It’s estimated that 2 in 10 new startups should survive and thrive, but over 75% of the startups never see their second birthday. Equity investors (including friends and family members) help some of these startups with equity, as they stagger. Fewer than 10% can show enough promise to receive the funding/ capital from private equity sources, or even financial institutions.
If you are an entrepreneurial manager who has reached this milestone, it’s a major achievement; your idea has progressed from an interesting concept to a promising commercial opportunity. You’ve probably demonstrated your product’s potential with a subset of customers, a market segment and now other funders are willing to bet on you.
The challenge becomes how to sell your product and create a sustainable revenue stream so that you can further develop your product offerings, build your infrastructure, repay your funders, and pay yourself. Unfortunately, many startups get stuck at the initial stage because they can’t quite figure out a scalable way to go to market.
Often, this is because they have been founded by amateurs or only passionate entrepreneurs; and sales is not an area of expertise. Or perhaps it’s because the only person who is passionate enough to sell the product is the person who honed the idea. Or people may believe their invention is good enough to sell itself. So sales don’t become a focus of attention until cash starts to burn out.
Figuring out a go-to-market approach is no trivial exercise. It separates the companies that will be successful and sustainable from those that won’t. In our work with startups over the last several years, we’ve heard dozens of questions related to how to start thinking about sales: Should we put together a direct sales force or sell indirectly through others? If we sell directly, should we organize salespeople by market, industry, geographical location, company size, or some other principle?
Will our salespeople require technical support and work in teams? Should we bundle maintenance and other services into our sales approach, or sell them separately? Can we get our product to market through other channels, such as social media or advertising? What about pricing? The list goes on.
The problem is that these are fundamentally the wrong questions to begin with. They all focus on the perspective of the startup and the available resources, but startups need to take their customers’ perspective to understand how to approach the market. They should think about what the customers are trying to achieve and what problems they need to solve, and then think about how the product can help them be successful.
For example, if a five-year-old agricultural processing company wants to have its sales team do a better job of selling to large enterprise organizations in the chain. The company could be already breaking even operationally after it has been capitalized. But despite some successes at the start, the salespeople could fail to expand their deals from “interesting trials” into ongoing revenue streams.
Many times, After talking to the entrepreneurs, you will realize that they have a lot about the manufacturing protocols but much less about the customer problems and pain points that the business was meant to address. Then, better for the ultimate solution is to focus on the business challenges these potential customers are facing. Once they are developed, the salespeople shall be able to identify many opportunities.
Well, one strategic objective of the customer could be growing the delivery of the merchandise. Startups such as Safeboda, and Uber/bolt, could help such customers reduce operational costs, and could be incorporated into the customer’s computer. There could be a need to partner with a key customer to go to the market, rather than selling directly to other customers. In this way, their “customer” could be an important part of the GTM.
If a startup desires to accelerate revenue growth, it should start by identifying a small number of very specific customers; (e.g. corporates with specific characteristics). Then put yourself in the shoes of these customers by thinking about their issues and by talking to them not about your product but about their challenges and pain points. for example, suggests that you talk to dozens of potential users as part of a “customer business development” process.
Well, we can begin experimenting with a go-to-market approach, with the expectation that we will continue refining and changing it based on experience and further insights. Figuring out an approach for going to market is one of the toughest things for a startup to do. But without understanding the customer’s issues, it’s almost impossible to get it right.
Editor’s Note: This article was written by Michael Jjingo; the General Manager of Commercial Banking at Centenary Bank, and provided to PC Tech Magazine for publishing.