There was an interview published in Forbes magazine recently, where the co-founder of software-as-a-service (SaaS) company DropInBlog, Jesse Schoberg discussed why he thought it was better for agency owners to launch software products over providing a service. But, which is the better option? And more importantly, which is the better option for you? In this blog post, we'll discuss 6 questions to help you decide whether you should launch a software-based business or a service-based business.
Deciding what type of entrepreneur you are, it will help in choosing a business that suits your personality and skills. Do you want to build a business around a high level of service and human interaction or do you prefer to automate everything and have the business rely as little on manpower as possible? In order for your business to thrive and survive, it's important that you choose a business that is the perfect fit for you personally.
Are you on a shoestring budget or can you afford to be more generous with your investment? This is an important question to consider because in general, the upfront investment in a software-based business is higher than that required for service-based ones. Make sure you do your due diligence around development costs and any other costs associated with the development of your software.
As a software-based business owner, you may have to wait longer than those in service industries before you start to see your return on investment. However, as software-based businesses tend to be more scalable, it could bring higher profits down the line.
The more complex it is, the harder it will be to replace it with a software product. However, even if you can’t fully replace your service with software and complete automation, you could develop a software product to support the service delivery process.
The software development process can be really time-consuming. It's important not only to take stock of your responsibilities and priorities to ensure you have the luxury of time, but you should also ensure you have enough energy and passion for the long haul. If time is not on your side, a service-based business may be a better choice.
Software may be the way of the future, but there are still many people who want to solve problems with human interactions. Understanding your target audience’s preferences should be one of your key considerations when deciding what type of business to choose. If the demand for software is not high enough, your business will struggle to get off the ground.
So, should you launch a service-based business or a software-based business? The answer is it very much depends on your goals, ability and time. However, no matter which route you choose, remember that it’s important to focus on providing value to your customers—that’s what will help set you apart from the competition and drive long term success for your business.