Bespoke Software Development for Startups
Software for founders who can't sit still
The wonderful world of startups
The entrepreneurial spirit in the UK is one to be proud of - even in such challenging times, businesses are popping up all over the country at rapid rates every year. However, the percentage of these businesses that fail within the first three years is as high as 70% depending on your source which paints a much gloomier picture.
So why is this? According to research undertaken by CB insights, the number one reason was running out of capital. Other common reasons include poor product fit, wrong market timing and being outcompeted by rivals. All solid reasons and in many cases, unpreventable but how many of these companies would still have failed if they managed to work more efficiently, cut costs and have full visibility of what was happening across every part of their business?
The role of bespoke software in startups
Startups can refer to a wide range of businesses from two founders working out of a spare bedroom to venture backed companies with significant investment and scarily ambitious growth plans. What they all have in common is the desire to build something new, solve a problem and scale quickly.
More and more, software plays an integral part for startups and indeed, in many cases the software is the product itself - a SaaS Platform, a mobile app, a marketplace or some other kind of digital service. For others, custom software is relied upon for automated processes and efficient operations without the need for additional headcount.
The fact is, most apps/digital services/marketplaces and SaaS platform begin life as bespoke software. They start as an idea, a gap in the market or the solution to a problem. Existing off-the-shelf solutions are not meant to be used to bring these ideas to life - authenticity, robustness and unique positioning comes from building from scratch. Bespoke software allows startups to focus on the functionality that makes their idea truly unique and more importantly creates something that future competitors can't simply purchase and replicate.
In short, for startups looking to innovate, disrupt and grow - bespoke software is the only logical answer.
For tech based startups
Let's take a look at some examples of startups where bespoke software IS their product:
SaaS platforms
These subscription based software services help businesses (and less commonly consumers) perform specific tasks or processes such as project management, customer support, accounting and analytics. They may be targeted at specific industries or specific functions. These platforms are usually developed with standardised capabilities, designed to appeal to a large section of their target audience.
Examples: Salesforce, HubSpot, Xero
Mobile apps
The ultimate convenience for businesses and consumers - these apps are designed to offer a specific service or create a new user experience. Whether it's ordering takeaways, getting live directions or playing games on the move - you'd be hard pushed to find anyone without some kind of mobile application on their phones.
Examples: Whatsapp, Citymapper, Uber
Marketplaces
These platforms connect buyers with sellers, customers with service providers and businesses with consumers. They are a convenient, low effort way for people to order goods and services without needing to physically shop around.
Examples: Airbnb, Etsy, eBay
FinTech solutions
There's a growing obsession with inventing new 'tech' words at present. The formula being to take an industry, chop part of the name off, add 'tech' at the end and you've got yourself a trendy new buzzword. FinTech was probably one of the first (but not the last as you will see) to really cement itself and as you probably guessed, it stands for financial technology. Under the FinTech umbrella you'll find everything from digital banking and payment platforms to lending, investments, budgeting tools and money management apps.
Examples: Monzo, Revolut, Moneybox
HealthTech solutions
As promised, here's another one: HealthTech. Health Technology. Technology that supports healthcare providers, patients, fitness tracking, wellbeing or medical administration.
Examples: ZocDoc, MyFitnessPal, Garmin
PropTech solutions
And another...PropTech or Property Technology. This covers software designed for the property sector which includes sales and lettings platforms, tenant engagement software, maintenance scheduling tools and pretty much anything else that may be involved in the day to day running of property focused businesses.
Examples: OpenRent, Zoopla, Arthur Online
EdTech solutions
The last of the trendy tech we're going to cover here - Education Technology. This includes learning management systems (LMS), online training portals, assessment tools and all manner of digital learning applications. This sector expanded significantly during and after the misery that was Covid.
Examples: Duolingo, Coursera, Udemy
Industry specific platforms
This covers all other software that is aimed at a specific industry. Logistics, Manufacturing, Legal, Travel & Leisure are but a small subsection of industries where there are hundreds - if not thousands - of software solutions aimed at solving problems or doing things 'better' in those specific sectors.
Examples: Onfleet (logistics), ProShop ERP (Manufacturing), Clio (Legal), Booking.com (Travel)
For non tech based startups
Of course, not every startup is selling services directly related to their bespoke software - indeed many are traditional businesses just with modern ambitions. Specialist retailers, recruitment agencies and consultancies are just a few examples of other types of startups where tech (more specifically software) is not the product for sale but CAN be used to help the business function. Let's take a look at how bespoke software is used in these startups:
Automation
Manual work is expensive. Even more so when it's to carry out low value tasks that whilst necessary, are not directly bringing in cash. This might be creating quotes, processing orders, allocating work, building reports or sending out customer comms. All of these processes, and many more, can be automated through the use of bespoke software using predefined workflows, business rules and triggers that are built into the software.
