Launching a new software startup can be an exciting experience, brimming with the prospect of success, but the cold-hearted truth is that most of them never survive to the 18-24 month mark. Here I am at 53 years old trying to do this exact thing, make it beyond this critical 18-month survival point.
In my 30’s I wish I had known about these 5 things because I think it would have allowed me to have more success in my first few years. The initial months can make or break a startup, and determining the right focus can be the most vital aspect. The following 5 checkpoints need special attention for a new software startup have the best chances for long-term success.
Creating and rolling out a product to the market that lacks modern day demand is a common problem for software startups. It is normal for founders to become overly affectionate for their ideas without knowing if customers are actually willing to buy what they are selling – trust me I’ve been here before!
Avoid this mistake by:
Doing high level market research at the onset to determine the audience you want to target and their needs – every new software startup has to do this. Speak with potential customers at the start through engagement surveys, interviews and beta launch options. Create a MVP / Minimum Viable Product and build upon feedback and not assumptions. Never just focus on adding features, rather aim to sustain your business and meet product market fit.
Startups run out of money frequently, partly due to an inability to secure finances. Here is the catch, without sustainable funding, these ideas, no matter how promising, are sure to fizzle out. The primary objective of these startups, whether self financed – bootstrapped – or backed by a loan, should be to devise some sort of clear monetary strategy.
Main steps to foster financial well being:
Estimate development, marketing, operational, and even personnel spending as accurately as possible. Try to avoid unneeded spending during the early stages of the startup and try to focus on the burn rates instead. I did not do a great job at this during my first startup but I did have a lot of great company branded clothing!
Establish a revenue model from subscriptions, licensing, or alternative monetization solutions as soon as possible. Appropriately planning financially will ensure the startup survives the initial growth stage without running out of resources. This second step in my opinion is the hardest and most new startups that fail because they do run out of operating cash. Here is a link to a great blog post that lists out the 10 best tech blogs for new software startups to follow.
No matter how great the product is, if no one uses it, then the value of the product is zero. This means that the startup should now make it a priority to focus on acquiring customers but also retaining them at the same time. This is one area I think I did well throughout my career. I always tried to give the best possible client and partner support and that allowed me to keep clients probably 3-4 times longer than industry average.
Steps to create a satisfied client:
Make sure to provide the best customer support so that these clients are satisfied.
Digital marketing techniques such as content marketing, social media, and SEO should be focused on to grab the attention of potential customers.
Current happy clients should be used to promote the startup through word-of-mouth and testimonials.
Provide perks such as discounts or free trials for the first round of clients.
Keeping customers loyal certainly costs less than having to attract new ones at every turn, which is why long-standing relationships with customers are important.
The strength of a company partially relies on the strength of the team behind it. Many early stage companies neglect competency and adaptability while onboarding which is why they end up failing at an alarming rate. I was very fortunate with my first software startup to have an awesome core team. They hung in there during all the bad times before the good times started to happen. I would have failed without my core 5 – Steve, Keith, Alex, Randall and George!
In building your winning team, consider:
Recruiting specialists who are excited about the target goals and are willing to fulfill various roles – they need to be all-in. Instilling and encouraging a progressive and open minded culture that allows employees to embrace changes. Don’t over hire! Hiring at a very slow rate to avoid the commonly known ‘hiring in haste’.
A well-rounded team can weather challenges head on, pivot strategically when necessary and move the company towards growth and success. Joining a young startup company is not for everyone because there is a large amount of uncertainty and potentially financial risks.
It is extremely common for a lot of new businesses to scale their operations the moment they secure funding without a detailed plan. It is essential to address sustainable scaling.
To ensure scalability consider:
Building best practices and adding automation that will help scale growth. Actively monitoring changes in the industry and business landscape and adjust accordingly, if needed. Know what particular areas the company should target in the next two to three years. Have several product roadmaps that build upon one again will help teams align and lead to more successful product launches.
Startups that plan for beyond the first year and half mark and strive for sustainable growth are far more likely to be successful in the long run.
The first one and a half years of a new software startup are highly pivotal. By giving priority to market validation, consistent funding, customer acquisition and retention, a strong team, and growth prospects, a startup can set itself up for success. While it is clear that some constraints are unavoidable, having the correct approach increases the possibility of creating a resilient and successful business. Best of luck to all of the startups that are on this journey now! Click here to see some of our other blogs.
