contract workers

The variance in startup costs is primarily due to the number of employees and contract workers brought onto the project. Workers speed up the development timeline, but also increase costs.

Paul Jarvis’ company OfCourseBooks is a good example of how a successful business can be started for very little. Jarvis and his team spent $1,125 in startup costs. The funds paid for a website, specialized fonts, stock photography, legal fees, the first month’s operating expenses and a couple other miscellaneous items.

John Sung Kim took a different approach with his company, getting a $40,000 initial investment before developing a call center software program.

What are the ongoing expenses for a software development business?

The ongoing expenses for a software development company also vary. OfCourseBooks costs $45 per month to maintain. A program like Microsoft Dynamics 365 require many more servers and a lot more personnel to maintain, and therefore, has much higher operating expenses.

Who is the target market?

The target market for a software development company can be almost anyone, but it must be well-defined. Business owners need a clear understanding of a need that people or businesses have, and how a program addresses that specific need.

How does a software development business make money?

Software development companies have traditionally charged customers on a per-license basis, but many companies are transitioning to a software-as-a-service (SaaS) structure instead. In SaaS arrangements, customers pay an ongoing fee in order to use the developing company’s program. Some level of support is usually included in this fee.

A few outlying software development companies don’t charge license or subscription fees. Instead, these companies typically either build advertisements into their programs or offer training that does have a fee associated with it.

There is a great range in how much computer programs cost. Simple apps are frequently free or just a few dollars. Complex enterprise solutions can cost tens of thousands of dollars. For example, Angry Birds originally cost $0.99 to $2.99 and is now free. Microsoft Dynamics 365 can be $190 per user / per month.

How much profit can a software development business make?

While not every business reaches this level, the profit potential for a software development business can be enormous. John Sung Kim stayed with Five9 until its revenue reached $10 million. An IPO on the NASDAQ valued the company at $350 million.

Even much more modest companies have substantial profits. For instance, OfCourseBooks brought in a little over $11,000 in profit before even launching a program.

How can you make your business more profitable?

Software development companies can increase their profits by providing additional services to clients. Expedited support, extra training and program customizations might be offered at an extra cost.

Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship , partnership , limited liability company (LLC) , and corporation .

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your software development business is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services . You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

You can acquire your EIN through the IRS website . If you would like to learn more about EINs, read our article, What is an EIN?

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil .

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history , which can be useful to raise money later on.

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a software development business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits .

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses .

Certificate of Occupancy

A software development business is generally run out of an office. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

• If you plan to lease a location :
• It is generally the landlord’s responsibility to obtain a CO.
• Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a software development business.
• After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
• If you plan to purchase or build a location :
• You will be responsible for obtaining a valid CO from a local government authority.
• Review all building codes and zoning requirements for your business’ location to ensure your software development business will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance . This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance . If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

FInd out what types of insurance your Software Development Business needs and how much it will cost you by reading our guide Business Insurance for Software Development Business.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners , we'll give you helpful tips and advice for creating the best unique logo for your business.

Recommended : Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker .

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator . Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a software development business

Most software development companies market their programs online, through websites and other platforms. What other platforms are most appropriate for a particular business to use depends on what programs that business creates. A business that makes spell checkers for legal documents won’t want to market in the same place as a video game.

How to keep customers coming back

A software company’s programs must work well, or else customers will switch to more user-friendly and error-free programs. For this reason, the testing and debugging phase of development shouldn’t be rushed.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business .

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

• All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
• Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
• Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended : Get started today using our recommended website builder or check out our review of the Best Website Builders .

Other popular website builders are: WordPress , WIX , Weebly , Squarespace , and Shopify .

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.

Recommended Business Phone Service: Phone.com

Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

Is this Business Right For You?

While many different types of people work within the software development industry, business founders tend to be people who bridge the gap between logic and creativity. Writing programs, of course, requires a strong command of logic. Having the vision for a software program that’ll be useful, however, requires creativity.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

Entrepreneurship Quiz

What happens during a typical day at a software development business?

Much of the work that goes on at a software development company is done on a computer. Business owners spend time writing code, testing and debugging programs, marketing their programs and providing support to customers.

What are some skills and experiences that will help you build a successful software development business?

Business owners must themselves know how to code in at least one programming language, and competency in several languages is highly advisable. This technical knowledge is necessary to code and debug programs. Business owners also need it so they can discuss issues with other programmers or developers working on the company’s projects.

People who don’t have sufficient coding knowledge can study different languages through both in-person and online courses. Many community colleges and four-year colleges have computer science programs, and local software developers may offer private tutoring. Regent University , Saint Leo University , Southern New Hampshire University and many other schools offer online degree programs in Computer Science.

What is the growth potential for a software development business?

A software development company can be a small, one-person business, or it can grow into an international corporation. Gorges is a local development company in Ithaca, NY, and Logos is a good example of a niche-specific company. Microsoft and Apple are two of the largest software developers in the world, although their work isn’t limited to only making programs.

TRUiC's YouTube Channel

For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe to view later.

Take the Next Step

Find a business mentor.

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

What are some insider tips for jump starting a software development business?

Many successful software development companies have raised support on Kickstarter before launching. Jarvis used this strategy to raise over $12,000 before launching OfCourseBooks. Pillars of Eternity , a computer-based role-playing game (RPG) raised almost $4 million on Kickstarter.

How and when to build a team

Whether a software development company hires people depends on the business’ owners expertise, program’s complexity, business’ budget and required timeline.

Business owners who do hire employees frequently bring on computer programmers, computer developers, designers and marketers. All of these people can be hired as traditional employees or on a contract basis. Sometimes, salespeople are brought on board . They may be given a salary, a commission or both.

Useful Links

Industry opportunities.

• Software & Information Industry Association

Real World Examples

• Cylon Technologies

Further Reading

• Advice on Starting Your Own Software Company
• Software Development Business Models: What to Choose for Your Business?

Have a Question? Leave a Comment!

Don't bother with copy and paste.

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Software Sales Business Plan

Start your own software sales business plan

Corporate Software Sales

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

This business plan outlines the strategy for sales of enterprise software planning solutions to medium-sized companies and franchises. Corporate Software Sales (CSS) will act as the direct sales arm of a software manufacturing firm based in Oregon. We expect a high degree of profitability based on our plan to key in on businesses that have already expressed the need for such services and products to the software manufacturer. Our management expertise in dealing with corporate decision makers and our partner’s reputation will be the cornerstone of our success.

1.1 Objectives

• Market a business planning software package to corporate managers and achieve $60K in commission fees in year one.
• Customize the software to the individual needs of each client.
• Provide training and follow-up service to each client.

