Always Be Closing
I’m sure there’s a punchline to answer the question posed above, but the serious answer is this: three.
You don’t need lots of sales people at the start, but don’t leave yourself in the lurch either!
I was reading this article by Barney Austen on Bloggertone and got to thinking about all the things people waste money on when starting their own businesses. There are tons of things that you think are really important to have or do. Many of them really are not.
Here at RevaHealth.com we were no different to any other start up. We invested time and money into areas that should have been left to much later in our development cycle. Here is a list of areas that on reflection we either should have ignored or that we managed to get away without.
A Logo
We still don’t have a logo and don’t have any plans to get a logo. We just typed out RevaHealth.com in a font that we liked and left it at that.
Stationary
We still don’t have any. It was a bit of a pain getting some things set up without any, like a business account with Vodafone, but we managed without and we are still managing without.
Business Cards
We did without business cards for a year and even after getting them printed I keep forgetting them. If your business isn’t based around meeting people face to face then business cards aren’t one of the first things that you need.
A CRM System
We spent a huge amount of effort in the early days evaluating CRM systems. This was at a time when we could list all our customers on the back of a napkin. Eventually we deployed Salesforce at huge cost. After a year we abandoned it and went to Highrise. This still didn’t do the job (more about this in a later post) and most of the company reverted to spreadsheets and notebooks.
We now have our own home-grown CRM system which works like a dream, but we couldn’t have created it in the beginning as we didn’t know the way our business would be shaped in the future. Fundamentally we would have been significantly better off if we hadn’t looked at any form of CRM until we had hundreds of customers and a well defined business. I think many start-ups would be in the same boat and that CRM systems are not something that you should be looking at during the early stages of a business.
A Sales Process
Unless you have already done business in exactly the same business environment and your business model is established and well understood then you can’t have a sales process. Inventing one prior to this is pointless and akin to throwing darts drunk, blindfolded and standing on one leg.
An Intranet
Most of us have worked in companies where a corporate intranet was badly implemented and used. When I started RevaHealth.com I was determined that ours would be implemented and used correctly. The truth of the matter is that it simply wasn’t required. For small companies the natural organic methods of sharing information are much more efficient. We do use our intranet effectively but it has a much smaller role than we envisioned.
A Server
I spent a good man week deploying and poorly configuring an internal server. It now sits in the corner gathering dust. We don’t have any active servers in our office anymore – everything is in the cloud: Mail server, development servers, intranet, source control … everything.
A Brand Name
This is probably important, however we gotten away with a fairly bland and meaningless one so far. I’m not entirely convinced that if we changed our one overnight that anyone would notice.
A Finished Product
Luckily this isn’t a mistake that we made. We deployed product as quickly as possible and iterated every week from that point on. However, this is a mistake that I see start-up companies making every day. They think that they have to get the technology correct before they start doing business. Whereas they need to start doing business before they can figure out what the correct technology is.
Legally Binding Terms & Conditions
Legally binding to what? A typically start-up changes its business so often that any agreements are outdated as soon as the paper dries. It’s probably best to start with standardised creative commons terms & conditions until your business firms up.
So, when you started up your own business what did you spend time or money on that you needn’t have?
I meet with a lot of start-ups that are determined on disrupting industries with Software as a Service (SaaS) solutions. The business plans I see increasingly focus on niche markets, everything from food production through to legal and architectural, and not on businesses that already depend on the internet to survive.
To these entrepreneurs SaaS seems to be the obvious solution to entering and disrupting the market and in many ways I agree. However, these same entrepreneurs are generally so caught up over the advantages of SaaS that they fail to see that in their chosen target market dependence on the internet is a competitive disadvantage rather than an advantage.
This isn’t a problem in itself, but it is vital that the entrepreneurs recognise it and aren’t blinded to the problems their customers are going to face. These problems are rooted in three areas: infrastructure, culture and commitment.
The benefits of SaaS are well documented and include:
These all seem like compelling business advantages, making SaaS solutions intrinsically sellable in any market. However, the very premise of SaaS is that it is built on the infrastructure of the internet, and if the internet isn’t reliably and effectively in place in a business already then a SaaS sale has some severe obstacles to overcome.
Infrastructure
SaaS depends on the internet. That’s why the first successful SaaS companies have focused on providing business solutions to businesses that already depend on having good internet connectivity.
Problems arise when entrepreneurs make the mistaken assumption that just because universal, fast and reliable internet connectivity is a priority for their own business that it is automatically a business priority of companies in their target niche.
The issue here is that when your SaaS solution fails for your customer it doesn’t matter why it failed – it’s your fault. If it is because their ISP got flooded and “the internet went down” then it is still your fault, just like if you pay a courier to deliver a parcel and they don’t because a bridge fell down, it’s still the courier’s fault.
The problem boils down to this – if you are selling to a business that doesn’t already have internet connectivity as a business priority then when something goes wrong (and it will) they won’t know how to get back online. Their regular staff members probably don’t know who provides their internet service, so they call you. You don’t know either so you call the business owner. They call their provider who says it isn’t their issue, and before you know it days pass before they are back online.
Unless you are building an application for the minority business where internet connectivity is already a business priority then you are going to be swimming upstream with your SaaS solution.
Culture
If you go to your mechanic to get your car fixed and they are busy and you have to wait a few hours, or even a day or two, then it’s usually no big deal. The chances are that the mechanic will retain you as a customer, but it’s a different story when something really has to be done and you are forced to find an alternative solution.
Say for instance you are leaving on a family driving holiday tomorrow and your normal mechanic can’t see you, forcing you to find an alternative solution. The chances are that you will never revert back to the original mechanic but stick with the new reliable solution.
The same thing applies when an employee uses your system and it fails for any reason. If what the employee is doing is critical and time sensitive, such as taking a payment, then the employee is going to revert back to the old solution. From this point on it is going to be very difficult to convince that employee to ever use your “unreliable” solution again.
Large companies realize this and put huge emphasis on change management. This is because when a large company implements a solution it typically represents a massive business commitment. Smaller companies often haven’t learned this yet but it applies just as much.
Commitment
The pricing model for SaaS solutions is typically a monthly subscription, which is great because it gives the customer a really low entry cost and provides the vendor with nice recurring revenue. In a lot of ways this seems like the perfect business model for software. However it has a serious problem – commitment or “buy in”.
When a business purchases a traditional software solution there are a lot of costs. The license may cost a couple of thousand, the server will be another grand and then there is the training which forms the backbone of a lot of software companies’ revenues. All in all it represents a serious commitment by the company.
What this means is that when the customer has a problem with the traditional software model then they are strongly incentivised to protect the investment the company has already made, and to persevere and overcome the issue. In the SaaS pricing model the upfront commitment is reduced and therefore the inclination is to give up and revert to the next best solution, even if it is pen and paper!
What to do
SaaS has so many compelling advantages that the last thing I would advocate is to abandon the approach. What needs to be done is to recognise the business challenges that a SaaS solution presents to a business and be prepared to face those challenges head on.
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