Jim Kelly is a Bethesda, Maryland-based serial entrepreneur whose expertise includes software technology solutions and venture capital. In 1996 – at age 55 – he left his position with BDM to start his first company: SynXis, a hotel reservation management software provider sold to Sabre in 2005. Later that year, Kelly (a former pilot) and his business partner, Bob Wright, launched Flight Explorer, a software and IT solutions provider to the global aviation community that was created from a division within Wright’s company, Dimensions International. Over the next three years, Kelly and Wright used a software product that tracks planes in flight to build Flight Explorer before selling the company to Sabre in 2008.
Kelly also is the founder of Innovectra, a telecommunications software provider acquired by Edison Venture Fund in 2003. His current businesses include a medical startup and a publishing company. He draws upon his own experience to offer the following ten-point plan for aspiring software entrepreneurs.
1. Define your mission. Document it in a written business plan that also spells out your products, services and markets. Make sure everyone in your organization is in full alignment. There should be no “If we build it, they’ll buy it!”
2. Implement a structure. This will require action on several housekeeping items. Are financial records established and up to date? Do you have an attorney who understands your company and will give knowledgeable advice when you need it? Are employee contracts fully documented with non-compete clauses and ownership plan references? Have you reviewed employee backgrounds for any surprises? Is your business insured?
3. Choose your management team. Are the right people in the right seats on the right bus going in the right direction? If not, make changes quickly. Personnel issues are – by far — the hardest part of management. Few people handle them effectively.
4. Cultivate your funding sources. Establish banking and shareholder relationships to ensure access to sufficient capital when and where you need it (for example, acquisitions). If you or other owners are not up to contributing additional capital, develop relationships with outside sources of debt and equity. Consider a line of credit as a way to build a credit history and banking relationship. Banks offer $50,000 Small Business Administration (SBA) loans to startups that have been in business for at least two years.
5. Don’t shortchange software development. This is the lifeblood of your company. Is the intellectual property fully in your hands? Is the development process documented? Even though outside contractors may assist, self-reliant enterprises will carry more weight. Make sure you have a serious process, such as a Product Review Board, in place to match development priorities with market requirements effectively.
6. Invest in a marketing and sales operation. As the marketing and sales team seeks new customers, it needs to stay engaged with existing ones at all times. Be aware that sales personnel compensation plans tend to be more complex in the software world. Management must make a special effort to adjust and readjust the plan to maximize sales productivity. Finally, remember that the enemy has a vote; the sales team always needs to be mindful of real and imagined competition. Many times, a supposedly minor player becomes an industry leader because the competition wasn’t paying attention!
7. Price your products and services carefully. Prices that are too low or too high will result in an early death of the organization. Failure to conduct frequent price reviews will only enable competitors.
8. Build relationships with partners. They can be helpful in verifying need, defining requirements, supporting concept tests, determining the pricing and spreading the good word within their respective communities. They can also be important sources of information about the competition. Product development with partners should be an enterprise rule.
9. Test the delivery. Has someone other than the developers vetted the software? Is the delivered product within the expectations of the customer? Usually, sales or support undertake this function in the initial phase — but as the organization grows, you’ll need to invest in Quality Assurance personnel.
10. Provide complete customer support. If a customer has an issue, are his or her options clear? Does your company have a disaster recovery plan in the event of a catastrophe (software fault or major delivery error)? Everyone in the organization should know his or her battle station when things go really bad, as they are bound to do once in a while. Be ready!