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Why Do So Many Software Companies Fail?

If we are to analyze the software companies that appear on the market, the first thing that will easily be noticed is that there are so many that compete in basically all parts of the industry. This is normal since technology is the wave of the future. Businesses need software so demand is high. However, software companies do tend to end up in bankruptcy sooner or later. When Oracle’s president, Charles Phillips, became CEO of Infor, he identified the needs that small businesses have and quickly understood why so many software companies fail. He identified the next reasons as the most common ones on the market at the moment.

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Focusing On Only One Product

Much of the initial success of a software company will come from one program that is created. That is great since it generates profits really fast. The problem is that the competition is not going to sleep. Similar products will appear on the market. What do you do when something better appears?

It is really important that once the capital becomes available, the software company starts to focus on the creation of other products. Developing new software is what helps to increase success in the future. Diversifying the services offered by the company is definitely something that helps a lot.

Improper Business Growth

It is normal to want to grow a business once some success is achieved. The problem is that in many cases the business growth process will be delayed because of a lack of knowledge about how to do this properly. In an attempt to grow we see so many business owners that simply overdo it. You should be sure that you plan business growth in a proper way. That is not easy and requires so much planning that has to be done.

In many cases the problem is that business growth happens at an improper time or is done without taking planned steps. Do be sure that you do not neglect the plan as it is vital for business growth.

Selling Too Early

This is something that becomes much more common at the moment than what many think. In an attempt to make a huge profit we see software company owners that simply sell when the first offer appears. Keep in mind that selling a business should be done in the event that you lack the resources to make it grow to the next level. If you can grow, it is a certainty that you will make a lot more money at a later point in time.

Lack Of Plans

We already talked about plans but what has to be understood is that in so many cases the big problem with the software companies is the lack of any plan. Software companies have to basically plan everything in operations. Never hurry this process and be sure that you plan everything from future development to potential crisis situations. The more you plan with the software companies, the higher the possibility you will be successful.

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Hello there!
Hello there!

My name is Gary, a 31 year old Tech Loving marketer passionate about home tech and coffee.

I'm a Programmer for hire working with small to medium businesses.

I network in Warrington, Liverpool and Manchester in the North West, England.

This website is my online notebook dedicated to tech, marketing and finance.

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