TRADITIONAL VS SOFTWARE BUSINESSES
Hi folks,
I've been deliberating on the nuances between buying/operating a traditional business (e.g., manufacturing, distribution, services, etc.) vs a software business (eComm, SaaS, etc.) and wanted to tap into the group's collective experience.
Software: Easier to scale, subject to global competition
Traditional: Harder to scale, subject to only local competition
Of course there are exceptions but I'd find this the general rule. How have others deliberated which route to take? Feel free to DM me. Thanks!
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I believe it's harder to find a true moat around a software product. Given the global nature of cloud software, it's difficult to size-up the competition the way you would in a local market bounded by physical constraints. All said, I am still pursuing SaaS, but I am clear-eyed about those risks.
If you do it, make sure your management team includes experienced engineers or product people with broader market knowledge. They should to be able to react to external developments, quickly.
Product pricing below $500 may have high acquisition costs and pricing above $5000 will have longer sales cycles.