1.2 Mission

The employees of CSS recognize that information is vital for management and presenting that information in an efficient and easily understood framework is crucial. Also, not every business manager requires similar tools; what works for a service based company might be useless for a manufacturer. That’s why we market an already proven third-party software planning tool which we will customize to the client’s individual needs. Although we recognize the intimate relationship between profitability and quality products, we know that our success is ultimately dependent on the well-being of our employees.

1.3 Keys to Success

The success of our company is dependent on our ability to:

• Anticipate clients needs.
• Adapt software solutions to these needs.
• Identify industries/corporations that need planning tools.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

CSS provides enterprise-corporate planning software solutions. We identify companies’ planning needs and work with a third-party manufacturer to create software to address these needs. Although the actual software is produced out-of-house, we guarantee the customer the right solution.

2.1 Start-up Summary

Start-up expenses, which cover phone calls, office furniture, letterhead and business cards come to $3,050. We also need $11,000 of cash on hand. These costs will either be financed by owner investment or through financing from the software manufacturing partner. Details and assumptions are summarized in the following chart and table.

2.2 Company Locations and Facilities

The company will be located in a home-based office in Portland, Oregon. This location is ideal, as it is close to the software manufacturer’s facilities and several of the first potential clients’ home offices.

Products and Services

CSS will provide medium- and large-sized companies with enterprise-wide collaborative planning solutions. We will also provide consulting services by helping companies recognize opportunities for using technology to streamline their business processes. Finally, we will provide complete training for the use of solutions purchased from us.

3.1 Product and Service Description

Software CSS software products consist of a business planning software package that is proven in the consumer market. In fact, this product is the top-rated and best-selling small business planning package. The enterprise version will be similar to the consumer version however, it will be modified to fit the needs of different clients. The product will allow corporate sales forces and franchises to use planning tools to achieve tremendous efficiencies in their business processes. In essence, a sales force will be able to write concise business plans for any customer and through the use of an extranet, allow the customer to collaboratively plan their own account. Franchises will be able to create a road map of their business plans that corporate managers can monitor and adjust accordingly. The possibility exists to customize the product to work with other collaborative tools such as LotusNotes and the clients email applications.

Consulting CSS will perform an analysis of all potential clients’ planning strategies and tactics as well as their degree of aptitude with planning software and information technology. The goal of this analysis is to ensure that all clients get a solution that best fits their needs and capabilities. Whether they decide to purchase the product or not they will have an expert analysis of their planning strategies.

Training CSS will provide further value to our customers, and ease the customer service burden on our partner, by ensuring that all product users are properly trained in the use of all software solutions.

Interface Through the software manufacturer, CSS will provide an additional product which will give the client a dedicated service representative–eliminating the need for product updates. This will in essence create a “living” product which can grow and adapt with the clients’ needs. The interface representative will function through the clients’ established extranet.

3.2 Competitive Comparison

Alternative products do not offer a complete package of tools. For example, to get similar results from another product(s) the client would have to integrate complex spreadsheets, word processing software, instructions and Web based collaboration themselves.

3.3 Technology

The software package runs on Windows 95, 98, 2000, Windows NT, and Macintosh platforms.

Market Analysis Summary how to do a market analysis for your business plan.">

We operate in the business-to-business segment of e-commerce which recent research estimates transactions in excess of $160 billion (www.e-commerceguide.com). Our market is further segmented into companies with sales forces greater than 100 people and companies with branches, divisions or franchises in excess of 100 units.

4.1 Market Segmentation

We segment our market by size of sales force and number of company subunits. Our target customers will have sales operations in excess of 100 direct sales representatives or more than 100 organizational subdivisions or franchises. For the first three years of operation we will focus on U.S. companies in the Pacific Northwest, California and the Southwest. Geographically this make sense as our office is central to these regions and management has established key client contacts in each of these areas. Larger clients are more likely to benefit from the efficiencies our product offers and will provide fees that will sustain our profitability. Exact figures for the number of businesses are hard to determine, however, the lean structure of our company will allow us to be profitable by generating two to three new clients per year.

4.2 Target Market Segment Strategy

Our strategy is designed to target:

• Medium- to large-size organizations whose sales forces provide their clients with proposals and plans that the client either collaborates on, or would benefit from collaboration.
• Companies that sell franchise rights and take an active role in the success of their franchises.
• Larger clients that will provide greater revenues through a larger volume of software licensing sales and greater chance of selling client interface solution.

4.2.1 Market Trends

The most significant trend affecting our company is the growth of business-to-business e-commerce. More and more firms recognize the need to take advantage of the exchange of information over the Internet and our products and services rely on this.

4.2.2 Market Growth

The fastest growing segment of the e-commerce industry is the business-to-business sector. This segment has gone from less than $50 billion to more than $160 billion in three years.

4.2.3 Market Needs

Customization-products that strengthen their brand and address their differences:

• We will “Private Label” the solution so as to further strengthen the clients’ brand.
• We recognize that different clients will have varying levels of sophistication and we will design different product templates for each customer.

Speed, efficiency and information:

• Our product will allow the client to make better and faster business decisions and receive quicker feedback from their end-customer.
• Managers will have the ability to monitor the progress and profitability of their staff.

4.3 Service Business Analysis

Customers tend to buy enterprise software solutions based on reputation, price and reliability. Also, compatibility with existing or legacy systems is very important. With this in mind, the key decision makers and influencer(s) will be the companies’ chief financial officer and chief information officer.

4.3.1 Business Participants

There are currently several companies that provide business planning software for desktop applications, but as yet none of these offer enterprise-wide solutions. Additional competitors are companies which provide word processing, spreadsheet and collaborative planning software, as well as publishers of business planning literature.

Strategy and Implementation Summary

Various strategy/and implementation topics are discussed in the following sections.

5.1 Competitive Edge

Our greatest strength and competitive edge is the reputation and success of the desktop software product. This product is the market leader in sales and consumer ratings. Our success will rely upon building on those strengths. We will also rely on our experience working with decision makers at the corporate level.

5.2 Marketing Strategy

We will position CSS as the best planning consultant for large corporations interested in the desktop software we sell. The software’s reputation is already established, so we need to focus on our understanding of the needs of large corporations and franchises, and how we can translate that into finding the correct software solution.

5.2.1 Pricing Strategy

This is an expensive solution to develop and maintain, and the price will reflect the premium quality of the offering. Set-up costs to the client will run between $100K-$200K. The dedicated service option is approximately $5K/year. Software licenses are $100/year.

5.3 Sales Strategy

We will first target the corporate offices of franchises with more than 100 units, and companies with sales forces in excess of 100 personnel. The software manufacturer has already provided the names and contact information for several firms which fit this profile. These firms have approached the software manufacturer about enterprise solutions in the past. The software firm has also provided a list of larger businesses that purchased an executive version of their desktop product. We will contact these firms with the idea of helping them take this planning tool to the next level.

