7 Simple Steps to Start an IT Company

how to start an IT company

Starting an IT company can be an exciting and lucrative way to work with consumers and other businesses in a wide range of industries and applications. As a result, you and your team will have the opportunity to apply your skills to new situations and challenges with every project.

Creating a business takes more than just the talent to help your clients, though. The tools and strategies to turn your skills into a successful IT company are equally important.

1. Choose Your Services

The obvious first step when starting an IT company is to decide which services you will offer. There are advantages to both specializing in your team's area of expertise and offering more generalized services.

Specializing in specific areas such as network security or backend design allows you to develop existing skill sets and charge higher rates for your expertise and experience. On the other hand, IT companies offering a broader range of services can attract clients with more diverse needs. This may require you to expand your team and stay up to date with a broader range of technologies than if you focused on a few areas.

Even as a specialized business, it is crucial to consider the additional services that complement your primary offering and whether you have the skills and tools to offer these extra services. For example, you can promote your business by building free tools related to your primary services. These enable existing customers to get more out of your services while giving potential new customers a taste of the value you can add to their business.

Offering a 'complete package' solution that combines other business solutions can be more appealing than a one-off service to give clients the results they're looking for.

2. Research Your Audience

Knowing which services you will offer is one thing, but knowing who needs those services is even more important. 42% of startups fail because they can't find a market for their services. Research which clients need the skills you provide based on:

  • Industry
  • Business size
  • Target audience
  • Current business goals and upcoming projects
  • The tools and services they already use
  • How effectively those tools meet their specific needs

Identifying these gaps in the market can help focus your initial services on attracting those clients who can't get the services they need from other IT companies by adapting your offering to better suit those needs. This is a vital step in establishing a clear value proposition for your target audience.

3. Get the Tools You Need

Whatever the services you offer, you will need the suitable systems and tools to provide those services and operate your business. While your team will already know which software they prefer and find most effective for their skill set, it is easy for startups to neglect the general business tools every company needs.

When it comes to tools the whole business has to use, you need to agree on tools that work for everyone. For example, your web designer's expertise already covers the best CMS platforms and graphic design tools. However, the app you use to chat with clients needs to support every team member's needs.

These can include:

  • Internal and customer communication tools
  • Invoicing, payroll, and accounting software
  • Project management and time tracking apps
  • Customer Relationship Management platforms
  • Human Resources software

4. Get Certified

Most IT services have associated certifications that potential clients will check for before hiring you. Furthermore, if you install or maintain third-party hardware or software as part of your services, often these also have related certifications.

While you don't always technically need these, they act as proof of your expertise, and clients will expect you to have them. Even if your team is already technology experts, you will miss out on clients without the proper certifications.

5. Get Insured

IT companies need a range of insurance policies to cover every situation. While not all of these are legally required, many clients expect to see insurance policies referred to in their contract:

Professional Liability

If your business makes a mistake or omission that costs a client their money, they can sue you for compensation. Without professional liability insurance, simply defending yourself against a negligence claim can be too expensive whether you are in the right or not.

Cyber Liability

Data breaches, hacking, and network failures are potential problems any modern business can face. If your data security is breached and sensitive customer information is exposed, cyber liability insurance covers the compensation and legal fees.

Technology Errors and Omissions Insurance

Technology errors and omissions insurance (E&O) covers the cost of online content liability claims such as IP and copyright infringement. Additionally, it covers denial of access incidents such as a network failure resulting in service outages for clients.

6. Business Banking

Even if you start a business by yourself, create a business bank account to separate your personal finances from the company's. This will make it much easier to track and subsequently manage your income and expenses.

It also enables you to pay for company expenses using a business credit card. Building positive credit for your company will make things easier later when you need a loan to expand. Keeping your costs on one credit card statement also simplifies calculating your taxes each year.

7. Find a Workplace

Finally, you're going to need somewhere to work. Because of the ease of remote working, renting office space is optional for many IT companies. However, different work environments have their advantages, so consider which suits your approach to work and your budget.

Sharing a physical space with the rest of your business enables collaboration and helps establish a business culture. However, it also has a high cost and limits your recruitment pool to the local area or candidates willing to relocate.

Remote working is more than just a cheap option for IT startups. With the right tools and workspace, working from home can be more productive and motivating and allows you to hire from a global talent pool. Remote working doesn't mean you'll be sitting on the sofa with a laptop, though; you need a dedicated workspace to stay focused. Ideally, this would be a separate room where you won't be distracted by outside noise or other household members.

Start Your Business with the Right Approach

Startups fail for many reasons. Missing one of these vital steps when launching your business might not cause immediate problems, but it could hinder growth or cause organizational issues later down the line.

Getting your business tools, finances, and insurance in order might not be the most exciting part of creating your IT company, but they are critical to the long-term success of any business.


Email More than 85% of US companies are overpaying or are underinsured. Discover how much you can save on your business insurance