Building Your Own Software
How to make real money from IT contracting – Building your own software.
This is something that IT Contractors often overlook but it can be very lucrative.
We give IT Contractors advice on the bestway to pull this off.
Limited Companies Worthless
One problem that IT contractors have is that once they stop contracting, their small business is worth nothing other than the cash in the company account.
You cannot sell it for a multiple of the annual profits.
Other professions, like accountants or lawyers, set up partnerships, and other small businessmen employ people or have recurring income from products that they have created.
The business can carry on without them, so it is worth something without them.
Pensions and Investments
However, IT contractors‘ money dries up totally as soon as they have finished with a contract. They have no recurrent income streams.
This makes it a very insecure profession. In means that contractors are going to have periods in most years when they are earning no money at all.
It also means that when they have finished their careers they have nothing to sell or get income from, so they have to rely on a pension, or on any savings or investments that they have made during their careers.
Getting Recurrent Income
Many will come to retirement age without a pension and without savings.
This is a very risky profession gentlemen, despite what the Treasury might tell you when they want their IR35.
Even agents are able to set up their own small agencies, which they can later sell or get recurrent income from.
Building Software Products
Those IT contractors who create software products that they are able to sell, have a business that they can later sell or obtain recurring income from.
What you shouldn‘t do (and most contractors who attempt this do this), is to spend a lot of time building a software product without having a customer.
There must be a tremendous amount of software that has been built which has no customers at all.
If you can‘t find a customer for the software that you want to build before you have built it, it‘s probably not worth building.
You don‘t find many software houses building software products without having an initial customer for it.
Intellectual Proeprty Rights for Software Products
The other thing that they do is to make sure that they keep the Intellectual Property Rights to the software package that they are building, so they let the initial customer have it a bit cheaper in order to convince them to give up the IPR.
So, if you are thinking of building your own software, the lessons are:-
- Find a customer first
- Keep the Intellectual Property Rights