Most new businesses have to overcome huge difficulties in establishing themselves in the market place. If you intend to set up a software business you will probably face more problems than most. You will be asking to replace a trusted way of processing data and your new technology will be regarded as suspect. Just competing on price, even if you can, does not work. My view is that to compete as a start-up you should follow the now famous “crossing the chasm” model. I personally reckon there are three main stages all based on differentiation then superiority. If you are lucky your business will travel through to the market place through all three but if you only get to the first or second you will be road kill. If you haven’t heard of crossing the chasm then go to see the entry in Wikipedia as a starting point and do it quickly!