39 Pros & Cons Of Starting A Software Development Business (2024)

Flexibility

You can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.

Ability to start your business from home

It's not necessary to have a physical storefront or office space to get your business started. You can do everything from the comfort of your own home, at least in the beginning!

Little startup costs required

The cost to start a software development business costs significantly less money than most businesses, ranging anywhere from 62 to 23,259.

Rewarding work

Starting a software development business can be really rewarding work. After all, you are solving an immediate issue for your customer and you're working on something you truly care about.

Scalable

With businesses and processes changing daily, there will always be demand for new features, products and services for your business. Additionally, there are several different business models and pricing tiers you can implement that will allow you to reach all types of customers.

No overhead costs

To get your software development business started, there are no costs associated with overhead, storage, packaging, etc. This will save you a lot of time and money!

Meaningful business connections

You never know who you will meet as a software development business. This could be the start of an incredible business opportunity!

High margins

The gross margins for your software development business are typically around 90%, which is considerably high and allows you to grow your business and manage costs easily.

Quick build time

The average time it takes to build your product is quick - typically around 7 months. This will allow you to bring your product to market faster.

Pick & choose the clients you work with

Software Development Businesses have the ability to choose the clients they work with. You have the freedom to work with only a few loyal clients or with hundreds of clients!

Control of workload

With starting a software development business, you have the unique ability to choose how little or how much you want to work. You also have the freedom to decide which projects you want to work on, and can turn down the ones that do not interest you.

Gain exposure and experience

This career allows you to gain experience working for multiple different businesses - which will benefit your resume and also keep things interesting for you!

Unlimited income potential

With starting a software development business there is no cap as to how much income you can make. The stronger your business skills and the more energy/time you put into your career, the more you'll make.

You are your own boss!

With starting a software development business, you are the one to make decisions for almost all of the operations. Calling the shots can be empowering and liberating!

Higher likelihood of getting referrals

This business is all about referrals, which can be a a very impactful way to attract and retain customers. It's critical that you have a great referral program in place that incentivizes your customers to tell their friends about your product.

Simple business model

A software development business has the advantage of a simple business model, which makes launching and building the business more seamless.

Control your own destiny

Starting A Software Development Business allows you to control every aspect of your life and make your own dreams come true every day.

You can decide who you work with

Gone are the days of working in a toxic work environment with employees that you may not vibe with. As a small business owner, you get to decide who you work and surround yourself with.

Express your opinions

With starting a software development business, you can express your opinions and knowledge to your audience, which allows you to build your own reputation and identity.

You can work from anywhere!

Not only can you start your software development business from home, you can also run your business from anywhere in the world. This is the entrepreneur dream.

You get to inspire others

Your business is one that encourages and inspires others, which in itself, can be very fulfilling.

High Hourly Pay Rates

On average, the hourly pay rates are high for your software development business - which means quality of clients is often superior to quantity of clients.

Never a dull moment

With starting a software development business, there is truly never a dull moment. Your job offers a lot of variety and allows you to meet interesting people from all walks of life.

Various different ways to make money

With starting a software development business, there is not just one business model to choose from. This field is amazing in that there are various different ways to make money. Although this may complicate things, it's great to have different options and sources of revenue.

Can build solid foundation of clients

It's unlikely you will have one-off customers as a software development business. Typically, you have a solid foundation of clients that use your product and services regularly.

Crowded Space

Competition is high when it comes to your software development business, so it's important that you spend a good amount of time analyzing the market and understanding where the demand lies.

Longer Sales Process

A software development business can be a big time and money investment for your customer, so it's important you plan and predict a longer conversion funnel and stay in communication with potential customers.

Work can be inconsistent

As a software development business, the amount of work assigned to you and schedule tends to be more inconsistent, which may make your income less stable. It's important to set boundaries and budget accordingly based on the amount of work you plan to have.

Lack of benefits

With a software development business, you are typically self-employed and responsible for finding your own insurance, which can be quite costly and time-consuming.

Isolation

Often times, as a software development business, you typically work alone and do not have much face-to-face interaction with other team members.

Taxes

As a software development business, you typically pay self-employment taxes which can be quite high. It's important to understand what you will be paying in taxes each year so you can determine if the work you're taking on is worth it.

No safety net

Typically, as a software development business, you do not receive a consistent pay-check and instead earn money based on your transactions each month. During the slow periods, you typically take away less since the job is based on commission. It's important to budget accordingly for the slow times.

Stressful work

This line of work can be stressful for both you and your clients. This type of transaction is a significant financial decision for your client, so expectations are very high for you. Although this career path can be very rewarding, it also comes with its challenges and stressful moments.

Time commitment

With starting a software development business, all responsibilities and decisions are in your hands. Although this is not necessarily a negative thing, work life can take over at times. This can place a strain on friends and family and add to the pressure of launching a new business.

Be prepared to get out of your comfort zone!

Although this is exciting for some entrepreneurs, it can be a big challenge for others! You may find yourself in uncomfortable social and business situations, jumping into tasks and responsibilities you aren't familiar with, and pushing yourself as far as you can go!

Minimal physical activity

A big part of starting a software development business is sitting at a desk for the majority of the day starting at your computer. Some may enjoy this, but others may struggle with sitting for the majority of your day without much physical activity.

Learning Curve

When you start your own business, you no longer have upper management to provide you with a playbook for your roles and responsibilities. You should know the ins and outs of every aspect of your business, as every decision will come down to you.

Easy target for criticism

Since your software development business has the ability to reach a large audience, you'll need to be able to handle criticism. The internet can be a cruel place, and regardless of your intentions, many people will disagree with you and even take their criticism too far. To survive in this industry, you'll need to have tough skin (or at least learn this along the way).

The job can be demanding

This is one of the major disadvantages starting a software development business. It's important to understand that you may need to make yourself available on a 24/7 basis.