In this guest blog post, Designli CEO/Co-Founder and friend of the Founder Institute Keith Shields outlines six of the most crucial steps that entrepreneurs must take to build winning software startup, regardless of which stage of the company they're at.
There’s never been a better time to build a software startup — whether it’s SaaS or custom software. Technology, and the software that connects us to it, is becoming an integral part of our lives. In both the business world and in the consumer space, there are opportunities for innovation.
But while the landscape is wide open for new startups, there’s still a high failure rate for software startups. We’ve had our own ups and downs over the five years since Designli launched, and we’ve seen the ups and downs of the dozens of other software companies that we’ve helped start up. During this time, we’ve learned a few things about what moves software companies forward. Here are our tips.
1. Stay Focused on Value, Not Features
It’s very tempting to build out all your ideas for features. You KNOW your users would love them, right? But until you’ve conducted extensive research and user testing, you only THINK you know what they want. It’s better to build an MVP (minimum viable product) or a prototype with only the most valuable features first so you have something to test and get feedback on.
Stay focused on the value you’re providing to your users. What problem are you trying to solve? In what way are you making their lives easier/better/more fulfilled? You can always add more features later on, once you’ve established a solid cash flow.
Related, your marketing needs to focus on the benefits your software provides — not the features it boasts. As you’re crafting marketing and advertising copy, always ask yourself, “So what?” Why should users care? How does each feature provide value to the users?
2. Keep It Simple
The user experience is everything. No matter how great your idea is or how significant the problem that you solve, inconvenience will keep people from using your product. It’s important to remember that the software has to be easy for your users — not just you and your team.
You’ll want to make sure you fully understand the specific users you’re targeting. Where will they be using your product? When will they be using it? What else will they be doing when they’re using it? Is the software easy to operate in the environment your users will be in? What other factors come into play when people are using the software? Does it integrate easily with the other tools people are using? A UX that people will enjoy goes beyond design best practices. It becomes a seamless part of the users’ everyday lives.
3. Lower the Barrier to Entry
It’s extremely difficult to get momentum initially. Most people aren’t chomping at the bit to spend time learning a new software and spending money to implement it. Create a strategy for how you’ll get those first customers on board. Consider a free offering, free upgrades, or a reduced rate for beta users. You can also create incentives for users who bring friends on board.
Another way to lower the barrier to entry for a SaaS product is to make sure you’re offering a variety of subscription levels that will cover the needs that different user groups have without requiring them to pay for features they don’t need.
4. Continually Test, Measure, and Improve
The world is moving quickly. Technology changes, people’s behavioral patterns change, new factors influence users’ needs. You can’t afford to become complacent, thinking that your product has arrived. Always aim for improvement, keeping an eye on how things are changing and how your product needs to respond and change as a result. You can’t change what you don’t measure, so create a periodic schedule for testing and tracking.
If you’re tracking key metrics, you’ll know what features are no longer resonating with users, which new features they need, and what new functionality the software needs in order to keep up with users’ environments. This information will also help you improve your marketing, since you’ll know what’s most important to users and precisely how they define the value they’re getting from your product.
5. Stay Open
Software that becomes successful integrates easily with other tools. You need a flexible API that’s easy to use. The simpler it is for customers to integrate your software with the other software they use, the higher likelihood that they’ll adopt it for the long haul.
Another benefit of open APIs is that they provide a built-in opportunity for new revenue streams. Think broadly, and consider how you could craft revenue funnels from referrals, resales, and other strategies.
6. Don’t Go It Alone
This tip is perhaps the most important. You have to get the other pieces right, but without support behind you to prop you up on the tough days and to provide experienced advice at those forks in the road when you aren’t sure what direction to turn, success will be tough to come by. Find folks that have been where you are who will cheer for you and mentor you.
If you have funding, you’ll likely have guidance offered as part of the deal. But if you’re bootstrapping it, you’ll need to find your own. In most cities, there are local resources for startups and entrepreneurs. Check into your local Small Business Development Center for general business advice, and look for startup communities, coworking spaces, and networking events to find like-minded people who have experience doing what you’re trying to do. Think outside the box, since you’ll often find mentors in unlikely places, such as hobby meetups.
If you know that your product will genuinely make a difference in the lives of a target group of users, don’t give up. You may have to change directions or take a path you weren’t originally expecting to, but if you put these tips into practice, you’ll find success to be closer than you might think.
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