I’ve had a few requests to address specific topics since I started GNB. This one came in a comment on another post:
I have often thought of starting a company but the unknowns around sales and business development have kept me from doing so. My background is in product management and delivery. I like focusing on customer needs with an agile approach; it fits with my view that IT (software products and projects specifically) exist to support the business. So, I would like to hear how you got your first customer, your second customer, etc. and how you handled the challenges of early business development.
I’m happy to tell the specific story of our first few sales, but first I want to cover some important context for sales in software development companies.
1. They require very little capital. Innovation, creativity and production come from people, not equipment. The largest single commitment you’ll need to make (a lease on space) can even be deferred until the company is more established.
2. A high-touch sales process is mandatory. You’re in business the moment you get a single person to trust you to deliver value. As the founder, you can and indeed must do this yourself. You need to leverage your own abilities, character and reputation to sell your services.
3. The business scales linearly. Linear growth is usually seen as a major downside of service businesses, however in startup mode, it’s a great strength. You can grow your company organically as you grow your ability to sell.
In a nutshell, you don’t need money, you can be your own salesperson, and you can start small. Taken together, these factors significantly reduce the hurdle of business development compared to some types of firms.
Our first sale was to Burke Porter Machinery. I knew their director of engineering from having taught him in the grad program while I was a professor at Grand Valley State University. He had both the wisdom and the guts (thanks, Ralph) to hire our brand new company to build the client for their next generation end-of-line roll tester. Roll testers perform the final validation of new cars in automotive assembly plants. If a vendor takes an assembly plant offline for any reason, the contractual fines can be huge, as in $10,000 per minute of downtime. Therefore, the stakes were high when it came to developing the next generation of Burke Porter’s flagship product line. Happily, the trust Ralph placed in me was sound and we delivered a product that to this day is running in assembly plants all over the world. I’m guessing I earned Ralph’s trust through personal integrity, technical legitimacy, sound reasoning, and an absolute commitment to making the project a success.
The Burke Porter project kept us busy for about nine months. That was enough time to begin networking, register our company on a few developer lists, and put a simple marketing website together. In hindsight, I didn’t use this time as effectively as I should have.
Our second sale was to Valley City Linen. VCL hired us to build a video driver for OpenStep (thanks, Tim). I knew Tim from having done some consulting and development work for VCL while still a professor.
Our third sale was the first to have no prior connection to me personally. MTR Enterprises (thanks, Dave) hired us to complete an eCommerce project they started with a free-lance developer. Dave got our name from Sun’s Registered Java Developer program.
I guess every entrepreneur has an early biz dev story that’s somewhat idiomatic. But what I see in mine is consistent with the three points I raised above. It didn’t require capital to make my first sale. I could manage organic growth on both the sales and capacity sides. I could exploit my own reputation and skills as a technical practitioner. I focused like crazy on that first sale, then the second, then the third, and pushed for a long time on the heavy wheel of simultaneously gaining customers and completing projects successfully. Not at all easy, but all within my own personal powers and reach.
- Atomic Ownership, Part 5: Distributions - May 1, 2019
- Atomic Ownership, Part 4: Financing employee ownership - April 4, 2019
- Atomic Ownership, Part 3: Valuation - January 2, 2019
- Atomic’s purpose: to be a company where work matters - November 5, 2018
- Elevating & distributing “glue work” flows out of our core principles - October 18, 2018