From the February 1998 issue of Entrepreneur

Q: What steps do I need to take to get a concept for a software program from the idea stage to the distribution stage?

Kevin Reese
Olney, MD
Via e-mail

A: To answer your question, we called upon two entrepreneurs who have been extremely successful at bringing software products to market. Jon Ferrara is the executive vice president and co-founder of GoldMine Software Corp. in Pacific Palisades, California. The company was founded in 1989 by Ferrara and his partner, Elan Susser. We asked them how they brought this two-person company, started in an apartment, to a 100-person company with more than 500,000 customers.

Ferrara says to be successful in the software industry, you need three components:

1. Unique technology. With all the programs already out there, your idea must be new and different to succeed.

2. An innovative selling position. Differentiate your product from others in the same category.

3. Value that is easily communicated. People want to know what a prod-uct can do for them.

Ferrara advises that in today's software marketing climate, it's better to find a software category to build from, rather than inventing a new category. Essentially, unless you have a lot of marketing dollars behind you, you'll be hard pressed to convince users they need to purchase your completely new product. Instead, you need to convince them your product will either enhance an already successful product or better suit their needs than the product they're currently using. For example, GoldMine extended the contact management category started by ACT! by creating a network-abled contact manager (for tracking sales leads, maintaining contacts, generating reports and communicating with team members).

If, unlike Ferrara and Susser, you are not a software programmer yourself, you'll need to hire one to implement your idea. Finding one these days isn't too difficult, and the Web is an especially good resource for filling these types of positions. If you don't have the funds to pay a programmer, you may be able to find someone who will accept partial ownership of your company as compensation. Of course, you need to be extremely wary about whom you bring into your business, and you should verify a programmer's credentials thoroughly before moving forward.

To take your product to market, you're going to need a marketing plan. You can either look for investment capital to fund your business or you can go it alone. Because investors often require a portion of ownership or control, bootstrapping your new business may be more appealing. That's what Ferrara and Susser did: "We started with $3,000 and no bank loans and grew our business into a $20 million com-pany," says Ferrara.

To successfully take GoldMine to market, the partners had to creatively market the product to their audience with very little money. They went to the most obvious user of the product--VARs. Knowing that it's easier to sell what you know and what you use, the partners created a plan that got full running copies of GoldMine into the VARs' hands for a nominal fee. This worked well to get the VARs to sell the product, but then Ferrara and Susser had to make sure the VARs' customers were aware of the product. That's when they turned to public relations to increase awareness. After the product was a success at this level, the partners were able to easily enter the retail market with a single-user product that didn't threaten their VAR sales channel.

Q: Which is the best accounting program for a small business? How will it need to change as the business grows?

A: Small-business owners need a product they can not only afford but can easily figure out. Intuit's QuickBooks is such a product. Intuit, maker of the popular personal finance program Quicken, decided to develop QuickBooks in the early '90s after it realized that nearly 7 million Quicken users were already harnessing Quicken for their small-business accounting needs. A survey revealed these small-business owners just didn't "get" the other accounting programs out there.

Accounting practices, such as double-entries, posting and closing, and working from a general ledger, are foreign to most small-business owners. You need a program that does all the genuine accounting but does it in the background so all you have to do is enter information. Other products have followed Intuit's lead in creating easy-to-use programs, including BestWare's M.Y.O.B. Accounting Plus ($149) and Peachtree Software's Peach-tree Accounting for Windows Release 5.0 ($129). The easiest of these products is still QuickBooks; however, special needs might make one of the other two more desirable.

One of the reasons I prefer QuickBooks is that it is customizable for your business. An interview process takes you step-by-step through the setup and asks about your business to determine how your interface should be set up. For example, it will ask if you have employees, and if you don't, the payroll aspect of the program will be turned off. If you add employees at a later date, you can turn the payroll function back on. Another nice feature of QuickBooks is its easy and customizable reporting capabilities.

Before you decide on a product, determine exactly what you need. For example, Intuit offers two versions of QuickBooks--the standard one at $99 and a $199 enhanced version for service-based businesspeople, such as consultants, architects and freelancers, that is capable of time tracking, job costing and estimating.

Another concern for any expanding business is the ability to network the product so multiple users can access it. Currently, both M.Y.O.B. and Peachtree support this function, while QuickBooks' next upgrade, scheduled for release this summer, promises to address it. Of course, some businesses demand a program that is dedicated to its industry. There are numerous high-powered accounting programs you can look into as your business grows. The best bet, however, is to discuss your needs with people in your industry to find out what products have worked best for them.


Cassandra Cavanah is a contributing editor of Portable Computing Direct Shopper magazine and has reported on the computer industry for nine years.

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Contact Sources

BestWare, http://www.bestware.com

GoldMine Software Corp., (800) 654-3526, http://www.goldminesw.com

Intuit, http://www.intuit.com

Peachtree Software, http://www.peachtree.com