Selling Your Product

Mark Suster has an excellent series going on sales. Sales is an undervalued piece of entrepreneurship.  Many times technical founders think they built a better mousetrap and it will sell itself.

Yesterday, I was up in Madison, Wisconsin talking about the state of angel financing and entrepreneurial ecosystems.  I visited a co-working space up there, and spoke with Jon Eckhardt of Gener8tor.  Madison has a nice burgeoning ecosystem of startups.  Someday, it could be similar to Boulder, CO.

It was a great trip but while I was in the co-working space I talked to the founders about space management and operations.  I introduced them to the Desktime App.  When they saw it, they listed there space and became paying customers immediately.  Desktime solved a huge pain point for them.

Sales and creating lifetime customers adds a tremendous amount to the business.  It’s the best form of capital a business can get.  Revenue validates value.  Revenue is also a heckuva lot cheaper than bank debt or venture capital.

A Chicago payments company Braintree bootstrapped and then used revenue to grow for the first four years of its life.  They took a VC round in 2011, and then again in 2012. They are now a blow out company.

When talking to founders, I always ask about how they are organizing their sales and marketing efforts.  Sometimes sales cycles are long and the business needs working capital to sustain itself. Sometimes sales are quick, and not repeatable, so there is a constant quest for more customers.   Sometimes businesses are so good, they are growing so fast the existing infrastructure and capital can’t keep the business afloat. In those cases you might need some outside capital.

But before you go for new capital in the business, examine your sales process and see if you can’t generate some money through revenue.  Even if you still need outside revenue, with active sales and revenue numbers, you are liable to get a higher valuation anyway.



Enhanced by Zemanta