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The $1M ARR is about the point that I'm at today with my startup. It's three founders which own 90% equity, and 3 small investors which own the other 10% split

The $1M ARR is about the point that I'm at today with my startup. It's three founders which own 90% equity, and 3 small investors which own the other 10% split between them. We managed to build it up with relatively small capital investment from the founders, but in our industry there is no getting away with not hiring any employees for a long time, as it's not simply SaaS, but SaaS + "services" (services meaning doing a portion of the work for our clients within our software rather than them hiring people to do it themselves). Our software is B2B, and the sales cycle is frustratingly drawn out and expensive with demos, in person meetings, etc. That was something I hoped we could get away from when we started, but seeing the sales cycle first hand, I can't see a way to make it much cheaper while still growing. The people at these large companies which make the decisions really like in-person meetings, and if your competitors are willing to and you aren't...not a good way to try and save money. The up side to that, is each customer brings in a lot of revenue. We've noticed that a sale can take anywhere from 6 months to 1 year to go through. I wouldn't change anything about the slow growth we went for rather than trying to ramp up and get as many clients as possible as quickly as possible. It let us focus on the product a lot more, and make it efficient for our users (and thus our internal employees providing the "service" portion of our product). We'll continue slowly adding clients as we build out our product more, we want to keep customer satisfaction high so we don't want to spread ourselves too thin.

Blackstone4 9y ago
Thanks for this! I've got an idea for a financial data B2B business that I am going to go full-time on later this year. The idea of a long drawn out sales cycle worries me as I'm only looking at an initial product with a $10k p.a. price point. With that I can't necessarily afford to have sales people out in the field so they would have to be in-house. I imagine clients would want demos etc. so mostly Webex
- ThrustVectoring 9y ago
  There's a pretty natural hole in the market, between the "minnows" and "whales". Either your service skirts under the "needs review and approval" limit and you can get by with casting a wide net, or it's a serious purchase that needs to pay for the sales team that proves that it's a good idea for them. Also relevant: your first customer is going to be the hardest to get. There's a "whoops, I'm accidentally a consulting shop" trap here, but getting the customer first and productizing the solution you make for them might be a good approach.
- Tostino 9y ago
  Yeah, that's actually the same general space my business is in. We do Trade Promotion Management for manufacturers, which means managing their "contracts" and "claims (rebates)", and ensuring that they don't pay out more money than is actually owed. Our price point is considerably higher than yours, and requires buy-in from every level at these companies for them to go for our product. We don't have a dedicated sales person at this point, but that is a good portion of what one of the three founders spends his time on. We were initially trying to position our product at a much cheaper price point for just the software with us providing none of the "service" side of things, to market to smaller customers which are currently managing everything with Excel, but we found after talking to these companies that they are just as much of a pain to try and sell to as the bigger guys, and required just about as much effort, even if the revenue it would bring in was just a fraction of what a bigger client would bring in. That caused us to refocus on targeting the larger customers for now at least. We use Webex heavily for demos and everything, but with a sales cycle stretching into a year, every single client we've got has taken us going out there for at least one in-person demo with the higher ups, and an in-person training for their users after the sale. It adds up, but for a very complicated software that they tightly integrate into their business, it's necessary for them to feel all warm and fuzzy, have a face to a name, and feel like they are not going to be left high and dry if they have any issues. The effort put in during, and after the sale is really necessary to ensure all those points are hit.

Blackstone4 9y ago

Thanks for this! I've got an idea for a financial data B2B business that I am going to go full-time on later this year. The idea of a long drawn out sales cycle worries me as I'm only looking at an initial product with a $10k p.a. price point. With that I can't necessarily afford to have sales people out in the field so they would have to be in-house. I imagine clients would want demos etc. so mostly Webex

ThrustVectoring 9y ago
There's a pretty natural hole in the market, between the "minnows" and "whales". Either your service skirts under the "needs review and approval" limit and you can get by with casting a wide net, or it's a serious purchase that needs to pay for the sales team that proves that it's a good idea for them. Also relevant: your first customer is going to be the hardest to get. There's a "whoops, I'm accidentally a consulting shop" trap here, but getting the customer first and productizing the solution you make for them might be a good approach.
Tostino 9y ago
Yeah, that's actually the same general space my business is in. We do Trade Promotion Management for manufacturers, which means managing their "contracts" and "claims (rebates)", and ensuring that they don't pay out more money than is actually owed. Our price point is considerably higher than yours, and requires buy-in from every level at these companies for them to go for our product. We don't have a dedicated sales person at this point, but that is a good portion of what one of the three founders spends his time on. We were initially trying to position our product at a much cheaper price point for just the software with us providing none of the "service" side of things, to market to smaller customers which are currently managing everything with Excel, but we found after talking to these companies that they are just as much of a pain to try and sell to as the bigger guys, and required just about as much effort, even if the revenue it would bring in was just a fraction of what a bigger client would bring in. That caused us to refocus on targeting the larger customers for now at least. We use Webex heavily for demos and everything, but with a sales cycle stretching into a year, every single client we've got has taken us going out there for at least one in-person demo with the higher ups, and an in-person training for their users after the sale. It adds up, but for a very complicated software that they tightly integrate into their business, it's necessary for them to feel all warm and fuzzy, have a face to a name, and feel like they are not going to be left high and dry if they have any issues. The effort put in during, and after the sale is really necessary to ensure all those points are hit.