Starting a Software Business and Finding a Niche Market

So many people drudge through their daily work hating their 9-5 jobs. Surely you’ve even seen some of your friends on Facebook make statements about hating their jobs. I would have to guess that a majority of the people that I know don’t like their jobs. Do you hate your job more than the lima beans your mom made you eat? If so, keep reading.

Here is a recent post from an old college friend of mine:

New Years Resolution: Find as many sources of passive income, invest and manage… no more 9 to 5 BS… time for the 4-hour work week.

I responded:

Start developing iPhone and Android software. You should have it within two years.

If you’ve read this blog for at least a couple of months, you know that I write iPhone and Android software, so I’m biased. My two year projection may have been a bit optimistic. But, Reflect7 has had revenue from iPhone and Android app sales that rivals that of the salary of a single developer in the Midwest. So, it *IS* possible. But, I digress.

He responded:

When starting to develop software, how do you find the niche or market?

This is a fantastic question that anyone who has interest in starting a software company should ask. When starting to build a software business, it’s imperative to consider both the product and the market. They can’t exist without each other. It’d be like peanut butter without jelly, Apple without Steve Jobs, Kanye West without fishsticks… you get the idea. In my case, I went for the product first. If I had to do it over, I would NOT do it this way. But, I identified an inconvenience that I had, and figured that if I experienced it, then there’s a chance that others do as well. Fortunately, I was right; many people do want their favorite teams’ schedule on their phone.

If I were to do this over again, and I plan to, I would do the following:

Identify a problem that I have. Conceptualize potential solutions for this problem.
Apply the Startup Idea Filter.
Research to find out if there is competition. If there is competition, the market is validated.
Talk to potential customers. I would then ask if these customers would buy this product once it’s produced.
Discover how potential customers are working around this problem.
Develop my product to focus on doing one to two things better.

It’s important to note that if you develop a product that solves a problem that you have, you are not your customer. You have a deep understanding of your product. Whereas, your customer doesn’t. You may be tempted to keep adding features to solve crazy edges cases that you have. Don’t do this! Keep your software simple and read the book Getting Real.

A lot these thoughts were developed by reading Jason Cohen’s A Smart Bear blog. Jason Cohen founded a company called Smart Bear software that wrote code collaborating software. He eventually sold it. Here are the articles:

Yes, but who said they’d buy the damn thing? This article encourages you to ask potential customers to commit to buying the product when it’s complete.
Pick one and own it. This article suggests that entrepreneurs should build their products to have only one feature.
What did they do before you came along? What did your customers use to solve the problem before your product existed?

What do you think? How would you find and validate market?