16 Ways To Avoid Every Pitfall I Faced While Running My Software Company

I ran a software company for the last 7 years and over that time frame my software sold multiple millions of dollars and many thousands of units.  The software I dreamed up helped people and a majority of them loved the results they produced by using them.Until recently, my software kept food on my table and my bills paid.  I had a personal epiphany and realized that I enjoyed creating training for people a lot more than I did selling software and made a conscious decision to shift my business back in that direction.  There is nothing better than being able to do what you want.

At one point, I'd considered doing higher end software consulting to help software companies generate more revenue.  Then, I realized I didn't want to do that either.  Most of what you're about to read is what I would have shown to those that hired me as a consultant.  Since I'm not going to pursue the consulting side of things, I thought it would be cool to share what I learned over 7 years of running my software company:

What you think will sell like crazy may not sell at all.

My best product ideas come from the things that piss me off the most.  One of my main frustrations as a teacher or trainer was when customers wouldn't use what they bought from me.  So, I came up with what I thought was a brilliant idea.  A project management system with the ability to import sets of tasks.  All I had to do was break down what I taught into steps that could be imported into the software.

I figured I could also integrate my system with some of my friends that did training, too.

It didn't work.  The product is awesome, but I chose the wrong target.

My programmer/partner built a php based project management script from scratch and it just didn't sell.  I also couldn't get my friends to get together task sets based on their products, which led to far less integration partners than I expected.

It's an amazing product based upon an idea that made a ton of sense at the time, yet there is nothing sexy about it at all.  It was more difficult then I expected to build excitement around the idea of "get your work done".

By focusing on what upset me, I forgot about the customer.

It's much smarter to create products they'll have a strong desire to buy based upon a problem they want to fix.  Just because something frustrates you, that doesn't mean it is something your audience will want.

Have a free version of your software if you can.

Why free?  Mostly because that's what many of your prospects will want.  In fact, there are many thousands of people that will fight whatever registration system you use to protect your software and get it for free anyways.(we came up with a pretty simple one that stopped most people that wanted to get our stuff for free)Here is how to transform your paid software product into a free version and what to do with it when you have it:

1. Take a useful feature of your software and turn it into a standalone product you can give away.  Make sure you build in a link or banner that leads to your "full featured" software.
2. Create a "pad" file.
3. Submit it to software directories and download sites.
4. Watch the sales roll in.

This will drive sales for you if you do it right. 

Cutting your software into pieces to create upsells is a crappy thing to do and creates angry customers that don't like you.

This is simply rude.You have this amazing software put together that solves a major problem for people, then you split it up into tiny pieces and make people pay over and over again to get your complete product.Don't do that.Here are some alternatives:

• Find people with parallel (does something similar, but not the same) software or training that you can include in your sales sequence and split the profit with them.
• Create a "tripwire" training that shows exactly how to do what your software does without using your software.  Sell it for next to nothing and give 100% of the sale to affiliates.  Your software is the primary upgrade.
•  Find some resale rights software or PLR (source code) deals and pull together a bundle to offer as an upgrade.

Don't be a jerk.  There is a thin line between creating a profitable sales funnel and alienating your customers.  Some affiliates don't care about this kind of thing, but if I receive an email from one of my customers complaining about 43 upgrade options and an unfriendly sales process, I will never recommend that product creator again.

"Me too" software is generally a bad idea.

The only time you should create a software that is comparable to something already available is if you can do it for far cheaper or do it far better.  If not, don't do it.

Having software that does the same thing every other one does is a recipe for failure.  You have to have an obvious way to differentiate your product from your competition, otherwise you shouldn't spent time, energy, and/or money on it.

If you can't do it faster or better, find something where you can.

Doing one thing really well  is better than doing all things OK.

When I first started out, I was annoyed that I had 6 different tools that all did the same basic thing.  They all helped me put out content faster.  When one of them offered a source code deal, I grabbed it immediately.I figured one that did everything would be easy to sell.

While I was wrong, it made me over a million of dollars over the last 7 years and helped tons of people.

What the other software sellers were doing was smart.  They were taking one main idea and selling it over and over again.

If I could do it again, I would have followed their path instead of the one I dreamed up and made a better mousetrap instead of trying to invent something that didn't exist.

The more your software does, the harder it will be to sell as a front end product.

I was surprised when I had trouble selling this "end all" content syndication software.I got lucky and an amazing copywriter owed me a favor and wrote my first salesletter for the product.

Without his letter, I would have failed miserably at selling my software because I was terrible at writing sales copy 7 years ago.

Software should do one specific task and do it better than any other software on the market.  If you can do that, you can make tons of money.

Products that "do it all" can perform very well as an upgrade option (that's where my software sold ridiculously well).

Always include a weird question when seeking new programmers.

In fact, I would say that this would apply when hiring anybody for anything.Include a weird question like "Please include your favorite color" or "Include your childhood pet's name".

Why?

Attention to detail.  If they can't do it when applying to work with you, they won't do it when you ask them to get something done either.

Programmers will miss deadlines no matter how you decide to motivate them.

Even when my programmer became my partner and got half of every dollar that came in, he would still have trouble getting projects done on time.I believe every programmer is different and am not a programmer myself so I have no idea why they can't stay on time.

