Starting an IT Business

As both presidential candidates told us repeatedly during the recent elections, small businesses are the economic powerhouse that drives job creation and economic growth in this country.  In the case of IT businesses, the stakes are higher, because businesses that assist companies to manage their information more efficiently can positively affect job creation and economic growth in their customers' enterprises, as well.  While automation can reduce the work force in specific applications, such as in a factory assembly line, such reductions are usually offset by much larger employment increases as the companies with more efficient and effective IT systems grow and prosper.

The types of IT-related products and services that new businesses can offer are limited only by the imagination of our future entrepreneurs. There are two general categories: (a) IT that improves the core business, such as more advanced electronics in new car models; and IT that makes a company more efficient at conducting its business affairs, which is often referred to as "business process improvement." Only domain experts who are steeped in the technical knowledge and requirements of their future customers can hope to compete in the first category, which limits the prospects of new IT businesses whose principals lack this type of background. Business process improvement, on the other hand, requires no such technical knowledge about customer requirements; in fact, the lack of such knowledge is often helpful in developing fresh insights and innovative solutions to problems that experienced workers have been unable to solve.

There are two business planning concepts that are invaluable to new IT businesses that focus primarily on business process improvement: (a) a sustainable business model; and (b) a compelling value proposition. The business model is the manner in which the business foresees or recommends that customers will employ their products and services. Sustainable business models are self-propelled and adapt to meet changing needs. Value propositions are clear and concise descriptions of why customers are better off with the products and services that the business offers, than without them. Compelling value propositions are virtually "stand alone" justifications for moving forward with offerings of the IT business; in other words, they are convincing with minimal salesmanship required. In today’s marketing environment, where buying decisions are often made based on the materials furnished through websites and social media, compelling value propositions are "a must."

New IT businesses that offer products and services that can positively impact how their customers do business, and utilize a sustainable business model and compelling value proposition to position themselves in a competitive market, will be far more likely to succeed than those that do not. Starting such a business requires a commitment to these fundamental building blocks of a successful enterprise.