Why Do Most Programmers Who Start Companies Fail?
Here are some practical tips to avoid pitfalls as a software engineer if you want to start a software company - and be successful!
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8 Mistakes to Avoid When Starting Your Own Software Product Company
Are you thinking about starting your own software product company? Maybe you’re tired of the toxic tech culture, the endless meetings, or the feeling that you’re just a cog in a machine. You’ve got the skills, and now you’re considering building something of your own.
Before you dive into creating that dream product, let me share eight key mistakes I’ve made in my journey so you can avoid them and increase your chances of success.
1. Choosing a Product That’s Fun to Build, Not What the Market Needs
It’s tempting to work on a project that’s fun, exciting, or uses the latest tech stack. But one of the biggest mistakes software developers make when starting their own company is focusing on what they want to build rather than what customers need.
No matter how cool your tech stack is or how fun the project is to code, if it doesn’t solve a real customer problem – people won’t buy it. You have to build something that addresses a pain point severe enough that customers are willing to pay for it. Focus on profitability, not just passion.
2. Assuming You Need a Viral Business Model
Many high-profile software companies use a “freemium” model, offering free access to build a user base and hoping to monetize later with ads or subscriptions. While this can work for larger, venture-funded companies like Twitter, it’s a risky path for a solo startup.
Instead, focus on building a product that you can charge for from day one. Don’t waste months or years on a free product, hoping it will go viral. Your goal is to replace your paycheck with a reliable income, so charge enough to make it worthwhile from the start.
3. Overengineering Your Product
When you’re used to working in large teams with separate QA, automated testing, and sophisticated architecture, it can be tempting to apply the same level of complexity to your solo project. Don’t.
You’re not building a product for a large enterprise with hundreds of users (at least not yet). Keep things simple, maintainable, and don’t over-engineer. Yes, write clean code, but don’t waste time optimizing things that aren’t critical to your product’s success. Focus on getting something functional into customers’ hands.
4. Having a Fixed Mindset About Your Product
We often complain about businesses that fail to be agile. Yet, as developers, we can fall into the same trap when working on our own products. If you get clear feedback from customers that something about your product isn’t working, be prepared to change it.
You have to stay flexible. Just because you spent weeks building a feature doesn’t mean it’s what customers want. If the feedback shows you’re going in the wrong direction, pivot and adapt.
5. Spending Too Much Time on the Product, Not the Business
It’s easy to fall into the trap of coding all day and neglecting the business side of things. But building a business means more than just writing code. You have to research your market, price your product correctly, figure out how to acquire customers, and create a sales funnel.
Don’t be scared by the idea of “business stuff.” Marketing and sales are not as complex as programming, but they are critical. You can learn these skills – and they’re essential to your success.
6. Not Treating Your Business Like a Business
If you’ve been an employee all your life, it’s easy to fall into the habit of spending money like one—paycheck-to-paycheck, without much consideration for separating personal and business finances. But when starting your own software product company, you need to budget like a business owner.
Set aside a percentage of your income to invest in your business, and keep those expenses separate from your personal finances. It’s critical to know your business costs, from web hosting to advertising to legal fees. This clarity will help you manage cash flow and scale effectively.
7. Failing to Build a Network
Programming often feels like a solitary activity, but building a software business isn’t. You need to connect with people who have skills you don’t—whether it’s in marketing, finance, or even other industries where your customers work.
Networking with other professionals can open doors to new opportunities, offer valuable insights, and help you avoid costly mistakes. Don’t be afraid to reach out to others and build a support system. Success in business often comes down to who you know, not just what you know.
8. Lack of Self-Confidence
One of the biggest barriers to starting your own software product company is self-doubt. It’s easy to get overwhelmed by all the advice out there and feel like you need to follow what others say. But sometimes, trusting your gut and going your own way is the best move.
Of course, listen to advice, but don’t be afraid to break away from the “right” path if you feel strongly about a different direction. Confidence in your vision, especially when it’s backed by solid customer feedback, can be the difference between success and failure.
Conclusion
Starting your own software product company is an exciting but challenging journey. By avoiding these eight common mistakes—choosing fun over function, falling for viral business models, overengineering, having a fixed mindset, neglecting the business, mismanaging finances, failing to network, and lacking confidence—you’ll put yourself on the path to success.
About the THRIVING TECHNOLOGIST show
On YouTube and all major podcast networks, Jayme shares teamwork and leadership strategies, guidelines for healthy company culture, and stories about real projects so you can have a sustainable career in the software industry.
Jayme Edwards
A family man and veteran of nearly 40 software projects, Jayme experienced many wins and losses over his career as an architect and consultant.
Now he's coaching software developers, managers, and business owners to overcome challenges in the IT industry - so they keep growing.