Management of CSS has business contacts at the decision maker level for several more prospects as well. These will be our secondary targets.

Tertiary targets will come from lists of firms fitting the above criteria which management has generated through Web-based market research efforts. Tactics for approaching these prospects will be indirect, i.e., we will contact sales managers and/or franchisees to establish whether the firm fits our profile and then probe for upper or middle level management contact information. We will attempt to establish a face-to-face meeting with decision makers (CFO, CIO, COO) where we will present a proposal tailored to their needs. If possible, we will also have this proposal reside on an extranet so that the client can modify the proposal and see first-hand how the product and service work.

5.3.1 Sales Forecast

Our sales consist of two services–consulting and training, and one product-the software/extranet package (called start-up sales). Our services provide a fraction of the revenue we will receive for the software/extranet solution, but they will sustain our cash flow needs while we develop the enterprise sales. Sales of consulting, training and product are predicted to grow at 30%, 20% and 10% respectively. Costs associated with these sales are estimated at 10% for start-up sales, 40% for consulting fees and 50% for training. We expect these costs to decrease two, five, and ten percentage points respectively in years two and three.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

Ronald Ivanhoe, 33, founded the company in September of 2000 to take advantage of a partnership opportunity with a highly successful Pacific NW software company. He has an MBA in marketing and e-commerce from the University of Arizona, and has designed numerous successful business plans for companies in the manufacturing, e-commerce and entertainment sectors. He consults with insurance brokers, e-commerce, and manufacturing companies in marketing strategies. He has lived in Asia for five years, speaks Japanese fluently and currently resides in Portland, OR.

6.1 Personnel Plan

Payroll expenses reflect the salary of Mr. Ivanhoe.

Financial Plan investor-ready personnel plan .">

The most crucial issue affecting our financial plan is the receipt of start-up fees for the customization and installation of the software and extranet solution. This drives our cash flow, and all other aspects of our operation.

7.1 Important Assumptions

This table summarizes the general assumptions used to project our balance sheet.

7.2 Key Financial Indicators

The chart below shows the relative relationships, year-to-year, of four business indicators; sales, gross margin, operating expenses, collection days of accounts receivable.

7.3 Break-even Analysis

We have a break-even point in sales/month for year one as shown below.

7.4 Projected Profit and Loss

Monthly P&L fluctuate drastically due to the work required before a sale is closed. One to two months prior to closing a sale, we will incur travel costs and other miscellaneous expenses associated with our consulting service. Expenses are approximately 40% of fees. Set-up costs to the client (our commission), drive revenue in the period a sale is made, as do training fees. Associated direct costs are 10% and 50% respectively; however, as we anticipate a learning curve in training costs, these decrease to a flat rate in year two of eight percent.

The direct cost of start-up fees is our major expense. As the client prepares to go live with the product, we will need to travel more frequently to the site, bring in their key end-customers, and travel to the manufacturer more frequently as well. We have anticipated that start-up fees will grow 10% in year two and 15% in year three. Consulting fees are projected to grow at a steady rate of 20% and training fees at 30%. As a result, net profit is projected to grow at a conservative and realistic rate for the first three years.

7.5 Projected Cash Flow

Our cash flow assumptions are dependent on the start-up fee. We will receive 15-20% of the total fee in commission. Historical values of start-up fees are from $150K to $200K and the accounts have taken from one to four months to close. Conservative estimates lead us to believe that we can attain sales revenue from start-up fees of between $135K and $140K in year one.

7.6 Projected Balance Sheet

Balance sheet is a result of key assumptions and estimated sales/cash flows.

7.7 Business Ratios

The following table outlines important business ratios for pre-packaged software, as described by the standard industry classification (SIC) index, 7372.

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5 Best Business Plan Software in 2022

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When you’re starting a business, developing a strong business plan will be one of the first steps you take. Your business plan will cover everything from a detailed explanation of your products or services and pricing model to at least three years of financial projections—plus much more. Therefore, whether you’re not sure how to get started or you’re just looking to make the process easier, you may want to turn to business plan software for help.

In this guide, we'll break down five of the best business plan software options—discussing their pros, cons, features, pricing, and more—so you have all the information you need to decide which solution is right for your small business.

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Tell us where you're at in your business journey, and we'll direct you to the experience that fits.

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The 5 best business plan software options

The right business plan software will make the process of writing your business plan much simpler. Like many business software solutions, however, there are a number of different business plan software options out there—each of which has a unique set of features, user experience, and price.

This being said, if you're looking for a place to start your search for the best business plan software, you can explore the five top options below:

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

1. LivePlan

Best overall business plan software.

If you want template-rich, modern-feeling business plan software, then LivePlan may be the right pick for you. LivePlan excels with their user interface, which feels updated and slick, and also offers intuitive, easy-to-use features and options.

Their step-by-step instruction will help you kick things off from the beginning, and you can take advantage of their online learning center to continue to gain business skills.

Affordable plans, including pay-as-you-go option

No long-term contracts or cancellation fee; 60-day money-back guarantee

Modern, intuitive interface; cloud-based, can be used on Mac, PC, as well as tablets

Ability to create unlimited plans in one account; over 500 customizable templates

Variety of business resources including video tutorials, step-by-step instruction, and general customer support

Limited integration options

Challenging to enter your own financial modeling projections

Can be difficult to learn

Ability to create an unlimited number of business plans on one account

More than 500 business plan templates spanning various industries

Integration with Xero and QuickBooks Online

Real-time tracking of financial data with accounting integrations

Ability to export your business plan to Word or PDF

Expert advice and step-by-step instruction included

Performance dashboards for tracking against budgets and sales goals

Ability to create and export a one-page pitch executive summary

Annual plan: $15 per month, billed every 12 months

Six-month plan: $18 per month, billed every six months

Pay-as-you-go plan: $20 per month, billed once every month

2. GoSmallBiz

Best for multiple business management tools in one platform.

Next on our list of the best business plan software options is GoSmallBiz, which is much more than just a business plan software. With GoSmallBiz, you have access to business continuity planning software with features that cover creating a roadmap, working through business and legal forms, building a website, and more.

In this way, GoSmallBiz is great for startups or newer businesses looking to access multiple business management tools through one platform.

Unlimited business consultation and extensive library of online resources

Multiple business tools in one software

Website consultation analysis and business assessment

Industry-specific business plan templates with emphasis on financial projections and statements

Expensive monthly cost compared to alternatives

Limited business plan features

Entire business plan can only be exported to Microsoft Word

Outdated interface

Industry-specific business plan templates with step-by-step building wizard

Ability to create financial statements and projections

Free website hosting and website builder

Customer relationship manager with integration with MailChimp

Digital marketing dashboard with social media and Google Analytics integrations

HR document builder

Corporate minutes writer

Business documents library

Business courses library

Unlimited business consultation

$39 per month, no contracts, free cancellation

Best for simple, fast business plan creation.

