Starting a Business with a Development Company vs Without a Development Company
Starting a business you have dreamt for a longer period of time means being prepared to face the unknown. Once you start working on developing a business plan, you will become aware of the fact that dreams don’t come true that easily. In fact, only a true entrepreneur has the courage to live his/her dream, in spite of small chances of surviving in the market.
Yesーwe said itーsmall chances of making it in the market.
Why are we being so pessimistic? Actually, we are not and here is a statistic to prove it: 50% of business don’t make to celebrate the five-year mark? They get lost or “eaten” by a competition, or lack of entrepreneur’s motivation and/or knowledge. It is only natural for an entrepreneur to want to raise those chances by starting a business in the industry he/she knows best. Although it may seem like a good idea to start a local business in the fast-growing industries like cryptocurrencies or even green energy, this move can actually bring even more risk.
However, what if you are willing to face that risk and finally bring your idea to life by turning it into a web/mobile app? What happens then?
Well, first, let us just say: that’s amazing! And second, we are glad you showed bravery and dedication. You are slowly becoming a true entrepreneur!
So, what’s your next step?
The first challenge you are going to face when starting a business is putting the idea on a piece of blank paper and creating a business plan. In that process, you will come across a gigantic barrierーnot having enough skills and knowledge to deliver the product to the market by yourself. As a non-developer, you can always try learning programming languages and principles of web (and mobile?) design but that can take a while. To be precise, it can take months before you can actually start feeling confident enough to engage in the development process.
Once you become aware that you need a hand in building the app, it is time to start searching for professionals that have the knowledge, skills and experience to make it all happen. In short: you need great software developers to have your back. But, before you can start searching for them, you need to decide whether you would like to hire developers, work with freelancers or hire a development company.
Before you jump to start googling developers, there is one thing you should know. Starting a business with the right development team (no matter if it is a development company, freelancers or a team you hired yourself) is like finding the perfect suiteーit fits in all the right places and gives you the confidence to carry on with your day proudly and fiercely. Working with this kind of team puts developing your idea into whole other perspectiveーyou are able to focus on other tasks rather than controlling every step of the development process. If it doesn’t feel like a good suite than it is not the right team.
Since Kolosek is a development company and has worked with a lot of startups, we know a thing or two about pros and cons of making this kind of partnership. We are going to share our experience, providing you with objective information on several topics.
So, let's talk about what starting a business with a development company and without one is like.
Starting a Business with a Development Company
Imagine the following scenario: after a lot of research, you have found the development company you believe is going to be a good “partner in crime”.
So, what can you expect from partnering up with a development company? Well, from our experience, starting a business and deciding to collaborate with a company has its good and bad sides and we are going to name them all.
Without further ado, let’s get to the pros.
If you starting a business, you don’t want developers that are at the beginning of their careers. You need more. You need the best ones. That is why, before you make up your mind on which development company to hire, you should definitely take into account their portfolio. Remember that a good development company is the one that has multiple projects successfully done, and whose team of developers and designers has the expertise to carry out the project until the very end.
Why is it so important to find the company with a rich portfolio? Because a team that has more than a dozen projects completed is usually the one that is “well-trained”. When we say well-trained we think of developers’ and designers’ ability to efficiently and productively go through the project. This means respecting deadlines, properly providing estimates, prioritizing tasks and, on top of all this, regularly sharing challenges they face in order to improve the quality of their work.
Simply said, this kind of team consists of bookworms who are always striving to do better and, at the same time, have enough experience to face every programming challenge.
Which leads us to the next benefit of starting a business with a development company.
Team Reliability and Code Quality
Let’s make something clear in the beginning: a good development team should be your right hand in the process of developing an idea. It should guide you through the process, providing just as much information as you can comprehend. It is reliable, open to communication and trustworthy.
What does it mean to have a reliable team by your side?
There is only one answer to this question: a reliable team is the one that is going to write high-quality code. Although the goal of the project is to deliver the product in the predefined period of time, a reliable development company would never choose the speed in writing a code over code quality. The app has to be perfected to the smallest details and a reliable team knows how to achieve this goal. Not only this, a development team is responsible for the app even after the launch.
From reliability comes trustworthiness and from that on, the sky is the limit.
Out of all these benefits of starting a business with a development company, this is the one you should keep in mind: a good development company is your savior when it comes to time management.
As a fresh, small business owner, you have a lot on your mindーdealing with legal issues, perfecting the business plan, thinking about marketing an app and all the other matters that are not related to the product R&D. The last thing you need is to think about managing a development team. Lucky for youーa good development company is self-organized.
Bear in mind that, in the best case scenario, you, as an entrepreneur and the creator of the idea, simply have to explain the idea and let the development company do its magic. That is how the product development process should be done.
Starting a business seems a lot easier now, doesn’t it?
Once we have explained the ups of partnering up with a development company, it is time to get to the more challenging aspects of working with a professional development team.
When you are first starting a business at the end of each month it always comes down to how much you’ve earned and spent. If you started a business operating by a low-cost strategy then partnering up with a development company definitely shouldn't be your first choice.
There is no secret that working with a development company costs more than hiring a freelancer. In fact, according to the past year’s research conducted by Clutch.co, which included 120 development companies, a proper app development can cost a couple hundred thousand dollars. Precisely, average hourly rates for development team members can go anywhere from $15-$150, depending on the team location. So, before you decide you definitely want to hire a development company, keep an eye on the costs and then reach out to the company.
Time Zone and Language Barriers
One of the most mentioned flaws of starting a business with development companies (especially the offshore ones) is having difficulties with syncing time zones. To be honest, it has never been a problem for us and we don’t consider it to be a challenge. The days when development companies are on the rise and competition is everywhere, we try to be flexible about working hours and adjusting to the client’s needs. Make no mistakeーwe are not specialーmost development companies do business this way.
On the other hand, when it comes to language barriers, English is the third most spoken language in the entire world and everyone is at least familiar with it. If you take into account that code lines are all written in English (as well as code comments) and that all developers operate on English, language barriers become almost non-existent.
Starting a Business Without a Development Company
Once you have put all the numbers on the paper and costs seem to much to make additional ones, it is a good option to partner up with freelancers or even hire employees.
Let’s go back for a minute. In one of our previous articles, we wrote about what it takes to find good app developers. In there we mentioned that you have to be aware of multiple factorsーlocation, searching online and locally and mingling around to find the right ones. Butーyou have to face itーall that search can take longer than you can actually afford, especially if you are on the hunt for co-workers.
So, not only that you have to deal with all the tasks regarding starting a business, you also need to invest the two most valuable resources, time and money, into the process of finding a team to have your back. When choosing between hiring employees and working with freelancers, the second option is the one that is less time-consuming and can bring the results faster. With that in mind, for the following part of the article, we decided to write about what it is like to work with freelancers.
For the sake of this article, let’s say you have already found what you were looking forーa couple of experienced freelancers. But, before we start elaborating the benefits and shortcoming of hiring freelancers, there is one thing you should bear in mind: a good freelancer is a professional and the one that has the necessary range of skill set to be able to commit, test and deploy the code without delays. He/she should have an impeccable work ethics, be reliable and open to facing challenges.
Now, let's get to the perks of hiring freelancers:
This is the one benefit that can make freelancers superior in the comparison to development companies.
As you have probably heard, freelancers can work whenever, wherever. They make their own schedules and make themselves as flexible as they possibly can, they are a great option when you are starting a business and need fast results. For you, that means no worries about different time zones and not being able to properly communicate with your development team. They are even able to work on the weekends and holidays!
Flexibility is truly the one benefit that makes freelancers stand out.
As we have previously mentioned, hiring freelancers is much more cost-effective than partnering up with a development company. How much more cost-effective, you may ask? Well, depending on the region of the world, freelancers’ hourly rates can go up to $70. The least expensive are the ones in Pakistan and Ukraine.
Freelancers Are Easily Found
It’s no secret that you can easily find freelancers, just by Googling one of the top online platforms for hiring developersーToptal, Freelancer, Upwork and similar.
However, there is one tip we can give you: if you are trying to hire a “cost-effective” freelancer, try browsing through as many online platforms as you can. Why? Because if you compare the prices, you will see that freelancers on some of the mentioned platforms have higher hourly rates than others which can be a deal breaker when you are starting a business. Also, be sure to check freelancers’ “reviews”, so you don’t end up with a poor-quality code.
Now, let’s get to the cons. As it usually is, hiring a one-man-show, has its consequences and here they are:
No Post-Launch Technical Support
Imagine that all the blood, sweat and tears paid off and your app is officially on the market. It has been launched and is ready to be used. If you did everything right regarding marketing activities, hopefully, in the next couple of weeks, it will have a significant number of users.
What you have to bear in mind even before starting a business is that it is completely natural for a bug to appear after the launch. Or a crash. However, app users might not be that forgiving. At that moment the real problem is: you most likely don’t have a developer to fix all the current and future bugs and errors. How to stop this from happening? Well, depending on the contract, a freelancer can provide post-launch support and it can cost a bit more than the standard hourly rate.
This is the main con of hiring a freelancer.
Working on Multiple Projects
Although it is pretty easy to reach out to freelancers, it is not easy to hire them. You have to keep in mind that most of them work on multiple projects and find clients who can offer the best balance between work and hourly rates. So, if you need someone to start the development process as soon as tomorrow, don’t be so sure you will find him/her.
Alas, we have one final tip for you: it is crucial to find a developer who will be loyal and with whom you will not have a problem with confidentiality. After all, you are starting a business and you should raise your chances of having a successful product launch. What should you do? Propose a freelancer to sign a non-disclosure agreement (NDA), so all the information about product development process is safe between the two of you. It shouldn’t be a problem.
As a founder, you are going to face a lot of tough decisions.
There will be many bumps in the road so the last thing you need to worry is about the process you don’t have the competence to control. On the other hand, there is always an aspect of cost reduction especially when you are first starting a business. This is why you should give some serious thought to whether you would like to start a business with or without a development company by your side.
So, to conclude: be careful not to lose quality simply because you want to lower the costs.
You have reached the end of this article! We hope you found it helpful and have a better understanding of how your business can operate with or without a development company.
Have you had any experience with working with a development company or freelancers? Have you had any regrets? Share it with us in the comment section below!