Why it helps startups: Can prevent the need for additional hires or even reduce headcount, allows staff to dedicate time to more important areas, less mistakes through human error.
Unified working
Some startups begin their tenures with multiple different software systems. One for customer relationship management, one for scheduling, one for order processing, one for finance and one for every other process you can think of. Whilst this isn't inherently wrong, it can cause some issues further down the line when the business starts growing. Integrating these systems with each other allows them to act as one, cohesive platform.
Why it helps startups: Reduces duplicated work and jumping between systems, provides a consistent and full view of data gathered from across the business, information can be pushed and pulled between systems rather than being manually input.
Processes that scale
A significant challenge for startups that move into scaleup territory is taking their established, long standing processes and working out how to make them work for fifty people rather than the five they were originally intended for. However, custom software that is built specifically around your business and the processes in question can grow alongside you. New departments, services and locations can be accommodated whilst changes in user demand or customer base can also be absorbed with ease.
Why it helps startups: Provides flexibility for fast movers, doesn't require expensive replacements
Long term cost management
Managing costs is a critical part of any business but arguably even more so for startups. Many startups have received funding or investments and have an obligation to report on their finances, demonstrating appropriate use of funds and efforts to save costs wherever possible. Others may be seeking funding and need to provide long term forecasts, in which on-going licensing fees for software would not be a welcome addition.
When not to use bespoke software as a startup
It goes without saying, not all startups will benefit from bespoke software. For many, it is completely unnecessary and would not make financial sense. There are plenty of startups who manage just fine with off-the-shelf solutions (or none at all). Here, we'll take a look at some scenarios where bespoke software is unlikely to be worth the investment:
| Scenario | Why bespoke software might not be the right choice |
| You don't have established business processes | If you're still in the process of refining your core business processes, it is probably too early to invest in bespoke software. These solutions work best when they are built around established processes that aren't going to keep changing every few months. That could get expensive, fast. |
| Off-the-shelf software meets your requirements | If your day to day operations are pretty standardised and can be managed effectively using off-the-shelf solutions without having to adapt or change your operational processes to fit the software, there's little value in replacing it just for the sake of having something bespoke. There are plenty of mature and highly regarded off-the-shelf solutions for tasks including CRM, accounting, marketing and project management that might be sufficient. Although there are the on-going licensing costs to consider if you plan on using it for a number of years... |
| You have a tight budget | Let's be honest, most companies these days are operating on tight budgets - not just startups. However, cashflow is one of the biggest challenges for startups and if investing in bespoke software would leave shortfalls for other critical growth activities such as recruitment, marketing or product development it might be wise to prioritise those and revisit the custom software later. |
| You don't need software to differentiate you | If your business doesn't rely on unique technology or processes, automation or any type of digital product to differentiate itself, bespoke software might not offer any meaningful return on investment. For service based businesses in particular, off-the-shelf solutions can comfortably support operations until growth or complexity creates a genuine need for something more customised. |
The MVP approach
If you're a bit of a serial entrepreneur - especially in the tech space - you've probably heard the term MVP or Minimum Viable Product. The premise of an MVP is starting with the core fundamentals and developing and improving it over time based on real user feedback. Whilst MVPs are overwhelmingly used by tech focused companies who are in some way selling their software, it is an approach that can be taken by all businesses who are interested in procuring bespoke software - even just for operational use.
MVPs are attractive to start ups because they:
Reduce initial development costs & delivery time - By focusing only on essential functionality, startups can reduce initial investment and preserve capital.
Provide validation (or not) - MVPs give startups a way to validate business ideas before jumping in with both feet. Instead of making assumptions, you can test whether there is genuine demand for your product before throwing everything you've got at it.
Allow for real user feedback early - As well as validating your business idea, you can also get real user feedback on your MVP early and use that to improve and expand the product going forward. There is no better way to make your product attractive than basing it on real customer feedback.
Reduce risk - By focusing only on the core functionality, receiving feedback as you go and building a picture of actual demand, you're lowering the risk of investing significant sums that ultimately provide very little in the way of returns.
Attract investors - A working product with active users and proven market demand is going to be much more difficult for investors to ignore than a speculative business plan.
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