If you're looking for free business plan software, Enloop will be one of your closest options—they offer an all-inclusive seven-day free trial, no credit card required. Additionally, unlike some of the other options on our list, Enloop is strictly dedicated to business plan creation, including automated text writing, financial forecast comparisons, and a real-time performance score that tracks your progress.

This being said, if you'd prefer the most straightforward, fast, and simple way to write your business plan, Enloop will be a platform worth considering.

Simple and straightforward software, solely dedicated to business plan creation

Seven-day free trial

Automatic text generation available to streamline the writing process

Affordable plans with annual discount option

Limited additional educational resources

Only one template option

No integration options

Ability to create three business plans with customizable text, images, tables, charts, and over 100 currency symbols and formats

Includes automatic text generation for each plan section that you can then customize

Automatically generated financial statements

Includes financial performance comparison analysis (using three ratios with Detailed plan and 16 with Performance plan)

Real-time performance score to track your progress

Ability to invite users to edit (two with Detailed plan, five with Performance plan)

Pass/fail report and certificate to help you identify issues with your plan

Free plan: Seven-day free trial with no credit card required

Detailed plan: $19.95 per month or $11 per month, paid annually

Performance plan: $39.95 per month, or $24 per month, paid annually

Best for startups looking to acquire funding or find investors.

Part of the Startups.com suite, Bizplan gets top marks for their user interface—it’s intuitive, easy to use, and modern. You’ll work with a step-by-step business plan builder to get exactly what you’d like from your business plan. It may remind you of a modern website builder, since it has drag-and-drop tools to build templates.

Moreover, for one subscription fee, you have access to all of the tools in the Startups.com network, including self-guided courses, how-to guides, masterclass videos, and more. All in all, with a direct connection to Fundable, Bizplan is a top business plan software option for startups looking to acquire funding and find investors.

Subscription gives you access to all Startups.com tools

Lifetime access subscription option

User-friendly drag-and-drop business plan builder

Excellent educational resources

Connection to Fundable great for businesses looking for capital

No free trial

No templates based on industry

No mobile access

Drag-and-drop templates for business plan building

Financial command center to track all business financials in one place

Unlimited account collaborators

Ability to share business plan online with investors

Online resources including self-guided courses, masterclass videos, how-to guides, mentorship access

Unlimited software use for Fundable, Launchrock, and Startups.com

Monthly plan: $29 per month

Annual plan: $20.75 per month, billed at $249 per year

Lifetime access: $349 one-time fee

5. PlanGuru

Best for financial planning and budgeting.

Finally, for some of the strongest financial features among business plan software options, including budgeting and forecasting, you might check out PlanGuru. Whereas the other solutions we've reviewed were first and foremost focused on writing a business plan, PlanGuru is dedicated to business financial planning —providing the tools you need to create budgets, financial forecasts, reports, and more.

Therefore, if you need a software solution that can streamline the financial piece of your business planning processes, PlanGuru will certainly have the most to offer.

Extensive financial tools and detailed forecasting, budgeting, and reporting capabilities

Substantial library of resources

Cloud-based and desktop options

14-day free trial and 30-day money-back guarantee

Expensive, especially for additional users

Only focuses on the financial aspect of business planning; no templates or tools for basic business plan writing

Difficult to use without prior financial knowledge

Cloud-based version of software, as well as locally installed Windows version (desktop version has a few more features)

Works with QuickBooks Online, Xero, and Excel

Budgeting and forecasting for up to 10 years

Over 20 standard forecasting methods

Formula builder to create custom methods

Ratios and KPIs

Dashboard and reporting tools

Help guides, video tutorials, knowledgebase, and live U.S.-based customer support

14-day free trial

$99 per month (additional users $29 per month)

$899 per year (additional users $299 per year)

What to look for in business plan software

Ultimately, it's up to you to decide, which, if any, of the best business plan software solutions on our list is right for your business.

So, if you're trying to figure out how to choose between the various options out there, it might be helpful to compare your top choices based on the following criteria:

Features: As we've seen different business plan software solutions offer different features. You'll want to look carefully at the feature list of any software and determine what features are most important for your business needs. Do you need an extensive library of templates with detailed customization? Would you prefer software that includes an online learning center for business skills? Are you looking for a solution that combines business plan writing with other tasks? It may be useful to list out your ideal feature set, so you can compare individual software plans to that list.

Price: Although you might be able to find some free business plan software options (or at the very least, free trials), in most cases, you'll need to pay a subscription fee to access the platform you choose. Therefore, you'll want to think about what your budget is for this business tool and what type of software is most cost-effective for your needs.

User experience: User experience can vary widely among different business plan software options. You’ll find some programs that are newer or have been recently updated. Others might have the kind of interfaces that felt new years ago but are now pretty out of date—and, subsequently, make them a little harder to use. The right user experience for your needs is genuinely a matter of opinion and comfort—nevertheless, it's worth testing thoroughly testing out a platform to ensure that it can truly work for you before investing in a monthly or annual subscription.

The bottom line

There's no doubt that properly crafting your business plan is important for the future growth and success of your small business. Luckily, the right business plan software should make the process much simpler.

This being said, whether you opt for one of the best business plan software options listed here, or another platform entirely, you'll want to take the time to compare multiple solutions and ensure you choose the one that's right for your business.

As we mentioned, it can be helpful to think about the features you're looking for, your budget, and your user-experience preferences ahead of time—that way, you'll have a set of criteria in mind as you explore different solutions.

Ultimately, perhaps the best thing you can do to find the right software is to actually test out the platforms themselves—either by using a free trial or a money-back guarantee.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

On a similar note...

Business Plan Software Guide

• Written By Dave Lavinsky

Every business, no matter the size or industry, needs a business plan. A business plan is a written document that outlines the goals and business objectives of a company, as well as the strategies needed to achieve them. Business plans also include details about the company’s products and services, marketing plans, financial forecasts, and management structure.

Business plan creation can be challenging, but software can help make the process easier. This guide will explain what business plan software is, how it works, how you can use it to start the business planning for your company, and how to choose from the best business plan software options for your needs. 

The Basics of a Business Plan

Before you can understand what business planning software does, it is important to take a look at what goes into a business plan .  Business plans are documents that describe a business, its goals, and plans to achieve those goals. It includes information about your products and services, your target market, your financial projections, expectations for future growth, and your marketing strategy.  Good business plans lay out the groundwork for your business and all you want to achieve and there are many sample business plans available online to help you understand exactly what good (and bad) business plans look like.

If you’re seeking financing for your business, potential investors will want to see a detailed business plan that includes financial projections and information about your business model and potential for profitability. Even if you’re not looking for outside funding, business planning can still be a helpful tool for organizing your thoughts and keeping track of your progress as you start and grow your business. Business plans are crucial for every company, from small businesses to large corporations, and the best business plan software options make the creation process fast and easy.

