Almost more than anything else, we push startup founders to prioritize growing revenue. The reason we do is an obvious one: revenue drives business. Without it, you can't pay your employees, the bills, or yourself. Not to mention, you can’t keep your product up and running without getting some revenue in the bank. Here are some tangible examples of how you can focus on building your startup’s revenue stream.
We’ve seen a couple of companies fall prey to a never-ending cycle of building, perfecting, and tweaking a product to the point that it never hits the market. Then, a year or two later, they’ve burned through either their cash or that of their investors, with nothing to show. They never get a sale because they never focus on it. Keeping your business afloat means getting revenue in the door, and you do that by not waiting for your product to be perfect before you make a move.
Every startup needs a full-time salesperson, whether it's a business development representative or the founder and CEO. Whoever you decide on, all they should do is sell, at least in the early days when you're looking to scale and get business in the door. If you can't get someone to dedicate 40 hours a week to selling your product or service, then it's not enough to grow the business.
Get good at saying no to current or potential customers when needed. If you don’t, they could force you to deviate from your ultimate business goals. Here are a few specific ways we see founders get distracted.
This is a challenge that many startup founders face: should you say yes or no to revenue opportunities outside of your core product? You can fall for this trap by focusing on revenue growth at any cost (AKA taking Tip 1 too far). Because it’s tempting to take a $100,000 check for work you don’t typically do, but before you know it, you're doing some custom professional services you never intended to get into, distracting your engineers and derailing the development of your core MVP. So, while you should always explore revenue opportunities, there are times you should stop and think about whether it’s the right move for your business.
If someone asks you for a feature, function, or solution to a problem that you already had plans to develop, and it would add value to your product, by all means, consider the opportunity. Dive into it and see if it makes sense.
But if you start building custom solutions for everyone who walks in the door and says they want to give you money, you're not building a SaaS solution. You're building a consulting organization with individual updates. And we can tell you from experience that the last thing your SaaS startup needs is having to support multiple product offerings for multiple clients.
Don't expect meaningful growth without investing in marketing. The average small business, according to SBA, invests about 12% of its gross revenue into marketing. Many tech companies commit more than that because they want to grow faster than the average.
However, many startups underinvest in marketing because they are banking on founder-led growth. By that, we mean leaning on the founders of co-founders' existing network without expanding it or adding marketing tactics. That's almost a surefire way to experience disappointing growth.
Marketing is much easier and cheaper when you focus on being value-driven instead of making money. If you focus on the value of the product, what it does, who it helps, and lean into that, you often spend less money marketing because you have something that the market already wants.
Here’s one way to contextualize it: before you send out your next marketing email, ask yourself, “Would I pay a dollar for this?” Better yet, would someone give you a dollar for what you’ve written and are about to send? Think about that as you build out your marketing messaging. Don’t show up to the party empty-handed, have something to offer.
Think about how you can start repurposing your content. So, for example, if you're going to do a webinar, think about how the discussion from it can become a blog post. Then it turns into a couple of tweets. After that, it informs an infographic on LinkedIn. You see, efficient content marketing isn’t about drumming up brand-new materials. Instead, chop up the same content a million times and milk it for all its worth.
This is an easy win that a lot of people miss. Regardless of what you’re selling, have a good camera and microphone. Whether you’re on pitch calls, webinars, or leading a demo, the last thing you want is for the people not to hear or see you well.
Every minute counts when you’re building a company. If you spend all your time batting emails back and forth, you’re not spending it wisely. Help yourself out with a couple of useful tricks.
Hiring the wrong person can turn into a resource and emotional drain for startup founders. And you don't have the time or money to waste on that.
It's 2022. It's time for everyone to stop manually scheduling meetings. And if you still do, we promise you are spending way more of your time than is necessary. There are many services available to automate this task. Calendly is a good example, or HubSpot, which we use with our portfolio companies. Start thinking of ways to get your time back to spend on more important matters.
When putting together your calendar, put 15-minute buffers between your meetings. That way, you have less chance of them running into one another and spare yourself the stress of one continuous meeting all day.
There are a number of these providers on the market. We use 1Password, and when we say this is the best money you can spend as a startup, we mean it. Business subscriptions often run around $7.99 a month, enabling you to securely manage all sensitive items from passwords, credentials, and credit cards into a secure encrypted vault. Better yet, it lets you share access in a very granular, as-needed fashion with your team and external parties. So, you’ll never have to send passwords in an email, chat, or text again.
How is this a time saver, you ask? You never have to remember your password because the software fills them out automatically. It's a huge efficiency gain because you avoid the age-old scenario of, "Hey, we need to get into this system to see how it's configured. Oh, I forgot the login credentials." Do yourself a favor, and skip playing the account recovery game whenever you can.
