Dear Miami tech startups, please come with your Business Plan!
We love hearing from you. We enjoy seeing you at events like eMerge Americas and Refresh Miami. We communicate with you via emails, and on the phone. Even meeting with you in our offices is a good way to better understand ideas and communicate concepts.
And the energy that you are bringing to the Tech scene here is awesome. Keep doing what you’re doing – dreaming big, sharing your ideas and vision with anyone who will listen, and working hard to create something of value in our hometown.
In addition, whether we become your development partner or not, we’re always happy to offer suggestions or tips when we meet with folks. Since a lot of these happen during one-on-one meetings, we thought it would make sense to share some of the most common Tips and Strategies that should apply to almost any Startup in South Florida.
Be Prepared. Very Prepared.
Furthermore, most developers, if they’re successful and running their business correctly, are busy. We all have software projects that are at various stages – in the pipeline, in planning, in development, in testing. Any developer offering clients the ability to outsource work/projects to them needs to keep talented folks on hand – if those folks aren’t working on a project, or are idle, than the developer won’t be successful for very long.
Moreover, so as a Startup, you should assume that a good developer is likely to be busy, and that their resources are carefully managed so that they’re busy/engaged at any given time. When that developer is committing resources to sit down with a Startup, and really tries to understand the business ideas, brainstorm how the project might look, of even just get to know a bit more about the opportunity, it really helps all sides to have key ideas developed as much as possible in advance.
Thus, if you’re a Startup and you are looking to a Software Developer for help – have you written out a description of your project? Thought through the risks and challenges you might face? Have you created an outline for some of the key features and objectives that you have?
Furthermore, is there a business plan, even if it’s early stage? An idea of what might be needed for marketing and post-launch success? Have you sketched out what your software product may look like, visually?
All of the above, while certainly not required, are very helpful to developers – and really demonstrate a level of preparedness that will help you get more attention. A well-prepared, organized founder is a signal to a developer that the project will be similarly organized and effective.
- Are you ready to start a business? A Startup isn’t just a “project”. It’s a business, and we often remind folks of that very point – they aren’t developing a mobile app. They’re launching a business. This requires a commitment of time and energy that most experts would agree is going to be a full time commitment at best, and typically far more. Data and experience have shown us that the less engaged a founder is in a Startup, the less successful that Startup is likely to be.
Be Fully Engaged
- Given that most Startups fail at a very high rate (just like any new business, except higher), being only partially engaged in a project will increase that failure rate even more, and raises red flags both to developers and potential investors/partners. A developer wants to know that their client is fully engaged, involved, committed, and accessible, just as much as a client wants to feel the same about their developer.
- What is your startup budget? The reality is that Angel/Seed Money just isn’t here yet. The first $25k-$50k in capital comes from the startup founder themselves. Sometimes it’s personal capital. Often it is capital raised through networks, both professional and personal. Figuring the numbers part out early on, and communicating how you intend to raise funds, is something a developer wants to understand as early as possible.
- While it’s not impossible for talented folks to launch businesses without any startup capital of their own, it’s usually unrealistic. As well, remember that your developer wants you to be successful – they’d love to have a hugely successful tech product in their portfolio. They’re interested in understanding the likelihood that you will be successful, and establishing the source and amount of capital available is vital in that mix. Knowing what is available to work with is a key early indicator, and one that should come up in any discussion fairly quickly.
Things to Avoid
- Avoid Equity Partnerships. Or to put it more succinctly and directly – avoid them like the plague. It should be an absolute last resort. What seems like a quick/easy path to defraying costs almost always ends up being a serious impediment to your project being completed. Many folks think an idea itself has value. Thus, to be honest, it really doesn’t. How do you even value a concept or an idea that hasn’t proven itself?
- If we said to you we had an incredible idea for a massive new tropical resort in the Caribbean that would offer helicopter access and underwater suites – but we had no financial means of making it happen – would you say that idea had value, and be willing to pay us for it? Would anyone hand that person money?
What the cost is
- The truth is this: The cost is the work that goes into a project, because someone needs to be paid for it (or needs to work for free, thereby effectively foregoing other paid work). In the scenario above, perhaps if someone had written out an entire blueprint for the property, and taken an option to purchase/lease the land, they would have created some value.
- In addition, in software, the final product and how it is launched and marketed may have some value. The return on investment / profit / revenue from the product definitely has value. As the famous Edison quote goes “genius is 1% inspiration, 99% perspiration”.
- The same goes for a business. If you’re asking a partner (investor, developer, or other) to put in the capital as well as the perspiration, then effectively they are the ones who own that business and have created all of the value. That means you’re working for them, not the other way around. Is that truly what a startup founder is looking for?
Define what your company is looking for
- Define Contributions. It is best to clearly define early on what everyone’s contributions are. Also, what the value of those contributions are, and how differences in vision will be resolved. Typically in business this is done through payment for services and that’s relatively simple: the person paying calls the shots. When it doesn’t work that way, the relationship actually becomes more complex.
- As well, if you are expecting your developer to shoulder costs, than they aren’t really your developer – they are your investor. If an investor doesn’t see eye to eye with the founder, they usually either get their way, or they pull the plug on funding. They can end up killing the project. Is that really what a founder is looking for?
- Be Realistic About Timelines and Costs. In addition, of course we all want projects done quickly. And many folks that aren’t involved in Development tend to think thinks should easily be achievable in short timeframes. The reality is that this isn’t usually the case. Promising short timelines may be a sales tactic used by unscrupulous developers to land a client. It is something to be very wary of.
- Furthermore, don’t be fooled by the publicized stories of one programmer working in a basement. This type of programmer who- within 3 months – created a smash hit iOS game and made a fortune. It usually takes a team, it takes money, and it takes time.
Consider the cost
- Just consider for a second the cost side – a talented freelance iOS designer in a large city can easily command an hourly rate of $100 / hour. Let’s say that developer does create an App completely by himself in 3 months flat.
- That’s $4,000 per week in cost, assuming a modest 40-hour week. So $16,000 a month, and $48,000 over the course of the 3-month project. And for that you get literally one person – who isn’t likely to have the full complement of skills needed. These skills include Interface Design, User Experience, Graphic Design, Software Architecture, Testing, Market Analysis, and Server Coding. An experienced developer should bring all of those skillsets to the table. As well, those skillsets in equal parts aren’t typically found in a single person.
Come Meet Us For a Consultation
In essence, a big part of our commitment to the Startup community in South Florida is to be as informative and educational as possible. Often the goal is to strive to provide valuable advice and insight to everyone who walks through our doors.
Moreover, we try to cultivate a more prepared, engaged, and educated Startup community. This is a big part of what needs to happen for this Miami Tech scene to really take off. Sharing that knowledge is a big reason why we blog. If you’re a Startup, come in and meet with us in our Coral Gables offices.