What I did was tell the programmer the due date was 2 weeks prior to when it actually had to be done and this normally gave them enough extra time to get things done without messing up the timeline for the project too badly.I know that it's sneaky, but it worked.

You're better off overpaying programmers than underpaying them.

I got robbed.  These programmers were smart about how they did it, too.They bought a domain and showed me what "work" they were getting done.Then, after a few weeks they simply disappeared.I had no access to their work and the files on the site they built were all unusable.It cost me about $600, but was a very valuable lesson.If you're dealing with offshore programmers, be sure to use a site like Odesk to ensure that you get the work you're paying them to do.  They can act as a "middle man" if you don't like the work that was done for you and can prove that the programmer didn't do what they were supposed to do.

With programmers, sometimes you get what you pay for.

While it is possible to find a $4 per hour programmer that will do amazing work, you'd have better odds winning the largest lottery jackpot in history without buying a ticket.

Hiring from countries where pay is very low can keep your costs down, but quite often you'll find that the work you get from someone willing to get $4 per hour is going to be ultra low quality.

It's smarter to spend a little more and get something you can use.

Every week you have a subpar programmer working on a product for you is a week you lose if the work they produce isn't good enough to sell.

Know your next software before finishing your current one.

As I stated above, I should have focused on doing one thing really well.  By creating an "end all" solution, I cost myself more than a dozen opportunities to sell parallel products to my customers.My submitter had video, articles, directories, social bookmarks, press releases, RSS, podcast, and many others all built in.Instead of starting with something so huge, I should have created the best possible article submitter.  Then, done a video submitter, then a press release submitter, etc...By doing all of those things, I couldn't specialize how the software worked to be as beneficial as possible to the end user.Instead, it limited my ability to focus on the little parts of each type of content.  Eventually, we did produce a video version that sold very well and I wish we'd done that for all of the other content types, too.If I had followed the "do one thing awesomely" path, I would have created a much larger customer list and had more products to sell them.My customers loved the "all-in-one" nature of my software and I'm still glad I followed the path I did.

The more automated your software is the harder it will be to keep running and the more it will cost you.

One of the secret goals of my software was to never have to update it.  We did some unique things to make that possible.We were the first to allow the end user edit the lists of sites built into the software.  They could add or remove any site they wanted.On the rare occasion a customer would complain about outdated lists of sites, we let them know that we could update them on our end, but it would overwrite any edits they'd made.  Not one of them suggested we update the sites after that statement.Over time, I came up with better ways for the software to do what it did.  We ended up making drastic changes over the 7 years, but most were to make it easier to use.  Very rarely did it ever break.The focus was always to make it something that would never need to be updated.

Using income claims to sell software is silly.

Unless your software mines bitcoin, it doesn't make the end user money.In fact, you'd probably attract a lower quality customer by focusing on money instead of what the software actually does.

The software sales copy I created that produced the most money had a simple software demo that showed how the software did what was promised in the sales copy.

Then, there were testimonials from users.

Finally, there were words that helped prove the software would help the user do what it did.

There is no need to complicate the software sales process any further than this.

All you have to do is prove that your software does what you say it does and people will happily buy it.

Software should never "close" after it's released.

Unless your software is attached to a coaching program, any reason you give to "close" sales is made up and your prospects know it.It just makes you look bad.Once your product has been through a "beta test" (where you let a few people use it and report any bugs they find to you), it should forever remain up for sale unless it breaks.

If it breaks, then take it down while you fix it.

Once it's fixed, put it back up for sale.

How often has Microsoft made their office suite unavailable for purchase?  Never?  Keep that in mind if you ever decide you want to sell software.  Your customers will respect you more for it.

Attaching ego to software can cost you tons of sales.

Unless you create the best software in the history of software (Scriptdoll, Optimizepress, Clickfunnels, Screenflow, etc...) there is no sense focusing all of your energy on direct to consumer sales.Here are a few facts about what happens when I lost the ego attached to my product:

• My white label program made more than a million dollars over the last 7 years.
• 2 marketers sold over a million dollars of my software in a single month.  
• Most marketers were better at selling my product than I was.
• I made more money from white label customers than I did selling my products on my own.

This may be a testament to my copywriting ability, but it's generally much harder to write your own copy than it is to write it for someone else.The single smartest thing I ever did was let other companies sell my products with their brand attached.

If you're looking to sell your software brand, these 3 things are what matter to prospective buyers.

They want to see recent traffic, sales, and a large amount of users.

Traffic:  If you have a ton of traffic, your website is valuable.  If your website is getting traffic and it sells software, that makes it attractive to website and business buyers.  Google rankings for terms that get searched often are valuable, too.

Revenue:  A lot of recent sales makes a website more attractive.  If you run a launch and have no intention of selling something similar, sell the website.  Immediately.

Amount of users:  If you have a free product that has tons of users, that has value.

A website will generally sell for twice it's most recent annual revenue, but don't wait until sales have dried up.  If you do, you'll get far less for the site than what it's worth.There are companies that can help you sell your business.  I've used this one in the past and have been very happy with them.

Last, but not least...

I will probably get back into selling software at some point because it's something I did very well.  If you follow the guidance I've given here, you'll sell it better and help your audience a lot more.Don't hesitate to share this if it helped you.