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I am the owner of a small company, self-employed and working with freelancers every now and then. Working in a high-tech area (IT), selling a software packet and delivering development services.

I have opportunities to address bigger companies. These have concerns regarding stability and durability of my company, and they are right. The main issues to be addressed for the long run are 1) availability of the product; 2) technical support; 3) continued evolution; 4) preservation of the know-how.

I am open to many options, including partial buy-out of the company, but this is not my preferred one.

Are there known solutions to handle such situations ?

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I don't really see any options other than target a different market. Start selling to smaller companies. Build your business. Once you do that, the concerns of the large corporations will be reduced.

They want to protect their ass. You're not going to trick them. Build a business, then grow into the enterprise market.

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  • I don't want to trick them. I do want to take measures such that they can rely on my product in the long term. I need such companies to make my business sustainable. Jul 31 '14 at 7:39
  • Then you'll need to build trust. Unfortunately, there isn't a quick fix. Jul 31 '14 at 7:45
  • As I understand for now, I'd need extra human resources to keep the know-how safe, such that they could be put at disposal of these customers in case of need. But currently I cannot afford to hire guys. Jul 31 '14 at 7:52
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As @Paul said in his answer above, you can change your market.

Another option other than the buyout (or partial buyout) from the large corporations would be to attempt to form a consortium of buyers for your product + support.

If you could get a few different companies to agree to pay for product support for some number of years, then that would mitigate much of the stability issue.

This is sort of how CVS and SVN (versioning systems) were funded I believe. It can be done, but is likely not easy.

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I will answer with a question: are you willing to grow your company by yourself? If that's a yes then read on. If that's a no, then I'm afraid that you already know the solution, the partial buy-out that you already mentioned.

The problem I see with us developers is that we fail to see things using cold logic. When they tell us "Yes but what about X Y Z?" We tend to think "Oh my God, I didn't do these, I'm inadequate!". Instead we should go like "sure, how much are you willing to pay for each of X Y Z?".

All four points that you have listed boil down to the same thing that makes the world go round: cash flow. So if you managed to get to talk to big companies (which in my opinion is the hard part) that by itself means that you have something that grabbed their attention. Then you can discuss all sorts of things with them. Don't forget that this isn't black and white, it's a negotiation. During that negotiation you will hear many "yes but" and it's up to you to understand if that is a) a valid concern b) a way to negotiate better price from you or c) an excuse to pass on and move forward.

Make sure they understand that your x product has the y (low I guess) price because you are one person working from your home office (that's a guess again, feel free to ignore it if that's not the case for you). If they want to work with a company that has dedicated tech support (#2) and developers to ensure frequent delivery cycles (#1 #3 and possibly #4) they will have to pay more for all these. How much more it's up to you to decide as there is the caveat that one customer alone cannot sustain your business. (1)

Where I currently am, one software developer can cost from 45.000 € per annum up to 70.000€ p.a. let alone the sunken cost of onboarding that employee as, contrary to the common belief, employees are still humans and not machine parts that you plug them in the socket, press the switch and they instantly work at 100%. If you also have to move from a home office to an office-office then you can imagine that this is a huge investment for someone who was up until yesterday self employed.

All these boil down to how much leverage you can apply with the product already at hand. If you can negotiate a higher price with the "promise" (2) that you will at least partly fulfill some of their requirements in a reasonable time frame, then you can move to the next customer and growth milestone, not forgetting to calculate the risks involved after every step.

One important aspect specific to software is that it doesn't rot. Once installed and accepted, it can work for as long as the underlying OS and hardware can run it. It doesn't have tear and wear like a car or heavy machinery for example. That gives you extra leverage of negotiation that they can use the software (and thus have revenue or start saving) while in the meantime you address the rest of their concerns -that of course have agreed to pay you "a fair amount" for them.

All these might sound like fairy tale (it's not, reality can be way harder and often unpredictable) but you've mentioned something that is catalyst to me and I quote:

I have opportunities to address bigger companies

You used plural twice. As I see it, you've already done the difficult part, you managed to get in touch with more than one company. I will repeat myself here and I will say that once you get talking to them you can hear their concerns and try to address them -with the minimal possible cost to you. For a more thorough post you can read my answer here which is related but not an exact duplicate of what you asked.


(1) That of course depends on many aspects like how unique your software/product is, how niche your market is and how's the competition in that market.

(2) Promises are moot in the business world. You have to find a formula that will keep everyone happy and draft that in the contract.

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