Friday, September 10, 2004

For a rainy day

Back in early July I spoke about my business finances. At the time I said I had enough cash reserves to last until early September which was approximately nine weeks away at the time. That was nine weeks if I received no income whatsoever. Although I've stopped working for my major client (the day job) I have a small number of clients from whom I get about 2-5 hours work a week which is just enough to cover my overheads. In addition I've been starting up my home computer troubleshooting business which will should start to supplement that income in the near future.

So it's now early September and I guess I should report on how the business finances are looking once again. Well I'm pleased to say that as of today my business has enough cash reserves to meet its financial commitments until mid-December approximately 14 weeks away. That's really much better than I expected and perhaps it means that I should spend more time working on my longer term goals i.e. Sydney and less time working to meet immediate financial needs.

The fatal flaw in my plan

Up until recently I'd envisaged that my business's cash reserves would be gradually depleted over the next 12 months by my regular business overheads. I thought I'd be releasing Sydney with those reserves either completely exhausted or very close to it.

I've come to realise that that scenario is probably somewhat naive. Should I finish development of Sydney but in the process spend every last dollar I have I'll have no money to devote to the launch of the product. Exactly what it costs to launch a product I don't know but in the past few days I've thought of a few potential expenses that I really should be setting aside money for.

The first thing on my list is a product website. At present my web design skills are atrocious. You only have to look at my trouble with your computer website to see that I have only a rudimentary understanding of web design. Yes it wouldn't be too hard to improve my skills and certainly they will improve over the development of Sydney. When the time comes to create a product website though I'll most likely be occupied with adding the finishing touches to Sydney.

The next expense I'll likely have to cover pre-launch is for some specialist graphic design work to pretty up the user interface of Sydney. Unless I come up with a better business model Sydney is likely to be a shareware product and I know from my own experience in buying shareware that I'm more likely to register a product that has a professional and attractive looking user interface. I'm not saying it's the primary factor but I do believe it is a very important one for many people.

The last expense I've thought of is that I may wish to engage the services of a copywriter with experience in writing advertisements for software products to work in tandem with whoever designs the Sydney product website. Perhaps I'm being a little extravagant with this one but I will definitely need some sort of help with this. I'm sure you've noticed that my own writing style is probably just a teensy bit too verbose for good advertising copy.

What have I missed?

So there's two possibly three expenses that I'll likely need to cover late in the development cycle. If I can think of those offhand there's bound to be more that I haven't thought of.

I'd appreciate if anyone reading this who's launched a shareware product before could add to my list any late cycle expenses that they incurred as part of their product launch.

8 Comments:

At 4:44 PM, Blogger Tejas Patel said...

What about Marketing costs?

 
At 4:56 PM, Blogger Lachlan said...

Any specific marketing costs you're thinking of? Big budget advertising like magazine ads just aren't an option but things like Google ads should be well within my reach. My understanding is they're not that expensive.

 
At 7:10 PM, Blogger Tejas Patel said...

No, I am not talking of high budget marketing. Sorry Lachlan, I came to the party very late, so don't know about your product Sydney, but I can gain from this post that it is a software you are talking about.

Google ads. are good and cheap, but depending on your product you might want to look at different strategies as well. You are doing a very good job on your blog and I am sure that depending on your product you will get a good response from fellow bloggers as well.

Find a cheap but a decent marketing strategy that would stick to people's mind.

 
At 12:58 AM, Blogger Brian said...

My experience has been that Google Adwords are best if you're on a tight budget....as long as you can keep the keywords specific.

Less specific keywords will result in less qualified traffic that costs you money with only a small chance at converting them to a paying customer.

 
At 2:01 AM, Anonymous Anonymous said...

So many companies now offer trial versions of their software. Is the definition of "shareware" blurring? Anyway, I've never launched a shareware product. Or at least not yet. But you may be interested in the writing of these individuals:

Steve Pavlina
http://www.dexterity.com/articles/

Eric Sink
http://www.ericsink.com/index.html

As far as product launch is concerned, how will customers pay? Credit card? And how much will that cost you? Will there be any costs for printed manuals, CD duplication, or packaging?

Cheers!

 
At 12:54 AM, Blogger Brian said...

There are a lot of companies that will handle credit cards and will host downloads for you. Some will even burn a CD and send it to your customer if they prefer to receive the media.

I currently use esellerate.net and have been very satisfied with them. Several of these companies are now owned by DigitalRiver.com.

 
At 2:22 AM, Anonymous Anonymous said...

Developing (design & coding) the product is only half of the battle. You'll be investing significant energy/money in not only marketing, but also supporting your initial customers, refining the feature set to hit the sweet spot of your desired customers, etc.

You could scale back your time commitment when hard core development is done and pick up more consulting, but that will obviously has the potential to weaken your product introduction.

Even if you're still working 100% on your marketing, tweaking, etc, sales ramp (and thus revenue) WILL be slower than you expect, so plan for this in your financials...

Tom

 
At 1:19 PM, Anonymous Anonymous said...

I'd budget on learning SEO. It's free and to be frank time spent on SEO has been 1000x more financially rewarding than adding features to the software.

 

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