Business Plan Software Overview

Business plan software is a program or online tool that helps you create a business plan. A business plan builder guides you through the process of creating each component of a good business plan step-by-step and provides templates and tools to make the job faster and easier. Creating a business plan manually takes a lot of your time and can be expensive if you choose to outsource the process. Business planning software can make the planning process much easier by providing step-by-step guidance.  

Why You Need Business Plan Software

The right business planning software can help you create a professional-looking business plan on your own. Having a great business plan can be key to the success of your business and is something that many potential investors will want to see before offering funds. A polished, detailed plan shows investors that you have a clear vision for your company and how you plan to achieve it. Having a great business plan can also help you run your business more effectively and efficiently. Finding a great business plan builder makes the creation process faster, easier, and in many cases, less expensive.

The Best Business Plan Software Features

The business plan software features that are best for you will depend on your individual needs. That being said, there are several features to look for when choosing the best business plan software regardless of your business type, including:

• Financial Forecasting – The best business plan software will include tools to help you accurately forecast your company’s financial performance. This includes sales, expenses,  profitability, and other key financial data.
• Fill-in-the-Blanks – Great business planning software will have templates and tools that make it easy to fill in the blanks and create a professional-looking business plan with minimal effort.
• Starter Text – Just filling the in blanks is great, but sometimes you need a bit of clarity or inspiration on what to write. Business plan software that starts you off with example text can be very helpful in figuring out what you need to write for your own business.
• Design Options – While a well-written business plan is essential, it’s also important that your document looks good. Look for business plan software with design options that let you choose an aesthetic that works well for your industry and/or individual business.
• Customer Support – If you encounter a problem with your business plan software, it’s important to have access to customer support. The best business plan software will offer expert customer service and an online support center where you can find answers to common questions.

Business Plan Software Costs

The cost of business plan software tools can range from free to several hundred dollars. The price you pay for business planning software tools will depend on the features you need and the level of customization you’re looking for.

An important factor to remember is that a free business planning tool generally does not come with many of the features that make business plan software great in the first place. Features like financial forecasting are crucial for great business plans but are often not included in free business plan software solutions.

Choosing the Right Business Plan Software

Now that you know what to look for in business plan software solutions and roughly how much you will spend, it’s time to choose the right program for your needs. There are several business plan software options out there, but not all of them have financial planning or other key features you might need. When choosing between business plan software tools, consider the following:

• Your Budget – Remember that free software is limited in features. Choose a program that fits within your budget, but still offers the features you need.
• Your Needs – Whether you are a first-time business planner or an experienced pro, it is important to find the best business plan software that meets your needs and makes the job easier. Look for software with important features like financial forecasting, starter text, and great customer support.
• Your Business Type – Some business plan software is geared towards specific types of businesses and includes sections or locked-in design options that you do not need. Make sure the software you choose has design options that can accommodate your needs.

What Makes PlanBuildr Different

PlanBuildr is the fastest and easiest business plan tool, and it offers all the features you need to create a professional business plan. Not only does PlanBuildr have fill-in-the-blank simplicity, but it also comes with built-in financial forecasting and support from an expert customer service team. Standout features include:

• Simple Fill-in-the-Blank Exercises – PlanBuildr’s simple fill-in-the-blank exercises make it easy to create a professional business plan with minimal effort.
• Automatic Financial Calculations – Financial forecasting tools calculate your financial projections for you. PlanBuildr will automatically calculate key financial data, including financial statements, and makes adding charts and graphs simple.
• Multiple Design Options – PlanBuildr offers a variety of design options to choose from, so you can create a professional business plan that looks great and fits your specific industry.
• Instant Availability – Once you’re done with the business plan creation process, you can download or print your document immediately.
• Expert Customer Service – The expert customer service team at PlanBuildr is available to answer any questions and you have access to a helpful online support center to find solutions to the most common issues.

If you’re looking for business plan software that is easy to use, comes with great features, and won’t break the bank, PlanBuildr is the right business plan software solution for you. You can even get started for free and explore all that PlanBuildr has to offer.

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SEO Sandwitch

Business plan for startup software company.

As an entrepreneur, you have to plan everything you do to succeed. Today, most entrepreneurs still ignore the significance of having a business plan before investing their money in any project. When you think of starting a software company, you cannot proceed without a well-written business plan. 

This is important if you intend to compete favorably in the market. Note that a business should only enter a market to provide a solution to what most customers face or do not get from existing businesses. A well-structured business plan should outline the business mission , vision, objectives, and solutions. 

When you look up to a software business, you need a concrete strategy and plan that will provide a foundation for your growth. This article highlights some of the essential tenets and parts of a business plan you should know. You will also learn why it’s necessary to have a business plan before you start your business. 

Business Plan: What is it?

1. it can help in business growth, 2. helps you reach milestones, 3. helps you get funding for the business.

• 1. Executive Summary 
• 2. Company Summary 
• 3. Market Research 
• 4. Product And Service Description 
• 5. Operation And Management Structure 

6. Sales And Marketing Plan

7. financial plan.

A software company business plan is a well-structured and written document that highlights the premise of your company, summarizing the financial objectives, goals,  startup structure , and all the details on how you intend to accomplish the goals and objectives of the business.

A business plan is simply a mirror of where you want your business to be in the coming years . It is a road map that explains what you want to do in the business and how you intend to do it. In most cases, a business plan will have the following parts:

• An executive summary 
• Company description
• Market research 
• Product and service description 
• Operation and management structure 
• Marketing plan 
• Financial plan

Related: Best Startup Name Generators

Why A Software Company Needs A Business Plan

When starting a software business or company, you may be short of ideas. It is not easy to tell whether your business will grow or not if you don’t have a plan to do it. With a business plan, you have a definitive guide on how to go through every stage that your business will be facing. 

You will use a business plan to structure, run, and grow the business. A business plan helps you think in detail about how your business will run and achieve its goals.

As you move forward, you will need a marking scheme to determine if you are making progress. A business plan helps you take a step back and think of the objectives you set at the start of your company. 

This way, you can make the right decisions based on the goals of your business. A plan will guide you on whether you need a loan to finance your business or not.

If you are looking for ways to fund your software company, a business plan is one way to start. Most investors will ask to review your business plan if they intend to invest in your business.

With a business plan, you can easily convince partners and get funding from financial institutions.

Related: Best Startup Accounting Software

Tips For Writing A Business Plan For A Software And Tech Company

Now that you know why it’s essential to have a business plan for your company, we can dive into the critical elements of a well-written business plan.

1. Executive Summary 

This section of a business plan is the most critical for any startup that intends to grow. When poorly written or structured, the business may lack purpose and direction. 

