Software Company Business Plan
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Below is a software business plan template to help you create each section of your own Software Company business plan.
Executive Summary
Business Overview
SimpleBooks Inc. is a new accounting software company located in Seattle, Washington. We produce an accounting product that helps small and medium-sized businesses with all of their accounting tasks. Some of these features we provide in our software include bookkeeping, tracking cash flow, reconciling bank accounts, and creating/managing financial reports.
SimpleBooks Inc. is founded by Edward Jameson, who has been a developer for 20 years. He created this software based on the complaints that his wife had of the accounting software she was using. He initially created the software to help his wife’s business but decided to expand the product and sell it to other local small and medium-sized businesses with similar accounting needs.
Product Offering
SimpleBooks Inc. produces accounting software that helps small and medium-sized businesses with all their accounting needs. We offer an extensive list of features, including the following:
- Bookkeeping
- Reconciling bank accounts
- Cash flow tracking and management
- Accounts receivable
- Income and expenses tracking
- Invoice and payment processing
- Estimates
- Mileage tracking
- Receipt capture
- Bill management
- Tax deductions
- Inventory management
- Employee expenses tracking
- Business analytics
- Project profitability
- Time tracking
- Financial report generation
Customer Focus
SimpleBooks Inc. will primarily target businesses in the Seattle, Washington area. The software is designed for smaller businesses, so most of our clientele will include businesses with less than 500 employees.
Management Team
SimpleBooks Inc. is founded by Edward Jameson, who has been a developer for 20 years. He has substantial experience creating software for large companies and has been very successful in his career. He initially built the company’s accounting software to help his wife’s business, but decided to expand the product and sell it to other small businesses in the area.
Success Factors
SimpleBooks Inc. will be able to achieve success by offering the following competitive advantages:
- Edward Jameson has been extremely successful working in the software industry and will be able to use experience to create the best products for our target market.
- Edward knows many of the local leaders, business managers, and other influencers within Seattle, Washington and will use those connections to establish an initial clientbase.
- SimpleBooks Inc.’s products are designed with small businesses in mind and will be curated to help the particular accounting needs of this target demographic.
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Financial Highlights
SimpleBooks Inc. is seeking a total funding of $500,000 of debt capital to launch. The breakout of the funding is below:
- Office design/build: $100,000
- Software development: $150,000
- Three months of overhead expenses (payroll, rent, utilities): $150,000
- Marketing costs: $50,000
- Working capital: $50,000
The following graph below outlines the pro forma financial projections for SimpleBooks Inc.:
Company Overview
Who is SimpleBooks Inc.?
SimpleBooks Inc. is a new accounting software company located in Seattle, Washington. We produce an accounting software product that helps small and medium-sized businesses with all of their accounting tasks. We offer three tiers of features. Our basic tier only offers basic accounting functions while our advanced tier offers an extensive list of features for larger and more complex businesses. Some of these features include bookkeeping, tracking cash flow, reconciling bank accounts, and creating/managing financial reports.
SimpleBooks Inc. is founded by Edward Jameson, who has been a developer for 20 years. His wife is an accountant who was very unhappy with other accounting software products. Other accounting software can be overwhelming to use, unintuitive, and are geared toward large organizations and enterprises. Edward knew of her complaints and developed an accounting software geared towards her small business. Edward’s wife has been successfully using the software for nearly a year, so Edward is confident that this product can help other small and medium-sized businesses with similar accounting needs.
SimpleBooks Inc.’s History
After developing the software for his wife’s company, Edward Jameson did a thorough market analysis to see how well his software would do if he sold it to other local small businesses. Once his market analysis was complete, Edward incorporated SimpleBooks Inc. as an S corporation.
