I have an idea in my mind, for this idea I want to invest more time and money in making it a fully developed product.
So far, whatever small software products I have created are for a small niche and with only me developing that software. Now I have some software in mind that will be for a larger user base and large enough to include other people, and I will be the first customer of it (manufacturing is my prime business).
How and where should I start? What elements are needed within
If it solves your own problem, and it sounds like it does, write it for yourself first and use it. Then show it to others and get their feedback. When you do, realize you're selling it to them, with the customizations they mention. Once you have a contract to build a custom version, hire others or get another entrepreneurial spirit on board to help develop it.
Everyone here gave you good advice, but they missed an important part. To make money selling software you have to:
Write software that someone wants to buy
Build a company to sell the software and service it
Market/sell the software
Many software developers are good at points 1 and 2. Very few can do part 3. Writing the best software in the world isn't going to help you if you can't sell it. If 3) isn't part of your nature, make sure to find someone who can do it for you.
I used to work for a startup some years ago and here is what I learned :
Never forget you will have to deal with two different things : the software part and the company part. A good developer isn't automatically good at running a company and vice-versa as very different skills are implied.
As a general advice : do something clever and really useful, be user-oriented, tell people (trusty ones at first) what you're doing and show them your work, develop your network, work with trustworthy people, ask for legal advice, speak about money later (but don't forget to) once people are interested in your products or services.
And use your common-sense : do not follow any advice unless you understand how useful it will be for you !
The startup I talked about still don't have offices nor full-time hired people, I do not think this is the most important part.
I would also recommend reading The Lean Startup. It's short, cheap (15 US$ I think), and has changed the way I see things. But I think the most important thing is to build something small get out of the building.
If you have money to start hiring people and office, I would recommend to take a moment and elaborate a good plan. It's pretty easy to throw money away without a plan. And the first part of that plan should be -like they have already told you- to build a small prototype that you can show. Read a few books about the subject too.