In most cases, business plans fail in this section because they are not captivating to the readers. 

In this section, the business plan should hook prospective investors, employees, and partners. Your target investor may not have the time to read the other sections of the plan. Therefore, when you create a captivating and detailed executive summary, you may just win the deal in this section. 

Make the executive summary concise and more compelling to the reader. Put down some points on what makes your business unique from others in the industry. You should also clarify how the business will be offering solutions in the software industry and how you plan to beat the stiff competition. 

An executive summary should have the following key components:

• Target market : Who is your target customer, or simply who will benefit from the product you are offering?
• Business model : What new product are you bringing to the market? How will this product make you some money?
• Business opportunity : Is there a gap in the market that you intend to fill up? Why do customers need the product you are offering?
• Marketing strategy : How will customers learn about the product you are offering?
• Competition : Who are your competitors? What are other companies competing for the market share?
• Goal and objectives : How will this product you are offering transform the marketplace?

In most cases, if you want to create a compelling and excellent executive summary, you should write it last. Start with the other sections of the business plan, create, and finish with the executive summary. This way, you will capture all the key points in the executive summary.

Related: Best Tools For Early-Stage Startups

2. Company Summary 

A company summary or headline statement is another vital part of a business plan. When you create a perfect company summary, you can capture the imagination of your prospective investors and partners. The summary also serves as a lead to your business plan.

When your structure a company summary, you should focus on the following:

• Giving your readers a simple overview of what your company specializes in. What does your company do or offer?
• Explain and communicate the value your company products and services offer to customers.
• Highlight some of the opportunities your company has in the marketplace 

Here is an example of a company summary 

My Foot is a fashion and design business that sells men’s footwear and clothing to men who need quality and affordable shoes but doesn’t get it from local stores.

A business summary should state the company name, type of business, product or service offered, target customer, solution, and completion. Once you create a business plan, you can come up with an excellent company summary.

3. Market Research 

Yes, you have a great business idea, but not everyone is likely to buy from it. Even with a good idea, you still need to research the market and determine if your idea is saleable; learn more about your competitors and customers. 

When doing market research, you should:

• Identify target market : Your business is going nowhere if you don’t have a viable market for the product or service you are offering. You want to find out if the product or service you are offering is needed in the market. Get a sense of the Total Addressable Market (TAM) to determine the potential revenue your business is likely to generate.
• Segment your market : You can group your target customers according to their age group, gender, geographic location, and behavior. 
• Competitor analysis : You should conduct a thorough competitor analysis to help you determine the key differentiations between your competition and your company. Some questions you can ask yourself: How to improve the existing products and solutions in the market, why people should choose your product, and why people are not buying the existing product.

When you think of the existing products and flaws in the market, you can easily identify opportunities for your business and start a business that offers ideal solutions to target customers.

Related: How Many Startups Fail Within 3 Years Of Launch (Read Stats)

4. Product And Service Description 

When drafting your business plan, you should link what you are offering and what your customers are looking for in the market. This way you can easily prove that there are people who are willing and able to buy your product.

• Research existing problems in the marketplace : What problems are most customers facing? Are there solutions to these problems? Ask some of your potential customers about the problems they are facing in the market. Seek honest answers from your customers and come up with a problem. Do this research before coming up with a product.
• Custom the product to the existing problem : Once you have a list of problems, you can now trim it to focus on those related to your product. Explain to the customers how your product will offer solutions to the problems they are facing. For instance, if most people believe that the existing solutions are expensive, you can describe how you intend to come with an affordable product that offers the same quality.

Related: Best Tools For Startups

5. Operation And Management Structure 

The fifth stage in creating a business plan for your company is delving into the human resource in your company. While investors will focus more on the idea of the business, they also want to invest in the team as much. 

Your team should therefore consist of experts whose skills complement each other. For example, a tech or software company can have a programmer, a coder, a graphic designer, and sales professional. You should highlight the merits of each employee and the value they add to the business.

Lastly, you should create an organizational chart for your team and employees. It should define how your business will be organized. For a startup, it could just be you and the other partners that invest in your business. 

When you create a graphic organizational chart, you simply visualize the kind of structure you want your business to have as it grows. 

Sales and marketing is other elements you should include in your business plan. Outline some of the strategies you want to use in marketing and selling your products and services.  

Sales channels are all the mediums that enable customers to purchase your products, while a market channel is what you intend to use in promoting your business. If you intend to use a direct sales channel like an e-commerce store, you should not hesitate to explain it in your business plan. 

In the business plan, you should explain how you intend to attract customers and acquire leads. In most cases, you should focus on these activities;

• Develop and launch a website, if possible, an online store where customers can shop in the comfort of their homes.
• Have a strategy to drive traffic to the website from organic search and social media platforms.
• Come up with a PPC strategy that can aid in getting instant online exposure for essential products you are offering.
• Adopt email marketing by first building an email subscriber list.

You can choose a marketing strategy that will help you to nurture existing customers and make them loyal to your business. The marketing section for the business plan should account for factors like market risks, goals, and budget. 

Related: Best Startup Podcasts

A complete business plan should highlight the company budget and sales goals. This is probably one of the most challenging parts of any business plan. It is not that easy drafting this section if you lack accounting and financial planning skills. 

It is also challenging to create a financial plan if you don’t have a cash flow report, balance sheets, and stable income. 

Your business plan should include all the details on how you will generate income, what costs you expect to incur in the future, significant expenses, salary demands, and financial milestones. 

Final Thoughts 

Most startups don’t make it to the second year of business for lack of a business plan. When you create a business plan, it should outline some of the challenges you expect to encounter in the industry and how you will cope with them. 

An effective business plan should cover the seven key elements we have explained here. Always keep all the details in your business plan to the right perspective, research widely, and make your business plan concise and on-point.  With these tips you should be ready to make that move – start your software company now.

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Joydeep Bhattacharya

Joydeep Bhattacharya is a digital marketing evangelist who has over 11 years of experience in online marketing. He helps businesses improve their revenue online. He is a regular contributor to SEMrush, Ahrefs, Search Engine Watch, Hubspot, Smart Insights, and several other publications.

Marketing Plan for a Software Company

Getting from a brilliant idea to an equally spectacular business success is likely to be a long haul. In the highly competitive IT market , it’s often a solid marketing strategy that determines whether a company will succeed in achieving its goals. 

A B2B marketing plan is the foundation for building a thriving business. In this article, we’ll go over what a marketing plan is, why software development companies should have one, and how to develop it step by step. 

What Is a B2B Marketing Plan?

In the simplest terms, a marketing plan is a kind of a strategic roadmap that indicates what paths your software company should follow in order to achieve its business goals . The overarching aim here is to define the activities that will allow your firm and marketing team to reach their strategic goals and objectives and deliver value to the clients. This may lead, for example, to building a strong brand or help in increasing IT sales by acquiring new clients or improving loyalty of actual ones.