Since incorporation, the company has achieved the following milestones:
- Located a potential office space and signed a Letter of Intent to lease it
- Developed the company’s name, logo, and website
- Determined equipment and necessary supplies
- Began recruiting key employees
SimpleBooks Inc.’s Services
SimpleBooks Inc. produces accounting software that helps small and medium-sized businesses with all their accounting needs. Clients interested in our software can purchase one of three plans: basic, intermediate, or advanced. Our most basic plan will offer just the essential bookkeeping and accounting functions that most businesses need and only allow up to three users per account. Our intermediate plan will offer more features and allow up to seven users per account. Our most advanced plan will offer an extensive suite of accounting features and allow up to twenty users per account. All plans are charged on a monthly basis, with our basic plan being the cheapest option and advanced option being the most expensive.
Some of the functions and features included in our software products include:
- Bookkeeping
- Reconciling bank accounts
- Cash flow tracking and management
- Accounts receivable
- Income and expenses tracking
- Invoice and payment processing
- Estimates
- Mileage tracking
- Receipt capture
- Bill management
- Tax deductions
- Inventory management
- Employee expenses tracking
- Business analytics
- Project profitability
- Time tracking
- Financial report generation
Industry Analysis
According to market research, the global software industry is expected to grow substantially over the next five years. Nearly every business uses some form of software to automate its processes and increase efficiency and accuracy. Therefore, demand remains high and the industry continues to grow and expand.
Business software includes project management software, communication software, customer relationship management software, and accounting software. Accounting software is particularly popular as it significantly improves accuracy and efficiency when handling all things related to accounting. Good accounting software can help a business keep detailed tracking of all its finances, and prevent a business from bleeding money or losing track of funds.
Business software companies can succeed by providing competitive features, multiple plans and products, and keeping their products affordable. They will also succeed if they can make products that work for both small businesses and large enterprises. A company that can provide this type of software will remain competitive in the global market and see rising demand from its clientele.
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Customer Analysis
Demographic Profile of Target Market
SimpleBooks Inc. will primarily target businesses in the Seattle, Washington area. The software is designed for smaller businesses, so most of our clientele will include solopreneurs, small businesses, and medium businesses with less than 500 employees. We hope to eventually branch out and serve clients located beyond the Seattle area.
Customer Segmentation
SimpleBooks Inc. will primarily target the following customer profiles:
- Solopreneurs
- Small businesses
- Medium-sized businesses
Competitive Analysis
Direct and Indirect Competitors
SimpleBooks Inc. will face competition from other companies with similar business profiles. A description of each competitor company is below.
QuickBooks
QuickBooks is one of the most popular accounting programs out there. It provides businesses with everything a business needs for its accounting department, including tracking income and expenses, managing cash flow, and helping with taxes. Clients can choose one of four monthly plans depending on the features they need and how large their accounting department is. Plans are charged on a monthly basis and include quick and helpful support and app integration.
Xero
Xero is a powerful accounting software for companies of all sizes. Clients who have Xero can pay bills, manage payroll, claim expenses, send invoices, and track inventory. They offer three tiers to choose from, including a very affordable basic plan and other plans that offer extensive features. They also provide specialized features for small businesses and for businesses in particular industries.
Freshbooks
Freshbooks is a popular accounting software with businesses of all sizes in mind. They offer numerous features that vary depending on if you are a freelancer, a business with contractors, or a business with employees. Some of these features include managing expenses and receipts, tracking mileage and time, invoicing, and generating financial reports. They offer three tiers of plans but also create custom plans for businesses with complex and unique accounting needs.
Download the Software Company business plan template (including a customizable financial model) to your computer here <–
Competitive Advantage
SimpleBooks Inc. will be able to offer the following advantages over the competition:
- Management: Edward Jameson has been extremely successful working in the software industry and will be able to use his previous experience to create the best products and experience for his clients. His unique qualifications will serve customers in a much more sophisticated manner than SimpleBooks Inc.’s competitors.
- Relationships: Edward knows many of the local leaders, business managers, and other influencers within Seattle, Washington. With his 10 years of experience and good relationships with business leaders in the area, he will be able to develop an initial client base.