Want to know an easy and low-cost secret that helps retain clients, improve your product, and make more revenue? Listen to what your clients are saying. It's much easier and cheaper to keep a customer than to get a new one. So, while you’re out there chasing new revenue, keep a pulse on what your current clients want and need, what they like and dislike, and what’s working for them and what’s not.
Even as you're starting and working hard to get new customers, set aside time weekly, monthly, or whatever works for your business to meet with your current customers. Check-in, see how the product's working and how they're using it because it might be different than what you expected. And all you have to do is listen. Once you’ve heard them, take their feedback to your product management, marketing, and sales teams so everyone can work together to either tweak the marketing message or evolve the sales deck and pitch.
And when it comes to your original customers, give them the white glove experience. Go above and beyond and ensure the product gets implemented correctly, because they found value in what you’re selling. And that will lead to sales expansion, a higher renewal rate, and references.
Ever find yourself talking to a customer support rep, and they ask you a question like, "How likely would you recommend this product, tool, or service to your friend?" Then you answer with a number on a scale from 1 to 10, 10 being most likely, and 1 being the least. That’s how companies calculate their NPS or net promoter score. It’s a great way to gauge whether or not people like your product.
When you’re starting off, the best way to assess your business’ NPS is by surveying your customers annually. Include your NPS effort with a regular customer survey to avoid annoying your clientele with too many requests. And like with most things we’ve covered, there are many great tools that can help you with this, like SurveyMonkey or GetFeedback.
And don’t forget, once you’ve conducted your survey and gathered research, do something with it. We see so many companies do the customer survey only to let it sit on the shelf, and then they wonder why customers don't renew or aren’t happy.
Talk to your prospects and customers to understand their pain points. If you don’t, you’ll have a product that won’t sell well because, more than likely, it won’t fix an existing problem. Learning what your target market cares about, what they need, and the obstacles in their way is how you build solutions that people want.
Founders often lose sight of their customer’s needs by getting too involved with the product itself. They fall in love with the features and functions. But what they often forget is to step back and ask, “What problem am I solving?” They usually know the answer, but when they start selling it, either on a demo or a pitch, all they can talk about is a feature, feature, feature, function, function, function. Don’t lose sight of the forest for the function trees.
Don’t lose sight of the forest for the function trees. If you can understand three to four problems you're solving and turn those into value points, you’ll have a much easier time explaining and selling your product.
Almost every organization has disparate email systems for different purposes. There's the corporate email on Google Workspace, Office 365, or something similar for communication between coworkers and outside parties. There’s a marketing email account on MailChimp or Square and a transactional email account for billing, password changes, and other administrative tasks. And unless you have all your systems set up perfectly, you risk your emails getting blacklisted, undelivered, or silently falling into junk folders.
We solve this problem by implementing email protocols. We use DMARC monitoring, which allows you to put a DNS record in place, giving you observability into what's happening to your emails in the field. When we do this with portfolio companies we onboard, we always find problems. And all of a sudden, they go, "Oh my gosh. I've been sending out marketing emails, and I had no idea that it was a 50/50 chance that they were getting into inboxes."
Remember that 10% of your efforts will result in 90% of your wins, and that can manifest in many ways. For example, if you have a 1,500-page website, odds are 20 of your pages will get 50% of your views. If you're advertising, you might see that 20% of your ads produce 80% of your leads. Maybe you're present on ten social media channels, but only one of them is where people talk to you.
So, don’t put too much effort into filling in gaps that don't need it. You’ll spend more time fixing weaknesses rather than playing to your strengths.
If you're good at something, focus on getting better at it instead of focusing on your weaknesses and trying to strengthen those. You can always bring in someone else to compensate for the skills you lack. In other words, if you’re the Michael Jordan of your organization, you need to play basketball and be on the court as much as possible. Don’t quit the NBA after winning three championships back-to-back to play baseball for a year.
Data integrity is an investment that can easily fall by the wayside. We talked earlier about how the average startup spends 10-15% of their gross revenue on marketing, and high-growth startups are looking at 40-60%. You've got to be able to trust your data and spend your money wisely to compete with companies that are throwing that kind of investment at their marketing. So be smarter and use analytics to your advantage.
As technologists, software engineers, etc., we tend to want to try the cool new thing and have the cool new toy. And there are cases where that may be good, but the thing is, boring is good. Use battle-tested, simple, widely-understood technologies. You won’t regret it.
Many early-stage companies get overwhelmed by the messy process of building their MVP. And at some point, almost inevitably, someone will say, "Look, this is all over the place. It's too hard to maintain. Let's throw it all out and start over." And that's where you should stop, drop and roll because in almost every case, those efforts were valuable at some level. You'll never be able to replicate all of the business logic, all the blood, sweat, and tears that went into it, no matter how messy it was.