When discussing success rates for new business startups, most people are quick to quote the statistic that 95% of new businesses will fail within X (1, 3, or 5 seem to be most common) number of years. If this is true, then the failure of microISV businesses will be no different. What’s interesting is why the majority of microISV companies fail.
The main reason that the majority of the companies with completed products fail is due to the lack of marketing. This would seem to be obvious because most microISV businesses are created by programmers who don’t have experience or, in a lot of cases, the desire to do the marketing that is necessary to make their product a success. My observation is that there are far more microISV companies that fail before they even get to this stage though.
The simple explanation is that most microISVs will fail because they will never complete their product. But why is this the case? Even though the common way of thinking is to start your microISV while holding down a day job, which is the method of minimal risk, most people fail because they actually fear the risk of success. Once someone starts down the path of creating a project with the grand idea of leaving their crappy job behind they will inevitably end up having to face the idea of not having a steady paycheck, paying self employment taxes, and, in the U.S., paying for health insurance entirely out of your own pocket. With these thoughts the spiral begins.
Unfortunately, we have become a world of comfort. It is all to easy to go to school, get a job, work up, around, and through the corporate world and continue to draw a steady paycheck. Faced with the comfort of a steady job, the decision to risk success on your own actually becomes a daunting thought to many. At this point, the easiest thing to do is quit. It requires no change since you have a steady, stable paycheck. You won’t have the hassle of working on your project at night and on the weekends. And think of all the time you won’t have to spend supporting your customers. Life will go back to being comfortable…and disappointing.
Always remember why you started your project in the first place. The goals you set originally were what you thought would provide you with an improved lifestyle. The lifestyle and level of comfort that can be attained by selling something you created yourself can be far more satisfactory even if you never make as much money as you did in your corporate job, so don’t become a microISV casualty before you even get started.