- Small business focus: While our competitors do offer features for small and medium sized businesses, their products are designed with large enterprises in mind. This can make their products feel overwhelming and unintuitive. SimpleBooks Inc.’s products are designed specifically for small and medium businesses with fewer than 500 employees.
Marketing Plan
Brand & Value Proposition
SimpleBooks Inc. will offer a unique value proposition to its clientele:
- Service built on long-term relationships
- A focus on helping small businesses succeed
- Affordable pricing
- Excellent customer service
Promotions Strategy
The marketing strategy for SimpleBooks Inc. is as follows:
Referral Marketing
SimpleBooks Inc. will invest heavily in a social media advertising campaign. Edward will create the company’s social media accounts and invest in ads on all social media platforms. He will use targeted marketing to appeal to the target demographics.
Social Media
SimpleBooks Inc. will invest heavily in a social media advertising campaign. Edward will create the company’s social media accounts and invest in ads on all social media platforms. He will use targeted marketing to appeal to the target demographics.
Website/SEO
SimpleBooks Inc. will invest in developing a professional website that displays all of the features of our accounting software. It will also invest heavily in SEO so that the brand’s website will appear at the top of search engine results.
Direct Mail
SimpleBooks Inc. will blanket businesses with direct mail pieces. These pieces will provide general information on SimpleBooks Inc., offer discounts, and/or provide other incentives for companies to try out our accounting software.
Pricing
SimpleBooks Inc.’s pricing will be on par with competitors so clients feel they receive great value when purchasing our software.
Operations Plan
The following will be the operations plan for SimpleBooks Inc.:
Operation Functions:
- Edward Jameson will be the Owner and CEO of the company. He will oversee all the operations and executive functions of the company. In the beginning, he will also provide customer support and development support until he hires several other developers and customer support professionals.
- Edward will employ an experienced assistant to help with various administrative duties around the office.
- Edward will also hire several developers to develop, improve, and maintain the company’s software products.
- Edward will also hire a solid sales team to sell our products to potential clients. As the company grows, he will also hire a team that is solely dedicated to customer service.
Download the Software Company business plan template (including a customizable financial model) to your computer here <–
Milestones:
SimpleBooks Inc. will have the following milestones completed in the next six months.
- 5/2023 – Finalize lease agreement
- 6/2023 – Design and build out SimpleBooks Inc.
- 7/2023 – Hire and train initial staff
- 8/2023 – Kickoff of promotional campaign
- 9/2023 – Launch SimpleBooks Inc.
- 10/2023 – Reach break-even
Management Team
SimpleBooks Inc. is founded by Edward Jameson, who has been a developer for 20 years. His wife is an accountant who was very unhappy with other accounting software products. Other accounting software can be overwhelming to use, unintuitive, and are geared toward large organizations and enterprises. Edward knew of her complaints and developed an accounting software geared towards her small business. Edward’s wife has been successfully using the software for nearly a year, so Edward is confident that this product can help other small and medium-sized businesses with similar accounting needs.
Financial Plan
Key Revenue & Costs
The key revenues for SimpleBooks Inc. will come from the monthly fees that are charged to clients for using the software. There are three tiers that clients can choose from. The option that each client chooses will determine how much revenue the company makes.
The major cost drivers for the company include the lease, salaries, overhead, development costs, and marketing expenses.
Funding Requirements and Use of Funds
SimpleBooks Inc. is seeking a total funding of $500,000 of debt capital to launch. The funding will be dedicated to office design, software development, marketing, and working capital. Specifically, these funds will be used as follows:
- Office design/build: $100,000
- Software development: $150,000
- Three months of overhead expenses (payroll, rent, utilities): $150,000
- Marketing costs: $50,000
- Working capital: $50,000
Download the Software Company business plan template (including a customizable financial model) to your computer here <–
Key Assumptions
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.
