Whether you’re a SaaS start-up that’s had VC investment or bootstrapped by its founders you’ll always have those ups-and-downs; particularly in the early days. But whether it takes you 6 months, 2 years, 5 years or however long to reach that Eureka moment where everything takes off you’ll still hit a point where growth which has been racing ahead 15-20% month-on-month suddenly out of the blue starts to slow. Or worse simply stalls and starts to decline.
In your mind at least you’re doing nothing different. The product works as well as ever, support is performing well, and marketing strategy hasn’t changed. Churn (and indicator that something is wrong somewhere) hasn’t significantly increased either. And yet something is very clearly wrong.
Let’s be clear it’s not an issue unique to bootstrapped start-ups, or those with seed or Series A funding. This happens across the spectrum and company size – even mythical unicorn status – does not make you immune from this happening.
Depending on your finance set-up, whether you’re bootstrapped or raising money, will mean that this impacts you in different ways. But if you’re on that fundraising merry-go-round of always looking for the next investment round to keep growing and extend your runway, then growth suddenly grinding to a halt as you go to meet investors (whether existing or new), or worse still zero-cash-date just a few months away, makes this a pretty unpleasant place to be.
So when the proverbial hits the fan you’ll find that start-up founders and managers tend to fall in one of two extreme camps.
The first are those who rely on everything having worked well to date. It’s just a case of sitting tight and doing more of the same. Rinse and repeat what has delivered in the past. They’ll do this because by keeping calm and doing the same also means that you don’t spread fear amongst the team, and you don’t end up making knee-jerk decisions.
The second camp are those who when they see growth stop suddenly go absolutely crazy. Everyone in the company knows what’s going on. Everyone from the intern, through to the product team and marketing director up to to fellow C-board members. Everyone knows what is going on and just how bad things are.
Clearly there needs to be some balance but overall I would say the second camp have it right. Because in any SaaS start-up where it’s about growth, growth, growth a failure to get to the bottom of the growth freeze and rectify it only means one thing. If you’re in a fundraising round or near zero-cash-date you need super-quick reactions to recover this and pull up out of the dive before you hit the ground.
Remember the financial regulator often reminds us that a fund manager’s previous performance is no guarantee of future success. This equally applies to your start-up. Don’t assume that just sitting tight and applying tried-and-tested strategy will necessarily work again. You as a start-up CEO need to determine ASAP what has gone wrong and how to fix it.
So what are our 3 top tips when there’s a SaaS iceberg ahead?
#1 Make Aware & Focus
A key reason why the second approach is better is that you need to get people focused on the issue. If you don’t scream and stamp your feet your team will not realise just how important this issue is. They need to know so they put their full focus into investigating what has gone wrong, rather than getting caught up on other quite frankly less important things.
#2 The Right People
I’m pretty sure you won’t have any idea which area of the business is causing this free-fall in growth. You need to have the right person from each area of the business fully across this and have them taking responsibility for their teams to investigate fully in their own area of business expertise. They know their area best – get them to investigate. Getting the whole company involved, led by the right people, is not only good for ensuring that sense of urgency and focus, but it’s great for transparency and trust (no cover-ups). It also means you’ve got as many boots on the ground working to get to the bottom of the problem.
#3 Cast The Net Wide. Keep an Open Mind & Be Methodical
Getting as many people working on the issue not only brings as much resource and expertise to bear, but it means you’re able to work across a whole wide range of potential issues quickly.
Do look at metrics and analytics to try and understand when growth stalled, and look for patterns, anything that may have changed around then. Has the Google algorithm changed? Did we push a new code update live? Has this impacted all territories or just some? Is it all categories of users or just a particular sub-set? Is it all paid plans or just a particular tier? Have your competitors also been hit or indeed are they doing something new that is hitting you? All of this is great but most of all keep an open mind. Do not make presumptions.
If you follow the above hopefully with a bit of luck and plenty of judgement you’ll be able to find out the cause of the issue and start making those changes to get growth heading in an upward trajectory again. But if you can’t find the root cause (or you do indeed find the issue but getting growth going again is a battle that can’t be won), work out how long you’ve got before it’s time to turn off the lights. Think – what are our alternatives? Do you have time to line up the company for sale without it being a desperate fire sale (if indeed a buyer can be found)? Can you pivot the business and take it in another direction? Let’s just hope if you follow the above you’ll never have to ask yourself those questions and consider the plan B.
James Barnes, Co-Founder StatusCake.com – Uptime Monitoring
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