Startups Stack Exchange Archive

New business area: Internal product development vs work on contract basis

I have a small web development business running as part time work with occasional contracts. Now I want to break into a new market (also part time at first) but am not sure how to deal with it best to get my first contract and/ or payment.

I thought of two possibilities:

  1. Identify needs of several customers (could be private or business customers) and develop a product to start with (would most probably be on a SaaS basis). This might be very cost-intensive before any kind of revenue is generated and may fail for financial reasons.
  2. Trying to get contractual work by known contacts. This is very hard if you don’t already have a name in the business area. Even in my area it might be harder, because contractual customers would mainly be public authorities that will only rely on a solid company background. To “start a small project” is probably not possible.

Are there similar experiences you can share? Maybe there are other alternatives I did not yet think of?

Answer 5248

Your question is a bit vague and makes it sound like you’re not too sure what you’re going to be offering or to who, so it’s a bit hard to answer. Whatever you do, though, avoid building the product prior to validating that is any demand for it.

Getting contractual work isn’t so hard if you spend the needed time to look for clients – and apparently you do, since your web dev gig is only keeping you busy on a part-time basis.

Use this precious time with newly acquired clients in your target audience to figure out precisely what their needs are. Ensure you retain the relevant IP from a project to the next (use the MIT or BSD license), and your future product’s key parts will be built and well understood before you know it. Ideally, get a few of them to pay you in advance for the final product.

All content is licensed under CC BY-SA 3.0.