However, one important thing to remember is that a highly effective digital marketing plan is not a schedule or a checklist. Rather, it is a strategic approach that enables, as the name suggests, planning the company’s market activity in the long term. As an integral element of a B2B marketing strategy for software companies , it should be thought out in its early stages to help your business gain a competitive advantage and reach your business goals.

Why Do Software Companies Need a Marketing Strategy?

Strategic planning helps IT companies meet their business goals. But before you do anything, you should first carry out a thorough analysis of your current situation – only then should you proceed with writing an outline to an actionable plan and thinking out its implementation. As a result, you’ll avoid a situation in which a new line of business or tech product is introduced to the market in a chaotic manner and potential B2B clients are acquired by other software companies.

There are many other benefits of planning marketing activities, such as:

a higher ROI from marketing activities,

a more efficient use of the budget, team and resources,

improved customer service and, as a result, customer satisfaction,

the ability to monitor changes on the market and adapt accordingly much faster,

a better coordination of intercompany activities and your marketing team’s workflow,

the possibility of measuring the efficiency of individual activities and drawing conclusions based on data,

ensuring marketing communication consistency.

Marketing Strategy vs. Marketing Plan

The terms marketing plan and marketing strategy are often used interchangeably. Although both documents define the ways of reaching marketing goals, specify marketing activities, and indicate how to measure their effectiveness, they are far from being the same concepts. The key difference between them lies in the level of detail. 

A B2B marketing strategy is oriented towards achieving an in-depth understanding of your software company ’s situation, defining its competitive advantage, and determining how certain operations are supposed to be carried out. A marketing plan , on the other hand, is focused on identifying what your IT marketing team is supposed to do to meet your business goals. In other words, the company’s goals and overall philosophy, as defined in the strategy, are supposed to be translated into and supported by the marketing activities defined in the plan. And while the strategy primarily answers the questions of “why”, “for whom”, and “how”, the marketing plan is intended to provide more comprehensive answers to “how”, “when”, and “where.”

While most CMOs realize that acting without a high-level marketing plan leads to chaos, increased risk, and higher costs, they usually don’t know how to actually write one. What is more, both the document as well as the entire process of creating it are often identified with some of its last stages (such as creating a list of “tasks”), with prior research and analysis often ignored. This is a serious mistake that translates into lower effectiveness of marketing activities in the IT industry . 

How to Develop a Marketing Plan For a Software Company?

Understanding the role and benefits of strategic planning is one thing, creating an efficient plan is much harder. Even if a universal template doesn’t exist, there are some components that should find their way into every IT company’s plan. 

The key elements of a B2B marketing plan are:

• Conducting marketing audit (with an executive summary)
• Defining marketing goals
• Setting strategic objectives for your company
• Choosing marketing mix and tactics
• Defining marketing plan implementation and measurement methods

Below you’ll find a brief description of each of these areas.

Conduct Marketing Research

The first step in preparing a high-level action plan is conducting a market analysis (looking over the current market situation). This is because in order to determine what the best direction for developing your business is, you must first understand where your IT company currently stands.

You can do that by analyzing your company’s environment on two levels: macro and micro. As part of the macro-environment analysis, pay attention to general trends that may affect the market situation specific to your high-tech business . For example, for a company specialized in software development in a specific programming language, information about the dynamic growth of demand for competitive solutions will be of crucial importance.

To analyze the macro-environment , you should consider using dedicated tools, such as a PESTEL analysis, a simple framework of the most important factors (P – political, E – economic, S – social, T – technological, E – environmental, and L – legal) that may affect the development of your IT company . You can obtain data on these from industry reports, media releases, government reports, or conversations with subject-matter experts.

The second step in conducting a marketing audit concerns your company’s immediate environment, including your B2B clients, competitors, and business partners. Here, it’s worth analyzing what your competition is up to and what their offer is. Conclusions from your research and analysis can be presented on several slides, helping those who are not involved in the process to better understand the situation.

During marketing assessment, try to answer the following questions:

What kind of target groups are your competitors trying to reach? Does it coincide with the ones you want to get to?

What are the key differentiators, competitive advantages, and value proposition of other businesses in the IT industry? In which area does your software company provide greater value?

What B2B marketing channels (website, social media, offline) do other IT companies use?

In which direction, in your opinion, are other software development companies trying to develop their businesses?

Gathering this intel (by conducting a marketing research for your IT company ) doesn’t mean, of course, that you should blindly copy what other hi-tech companies are doing. However, it is a good starting point for understanding potential growth opportunities or threats to your IT business .

Moreover, make sure to investigate your target groups during the micro-environment analysis for your software development company. You can, for example, conduct short interviews with selected B2B clients , or develop questionnaires and send them out among your client base. Ask them why they chose your firm in the first place and what value you managed to deliver. Maybe your developers are particularly friendly and communicative, and therefore easy to work with? Or perhaps your company offers convenient forms of payment? Oftentimes, business clients find value in other aspects than the quality of IT services or products you deliver. But don’t stop there – try to really understand their experience and inquire about the reasons why they would (or would not) work with your Software House again.

Also, remember that a key step in conducting a marketing audit for an IT company is to examine the extent to which your business has met its objectives to date. For this, you’ll need clear data on gross profit or sales volume. Ideally, your firm should also have data on brand awareness or your business’s market share – for this, however, you should carry out a separate research (either on your own or by commissioning it to an IT marketing agency specializing in strategy consulting ).

Financial data and conclusions from the micro- and macro-environment analysis should allow you to assess where your software company stands. It’s also worth closing this stage with the so-called SWOT analysis, which indicates the strengths and weaknesses of your high-tech business as well as possible opportunities and threats that await it. As the foundation of the SWOT analysis, you can use information from your PESTEL model or conclusions from the client survey.

2. Define Marketing Goals For a Software Company

The second element of an effective marketing plan is defining the marketing goals of your IT company . Knowing where your business stands is an important foundation for all further activities, but in order to grow your business, you need to think of how you want to move forward.

Such objectives can be related to many areas. However, the direction in which you’re taking your software marketing should be consistent with the high-level strategic and business goals of your IT company . In other words, if you expect to reach a gross profit of $3 million in a given year, the marketing objectives should support this plan.

The areas in which you can set IT marketing goals include:

market share,

sales profitability,

B2B sales volume,

client loyalty,

client satisfaction.

At the same time, each of the B2B metrics mentioned above should be formulated according to the SMART framework – that is, specific, measurable, achievable, relevant, and timely. For example, your B2B marketing goals can be as follows:

an increase of the Software House market share in Poland by 10 pp by the end of the year,

an increase in customer loyalty by 10% by the end of the second quarter of the year,

an increase in IT sales by $5 million in the first quarter of the year.