- Number of clients:
- FY 1: 30
- FY 2: 50
- FY 3: 75
- FY 4:100
- FY 5: 125
- Annual rent: $30,000
Financial Projections
Income Statement
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Total Revenues | $360,000 | $793,728 | $875,006 | $964,606 | $1,063,382 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $64,800 | $142,871 | $157,501 | $173,629 | $191,409 | |
| Lease | $50,000 | $51,250 | $52,531 | $53,845 | $55,191 | |
| Marketing | $10,000 | $8,000 | $8,000 | $8,000 | $8,000 | |
| Salaries | $157,015 | $214,030 | $235,968 | $247,766 | $260,155 | |
| Initial expenditure | $10,000 | $0 | $0 | $0 | $0 | |
| Total Expenses & Costs | $291,815 | $416,151 | $454,000 | $483,240 | $514,754 | |
| EBITDA | $68,185 | $377,577 | $421,005 | $481,366 | $548,628 | |
| Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
| EBIT | $41,025 | $350,417 | $393,845 | $454,206 | $521,468 | |
| Interest | $23,462 | $20,529 | $17,596 | $14,664 | $11,731 | |
| PRETAX INCOME | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
| Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
| Use of Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
| Taxable Income | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
| Income Tax Expense | $6,147 | $115,461 | $131,687 | $153,840 | $178,408 | |
| NET INCOME | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 |
Balance Sheet
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $30,000 | $33,072 | $36,459 | $40,192 | $44,308 | |
| Total Current Assets | $184,257 | $381,832 | $609,654 | $878,742 | $1,193,594 | |
| Fixed assets | $180,950 | $180,950 | $180,950 | $180,950 | $180,950 | |
| Depreciation | $27,160 | $54,320 | $81,480 | $108,640 | $135,800 | |
| Net fixed assets | $153,790 | $126,630 | $99,470 | $72,310 | $45,150 | |
| TOTAL ASSETS | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $315,831 | $270,713 | $225,594 | $180,475 | $135,356 | |
| Accounts payable | $10,800 | $11,906 | $13,125 | $14,469 | $15,951 | |
| Total Liability | $326,631 | $282,618 | $238,719 | $194,944 | $151,307 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
| Total Equity | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
| TOTAL LIABILITIES & EQUITY | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 |
Cash Flow Statement
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | ||||||
| Net Income (Loss) | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 | |
| Change in working capital | ($19,200) | ($1,966) | ($2,167) | ($2,389) | ($2,634) | |
| Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
| Net Cash Flow from Operations | $19,376 | $239,621 | $269,554 | $310,473 | $355,855 | |
| CASH FLOW FROM INVESTMENTS | ||||||
| Investment | ($180,950) | $0 | $0 | $0 | $0 | |
| Net Cash Flow from Investments | ($180,950) | $0 | $0 | $0 | $0 | |
| CASH FLOW FROM FINANCING | ||||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 | |
| Cash from debt | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
| Net Cash Flow from Financing | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
| Net Cash Flow | $154,257 | $194,502 | $224,436 | $265,355 | $310,736 | |
| Cash at Beginning of Period | $0 | $154,257 | $348,760 | $573,195 | $838,550 | |
| Cash at End of Period | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 |
Software Company Business Plan FAQs
What Is a Software Company Business Plan?
A software company business plan is a plan to start and/or grow your software company business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
What are the Main Types of Software Company Businesses?
There are a number of different kinds of software company businesses, some examples include: Open source, Client-specific, Programming services, and System services.
How Do You Get Funding for Your Software Company Business Plan?
Software Company businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.
What are the Steps To Start a Software Company Business?
Starting a software company business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Software Company Business Plan - The first step in starting a business is to create a detailed software company business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your software company business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your software company business is in compliance with local laws.
3. Register Your Software Company Business - Once you have chosen a legal structure, the next step is to register your software company business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your software company business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Software Company Equipment & Supplies - In order to start your software company business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your software company business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.Â
Learn more about how to start a successful software company business: