Tag Archives: mISV

Training course update

I ran my second ‘Start your own software business’ course over the weekend of 22/23 March. Here is what some of the attendees had to say:

“I thought I knew most things about setting up and running an ISV but Andy filled in all the gaps and taught me stuff I hadn’t even thought about! I would, without hesitation, recommend this course (which is great value) to anyone thinking of starting a small software company or even an existing company that wants to ensure they give their business the best chance for success. Well done Andy!”
Anonymous (gainfully employed)

Roger Pearson“PC Pro magazine (not easy to impress) gave PerfectTablePlan a glowing review. That gives you some idea of Andy’s talent for programming and marketing. His weekend training program allows the attendees to garner his expertise for themselves and their software projects. Andy knows his subject – his experience is extensive, practical and hard-earned. I have run 2 successful small software business in the past. By attending his course I wanted to find out from someone who was actually doing it today, how I could apply techniques and best practice to my next software project. Did I succeed? Without a doubt. Andy was meticulous in his planning of the event and thorough in his presentation. I couldn’t ask for more. Top marks. I recommend Andy’s course to anyone venturing into the world of running a small software business.”
Roger Pearson

Derek Ekins“I recently attended Andy Brice’s “Start your own software business” course. Andy teaches some very practical skills to evaluate your idea, find if there is a market and launch your product. Behind most of the topics Andy had a story of how this particular lesson was learnt and how he has successfully implemented it. I now feel I am equipped with some practical knowledge of how to launch a software product. Thanks Andy.”
Derek Ekins

I will be following all their progress with interest.

I hope to run the course again in 2014. If you are interested in attending, please fill in the form on the training page.

Announcing a new date for my ‘Start your own software business’ course

AH111220CO-2000x1297I ran my first ‘Start your own software business’ course in November last year. It was a lot of work to write the course and organize the logistics. But I am very pleased with how it went. I have had a number of enquiries about the course since then, so I am announcing another date: 22/23 March 2014. As previously, the location will be Swindon, England. The course is limited to 10 people (first come, first served) and there is an ‘early bird’ discount if you book by  07-Feb-14. For more details (including comments by previous attendees) go to the training page.

Training course update

I ran my first ‘Start your own software business’ course over the weekend of 23/24 November. It was tiring but enjoyable and, overall, I am very happy with how it went. I think the balance of presentation, questions, exercises and discussions was about right. Thankfully everything went smoothly with the logistics of room, meals, accommodation etc.

Here is what some of the attendees had to say:

Pavol Rovensky“To run your own software business is an aspiration of every programming enthusiast and many professional programmers. Most of them fail without knowing “WHY?”. I’ve known Andy Brice for many years and have met him at several conferences and heard  a lot about his product and working habits. When the information about this course appeared it was the easiest decision in my professional career to sign up. The course itself is delivered with passion and ease, yet the information content is incredibly rich.  The course covers all aspects of Starting a software business and Andy continuously amends the presentation with elements of his own experience and available data from other people. None of the aspects of starting a software business is left uncovered. He definitively gives an answer to aspiring programmers “HOW?” to start and avoid the failure; or fail fast and learn quickly.”
Pavol Rovensky, www.hexner.co.uk

Kevin Horgan“Andy’s ability to imprint the wisdom he has gained through successfully starting and running his own software business is amazing. The course covered a lot of material very quickly and effectively with plenty of time to ask concrete questions, all of which Andy comfortably answered from his experience in the field. I feel I have a much better focus now on where I need to put my time and energy to build a successful software company. The course venue, facilities and overall organisation were also excellent, from booking through to ensuring we finished on time so I could catch my plane. I highly recommend this course if you plan to start your own software company.”
Kevin Horgan, www.balancedcode.com

Anthony Hay“I’m a programmer and I’ve been an employee in other people’s software businesses all my working life. For some time I’ve wanted to create my own product to sell but I’ve found it difficult to evaluate the various ideas I’ve had and get started. Andy’s course is broad and covers all aspects of starting a software business, but the parts covering the early stages of product development were especially useful to me. Andy is a great communicator and I highly recommend this course.”
Anthony Hay, howtowriteaprogram.blogspot.com

“I was lucky enough to find out about Andy’s course in time, and wasn’t sure if it would help me figure out how to work for myself as an independent software vendor — I have the answer now — and it would be an understatement to say it pointed me in the right direction. I now see the possibilities, and the course has given me important insights into how I might go about the transition from ‘working for the man’ to starting my own micro ISV. If you get the chance, do go on the course. It’s well worth it.”
Jason Spashett, jason.spashett.com

“If you’re starting a software business, give yourself a big unfair advantage and sign up for Andy Brice’s course. Andy has spent eight years investigating numerous cul-de-sacs, all so that you don’t have to. Whether you’re working with desktop or web, selling to consumer, enterprise or developer markets, there are pearls of wisdom in there for everyone. Benefit from the advice of someone who’s been there in the trenches – it’s possibly the best investment in your fledging business you can make.”
Justin Worrall

I would like to say a big thank you to the attendees of v1.0 the course. I shall be following their progress with interest.

I hope to run the course again in 2014. If you are interested in attending, please fill in the form on the training page.

VAT basics for software vendors

The dreaded VAT. Ugh. Value Added Tax (VAT) is the European equivalent of sales tax and it is a Royal Pain In The Arse. However, if you are running a business that makes sales in Europe you need to understand VAT. In particular it has important implications for your choice of payment processor, even if you are based outside the EU or below VAT registration thresholds. I have put together a few pointers here in the hope that it will help someone grappling with the complexities of VAT. But please note:

  • I am not an accountant. If you need proper advice, talk to a proper accountant.
  • The VAT rules are complex and may be interpreted differently by different people.
  • The rules may be different in different countries.
  • The rules change over time.

Only VAT registered businesses have to charge VAT. You have to register for VAT once your sales reach a certain threshold. At the time of writing,  UK-based businesses have to register for VAT if their EU sales exceed £77k in a 12 month period (technically it is UK sales, but the ‘place of supply’ for EU consumers is classified as the country of the seller). You can also choose to register for VAT before you reach the threshold. But it usually isn’t worth it, unless perhaps you think having a VAT number is essential for your credibility. Personally I waited until I couldn’t avoid it any longer.

Even if your business is not based in the EU, the EU still expect you to pay VAT on any sales inside the EU once you reach a threshold. This is controversial and it isn’t clear to me exactly what the EU can do to enforce this if you are based outside the EU. Talk to your accountant.

The VAT rate varies between countries. At the time of writing it is 20% in the UK and 19% in the Netherlands. It also varies over time, it used to be 17.5% in the UK.

The UK also has a simplified flat rate VAT scheme with a lower VAT rate. But you can’t claim back VAT on purchases. Worse still, it appears that you will effectively be paying VAT on sales outside the EU. So that doesn’t seem at all attractive.

The VAT rules are complex and depend on:

  • where you are based
  • where your customer is based
  • whether your customer is a business or a consumer
  • whether you are selling goods or services

Technically you do not have to charge VAT to an EU business, even if they aren’t registered for VAT. Apparently they are then responsible for “self-charging” the VAT. However the burden of proof is on you to show that the customer is a business. So most vendors require a VAT number as proof of business status.

There also seem to be disagreements over whether software is goods or services. What if you ship a CD?

Here is a simplified summary in pseudo-code of whether a seller needs to charge VAT on software as I understand it:

paysVAT()
{
    if ( seller registered for VAT)
        if ( customer in EU )
            if ( customer is a business )
                if ( customer in same country as you )
                    return TRUE;
                else
                    return FALSE;
            else
                return TRUE;
        else
            return FALSE;
    else
        return FALSE;
}

Except that people in Norway and Switzerland (which aren’t in the EU) pay VAT in some circumstances. Don’t ask me why. Also you don’t pay VAT on some items, e.g. postage. And outside the scope of VAT (O), not rated for VAT (N) and zero rated for VAT (Z) are all different VAT codes meaning no VAT is payable. As I said, it’s complicated. Not complicated and interesting like quantum mechanics or the love lives of celebrities. Just complicated.

The only upside of being registered for VAT is that you can claim back the VAT you pay on any purchases you have made (make sure you get a VAT receipt). Or, if you are buying from another EU country, you can tell them your VAT ID and they shouldn’t charge VAT (see above). So any equipment you buy in the EU is now 20% cheaper. This is small recompense for the giving 20% of your sales in the EU to the VAT man. Try not to think about that. Instead give yourself a pat on the back for having reached the VAT threshold. A lot of businesses never do.

Note that when you register for VAT you may be able to claim back the VAT of products purchased before you registered. When I registered I could claim back VAT paid on goods purchased within the last 3 years and services purchases within the last 6 months. So keep your VAT receipts.

Congratulations on making it this far. Here is the important bit. How you process payments has important implications for VAT. When someone pays you via a payment processor, such as PayPal, legally they are buying from you and the payment processor is just handling the payment on your behalf (like a bank cashing a cheque). So you are responsible for collecting what VAT is due and paying it to the appropriate government. This can be a major headache if you are selling hundreds or thousands of licences per month.

When you use a reseller, such as Avangate or Fastspring, legally you are selling your licence to the reseller and the reseller is then reselling it to the customer. The reseller is then responsible for deciding what VAT is due, collecting the VAT and doing the paperwork. They then pay you net of the VAT and their commission. Leaving you to sort out the VAT for their one payment to you per month.

Using a reseller is a big win if you are registered for VAT. I am registered for VAT and use Avangate as my payment processor. They do the heavy lifting in terms of calculating, collecting and paying the VAT on my sales. But if you aren’t registered for VAT be wary of using a VAT registered reseller – approximately 20% of your sales will be disappearing in VAT (which the VAT registered reseller has to charge) which you could be keeping if the customer bought from you direct. So if you aren’t registered for VAT, a reseller such as Avangate or Fastspring may not be the best solution for you. Check out e-junkie.

VAT admin is fairly straightforward. To keep the VAT man happy I have to file:

  • an EC sales list every month
  • a VAT return every quarter

My Quickbooks accounting package generates the numbers for these. It only takes a few minutes to file reports online once all the transactions and VAT codes are entered correctly into QuickBooks. The VAT man then debits (or credits) the appropriate amount from my business account each quarter. It is not too bad, as long as I don’t think about the wheelbarrow loads of cash Avangate keeps to pay the VAT man. Maybe they roll around naked in it on the last day of every quarter. I probably would.

When I first registered for VAT I tried adding the VAT onto my existing prices. But I found that sales dropped more than 20%. So I ended up keeping the gross price (including VAT) the same, whether the customer pays VAT or not (Avangate gives you this option). Whatever you do, make sure it is clear whether any prices you quote include VAT. EU consumer expect to be quoted prices inclusive of VAT and won’t appreciate it if you try to sneak on an extra 20% at the end of the purchase process. You may be legally required to quote the price including VAT in some countries.

A final note of warning. The VAT man has a lot of powers. I understand the UK VAT man can kick your door in and seize your equipment without needing even a warrant. He might not be impressed to find out that the computer you reclaimed the VAT for is an XBox. Do not mess with the VAT man.

If I have made any mistakes, missed anything out or if the rules are substantially different in your country, please add a comment.

Thanks to Marcus Tettmar of Macro Scheduler automation software for checking this through and advising me on some of the finer points.

A curated list of 200 articles for microISVs and startups

I have been steadily adding to the curated list of links on this site. Currently there are links to 200 articles, loosely categorized into topics such as ecommerce, market research, product naming, Pay Per Click and SEO. I have tried to select articles that contain ‘actionable’ information, rather than wafflely articles about ill-defined subjects such as time management and motivation. Some of the articles linked to were written by me, but the majority weren’t. I hope you find something useful. I would be surprised if you don’t.

Go to the links page

Ten mistakes microISVs make

Here is a video of the “Ten mistakes microISVs make” talk I gave at the Software Industry Conference 2009 in Boston. Total duration: 27 minutes.

The slides aren’t terribly easy to read, due to the resizing and compression of the video. But you can also download the paper and slides:

A big thank you to Alwin and Sytske of collectorz.com for doing the video. You can read Alwin’s excellent software marketing blog at alwinhoogerdijk.com.

Feel free to embed this video, as long as you include a credit and a link back to this blog.

How many of these mistakes have you made? How many are you still making?

microisvcentral.com

MicroISV blog aggregator planetmiscroisv.com has died, for reasons unknown (Floyd, if you are reading this, I hope you are OK). Glenn Rice of backupbrain.com.au has kindly filled the gap with new aggregator microisvcentral.com. Thanks Glenn! Hopefully he will be able to fix the problem that is causing posts from this blog to not be displayed properly.