Custom software is a good idea for a small business in one situation: a process the business depends on is not served by any packaged product, staff are filling the gap with spreadsheets and retyping, and that is costing more than a system would. For everything else, such as accounts, payroll and email, a packaged product is the better buy. Most small businesses that benefit from custom software need a small piece of it, not a large system.
Custom software is called bespoke software in the UK, and our guide to what bespoke software development is covers the term, the advantages and the drawbacks in general. This article looks at the question from the position of a small business: limited budget, no IT department and an owner whose time is already spoken for.
When custom software is worth it
The cases where it pays have features in common.
- The process is particular to you. The way you quote, schedule, track jobs or serve customers differs from the way a packaged product assumes, and the difference matters to your customers or your margin.
- You have tried the products. You have looked at what is on sale for your trade, and each one either misses something you cannot do without or forces a change you are not willing to make.
- The workaround has become a system. A spreadsheet or an Access database that one person built now runs a department, several people depend on it, and it has started to cause errors.
- The same data is typed more than once. An order goes into one system, then the accounts, then a delivery schedule, by hand each time.
- You expect to use it for years. The cost of a build is paid at the start and recovered slowly.
One of these on its own is seldom enough. Two or three together usually are.
When it is not
A small business should be slower to commission software than a large one, because the cost is a bigger share of its budget and the owner’s attention is scarcer. Custom software is the wrong choice when:
- every business does the work the same way, and products for it are mature and cheap;
- a product does most of what you need and the remainder is an irritation, not a cost;
- you cannot yet describe what the system should do, which usually means the process itself is still changing;
- nobody in the business can give time to explain the work, review progress and test the result;
- the business could not afford to maintain the system after it is built.
Our article on bespoke software versus off-the-shelf software explains how to test whether a packaged product really fits before you rule it out.
Claims to treat with care
Articles on this subject, including the one that used to be at this address, tend to make claims for custom software that do not hold up.
“Custom software is more secure.” Not by default. A packaged product from an established vendor has people whose whole job is security, and it is updated regularly. A custom system is as secure as the people who built it made it, and it stays secure only if someone keeps the platform underneath it up to date. It is true that a flaw in a widely used product is attacked everywhere at once, while a custom system has to be targeted individually. That is no substitute for building and maintaining it properly.
“It needs no training because it fits the way you work.” It fits only if the people who do the work were involved in designing it. A system specified by the owner alone, without the staff who will use it, can be as awkward as any product.
“You get better support.” You get support from one supplier, on whatever terms you agreed. That can be very good. It also means that if the supplier or the freelance developer stops being available, you need the code, the accounts and the documentation in your own hands so that someone else can take over.
“It always pays for itself.” It pays for itself when the time or the errors it removes are worth more than the build and the upkeep. That is a sum you can do in advance, and sometimes the answer is no.
Smaller ways to start
Custom software does not have to mean a large project. For a small business the sensible first step is usually one of these.
Use more of what you already pay for. Many businesses use a fraction of their accounting package or their Microsoft 365 subscription. An afternoon spent on the settings and the reports can remove the need for anything new.
Connect two products you already have. If the pain is retyping, a small integration that passes orders or invoices from one system to another may be all that is needed.
Try a low-code platform. Tools such as Microsoft Power Apps let a capable member of staff assemble forms, lists and approvals with little programming. They suit simple processes with few users, and our comparison of bespoke software and low-code platforms sets out where they run into limits.
Replace one spreadsheet. Take the workbook that causes the most trouble and turn it into a small web application with proper records, logins and a history of changes. Because the spreadsheet already shows what the system must do, this kind of project can be priced in advance. We offer it as a fixed-price package.
Each of these teaches you something about what the business needs, at a cost you can absorb if the answer turns out to be “not this”.
Working out whether it pays
Before you ask anyone for a quote, put rough numbers on both sides.
On one side is what the current way of working costs: the hours each week spent retyping, checking and correcting, the orders or invoices that go wrong, and the work you turn away because the process cannot cope. Write down hours and events, then convert them to money.
On the other side is the cost of the system over its life. That is the build, plus hosting and maintenance for each year you expect to use it. Our cost calculator gives a range for the build from six questions. Set the same period against the alternative, which is usually a subscription charged per user per month. Use the vendor’s current price list and the number of users you expect in three years, not today.
How the cost of software is treated in your accounts and for tax depends on your circumstances, so ask your accountant before you set the budget.
What to settle before you commission anything
A small business usually has nobody on staff who can judge technical work, so a few points matter more than they would in a larger company.
- Ownership. Paying for software does not by itself make the code yours. The contract should assign it to you in writing. Our answer on who owns the source code explains what to look for, and it is worth taking advice.
- Accounts in the business’s name. Hosting, the domain name and the code repository should belong to the business, not to the developer or to a member of staff personally.
- A price agreed against a written scope. With a fixed price, an overrun is the supplier’s cost and not yours.
- Upkeep. Agree who will apply security updates and fix faults after launch, and what that costs each month.
- One person with time. Name the person in the business who will answer questions and test the result, and free some of their week.
Then write down the five things the system must do on its first day, and leave everything else for later. A supplier who receives that list can tell you quickly whether custom software is a good idea for your business, or whether something you could buy tomorrow would do.