3. Define Strategic Assumptions For a B2B Marketing Plan

After establishing your business and marketing goals, the next step is to determine how you want to achieve them. For this, you should use strategic assumptions.

Within the strategic part of the marketing plan for your IT company , you should first focus on defining your target audience or target groups. Directing your messages at everyone is simply a waste of time and money.

Think about this in terms of:

the main industries (or segments) you want to reach,

client needs you want to satisfy,

what motivates your potential B2B clients,

the problems your prospects are facing (and the solutions you can offer),

the expectations your potential clients might have towards a software company like yours.

Defining target groups is the first step in understanding who you want to target with your products and/or IT services. For companies operating on the B2B market, it’s equally important to create buyer personas – semi-fictional representations of your ideal clients based on your company’s data and research. One of your buyer personas could be, for example, a specific type of CEO. Understanding the needs, problems, and objectives of decision makers and stakeholders on your client’s side will allow you for more precise actions down the line.

The strategic part of your digital marketing plan is also the place to identify the key advantages you have over your competitors which you’ve previously analyzed. What IT services does your company offer? What kind of competitive advantages does your high technology company hold? An integrated marketing plan must include answers to such questions.

4. Choose the Right Marketing Mix For Your IT Company

Identifying the competitive advantage and target groups of your software company , hoverer, is not enough for an effective execution of your plan. For that you’ll also need to choose the right B2B marketing tactics – or, in other words, specific activities that will help you reach your strategic objectives. For this purpose, consider using the so-called marketing mix , a combination of marketing activities in several key areas.

The 7P marketing mix consists of:

Product – the elements of your B2B company’s offer as well as various branding aspects (colors, fonts, naming),

Price – the general approach to pricing services and/or products and occasional discounts (if applicable),

Place – ways of reaching your audience (such as social media, websites, external services) or, in other words, places where your clients will be able to find or hear about your IT services,

Promotion – what B2B marketing channels you’ll be using to convey information about your services and how you’ll formulate those messages to your clients,

People – guidelines for people who will have direct contact with the recipient,

Process – a list of activities that will lead to the delivery of your IT services/products (such as the time that should pass from acquiring a lead, converting it into a client, interviewing them about the product they want to develop, or actions to be taken in case of problems on the client-side),

Physical evidence – all kinds of visual elements that will reassure the recipient that you’ll deliver your service (such as a well-functioning website, testimonials from other clients, or an impressive appearance of your company’s headquarters where the clients will be invited for crucial talks).

Physical Evidence (świadectwo materialne), czyli wszelkiego rodzaju wizualne elementy, które upewnią odbiorcę w przekonaniu, że zrealizujesz usługę, której oczekuje – jak choćby dobrze funkcjonująca strona internetowa, referencje innych klientów czy… efektowny wygląd siedziby firmy, w której podejmiesz klientów na decydujące rozmowy o kontrakcie.

5. B2B Marketing Plan Implementation

All that background research is necessary to develop a plan that is well-adjusted to your situation. But you might be wondering how to actually implement a marketing plan in your software development company . 

First, you should figure out how you will monitor progress and evaluate the efficiency of various initiatives at their different stages. Without it, you won’t see how your business is performing and whether or not the effort put in preparing a marketing plan has actually paid off. This is why the final part of creating a marketing plan is to prepare a kind of blueprint for its execution (discussed in more detail in the next section) and defining ways to measure its performance. Thanks to the metrics you choose, you will be able to continually assess your marketing team’s business results. 

The primary measure of effectiveness is when a goal defined on the plan-level has been achieved. However, consider creating additional B2B marketing KPIs (Key Performance Indicators) , which will make evaluating individual elements of the plan significantly easier and, if problems arise, help you determine what has gone wrong.

Digital marketing metrics are different depending on the area you’re measuring. For IT companies operating in the B2B market, you might indicate:

the strategic level – the measurement of high-level marketing business objectives (as defined earlier, market share, sales profitability, etc.),

the marketing-mix level – the elements in relation to the 7P framework mentioned above) such as:

• product (e.g. brand awareness indicator, the number of customers for a particular service)
• price (e.g. price index),
• place (e.g. the number of visits to a page with specific services),
• promotion (e.g. the number of users on the website, social media reach)
• people (e.g. employee satisfaction index),
• process (e.g. the average response time of the customer service, the time it takes for a lead to convert),
• physical evidence (e.g. the percentage of leads gained thanks to client testimonials or word-of-mouth marketing).

Using an IT Marketing Plan in Practice

After developing a marketing plan for your software company , you might be unsure about what to do next. Truth is, even the best plan won’t bring you or your business the desired outcomes if it’s not implemented correctly. Below, you will find two critical documents that may help you in the process.

Executive Summary and Its Benefits

An executive summary of your marketing plan is a short document containing only the most important information. It will serve you and other people (also those who weren’t involved in the drafting process) as an overview of the document’s individual assumptions. How long should an executive summary be? Just one page is enough! When creating it, make sure to include the main objectives, key numbers, crucial tactical activities, and a general overview of the marketing mix you’re using.

A fair share of problems with marketing plans manifests itself exactly during the implementation of their assumptions. This makes defining ways to implement the marketing plan an absolutely key element of the whole process and must be taken into account at the stage of strategic planning. So, consider supplementing it with an executive summary section.

Work Schedule for Improved Communication

In addition to the above, having a clearly defined work schedule will come in handy at the implementation stage. When creating a schedule, consider using a Gantt diagram. It will allow you to place particular marketing activities in time (e.g. preparation of the concept of a new product or service, decision concerning its pricing, the way of communicating it via social media.) and to allocate budgets and employees responsible for carrying them out. Research shows that over 40% of marketers declare that communication problems and difficulties in cooperation are the biggest barriers in implementing the plan. Thus, paying special attention to these aspects is crucial.

A Marketing Plan Cheat Sheet for B2B Marketers

Establish a coherent vision of the future that ensures (although you can never be 100% sure) the successful implementation of the B2B marketing strategy and plan .

Keep the team involved at every stage of drafting the plan for your company.

Set clear timelines for the various stages of implementation.

Ensure that the CEO and the management team are involved in the process (not only the creation but also implementation phase).

Prepare an executive summary of and distribute it to management.

Strategic Planning is worth more than a Plan

Hopefully, the tips outlined here will be useful in creating an IT marketi ng plan that will help your company build an edge in the market. After all, in the IT industry , good strategic and marketing planning is the key to business success. By developing a B2B marketing plan for your software company and executing it step by step, you’ll significantly increase your chances of reaching clients who are the best fit for your business and support its growth. Just remember to do your research!

Does Your Software Development Company Need a Business Plan?

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