Want to Sell to Startups? Get Inside The Entrepreneurial Mind

We were four IT consultant neophytes attempting to launch a services firm near the peak of the dot-com boom. In hindsight, the endeavor was a failure even before we paid a lawyer $2,500 for a solid operating agreement. But we did have one thing going for us: a relatively small number of technologies to wrangle. Daily challenges generally limited themselves to price-point comparisons for a variety of commodity providers, including cellular and internet service, and the cheapest home-brew production servers we dared build and charge our clients to maintain. 

Today’s nascent entrepreneurs face an entirely more complex ecosystem. An even bigger problem? Few service providers really understand the problems true small businesses face.

I work with startups every day, and I’ve learned a few things. Entrepreneurs don’t care about industry buzzwords or bleeding-edge technology. They care about success, which hinges on generating customer value and identifying more people who want their products and services. This is evidenced by the increasing viability and popularity of the Business Model Canvas, a more efficient kickstarter to entrepreneurial ventures than a traditional business plan.  

Entrepreneurs focus like lasers on the value they create and who wants to buy what they’re selling. They figure the rest (channels, infrastructure, finances and resources) will fall into place in short order. This single-minded focus on products and services is one of many reasons startups are a hard sell when you pitch new technologies — even those products and services that may in fact aid their business in material ways.{ad}

It’s not that they don’t care. It’s that you’re not speaking their language. Here are a few ways to break through.

Address the Opportunity Cost With Demos, Not Trials

The last thing any entrepreneur has too much of is time. An argument could be made for a pervasive lack of capital as well, but generally, with time comes ideas, and ideas spawn the creative destruction that eventually delivers a growing commercial enterprise. No amount of capital can substitute for a great idea. 

However, evaluating the opportunity cost of technology is difficult for the entrepreneur. Small shops often cannot survive a misguided technology deployment, like their larger cousins. Time wasted working out kinks and migrating data into a solution that may or may not work isn’t an option for the cash-strapped startup. Yet they are keenly aware there is probably a better and more efficient way to skin their cat-like technology challenges.

The current trend toward subscription-based services rather than term-licensed or version-limited software is a win for these companies. Subscriptions offer the value of scalable, enterprise-grade solutions at a cost that is sustainable through the fits and starts of business growth and stability. For the small business, it becomes a much easier decision to …

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implement new services and technologies when they can trade off the fixed costs and time spent acquiring them for monthly or annual charges. Toss in the ability to occasionally lock in discounts on annual or longer subscriptions and the small business will be much more open to evaluating and adopting new services and technologies. 

This is where things get less intuitive. Test drives and free 30- or 60-day trials sound great to entrepreneurs. They remove the explicit risk of having to pay for a solution prior to implementation. The problem is, a trial installation might sink to the bottom of the team’s to do list, since no capital or long-term commitment is at stake.{ad}

Well-planned demos, on the other hand, provide a visceral experience of the technology and put you and your team front and center in addressing the entrepreneur’s real fears, in real time. You have the team’s full attention. Build in plenty of time for the discussion necessary to run through most if not all the permutations at issue for a given client.

A side benefit: You limit the resources consumed by drawn-out trial phases that may never translate into sales, yet require resources to sustain.

Think Perception of Value

The primary objective of any viable small business is to continually add to and recognize income from the value they provide their customers. Being approached by a salesperson trying to fix phantom problems only reinforces the entrepreneur’s natural boot-strap attitude toward technology. Why upgrade something that continues to function and is at least relatively easy to maintain?

I have no doubt a large portion of the global economy runs on custom Excel spreadsheets created by that temp employee who graduated high school two years ago and now works for SpaceX.

It may also be difficult for a small business to find a level of service or entry point to technology systems — particularly as they are often not well-versed in accounting for the productivity and efficiency gains you promise, in a fiscal sense. The several hundred dollars they are asked to pay for a new service is not easy to account for in entrepreneurial language. Any ROI calculation you present must clearly explain the value created and how it will lead to an increased premium to be captured through higher margins or improved efficiency, thereby reducing costs. 

Being able to articulate the benefit of a given technology with a realistic analysis that includes installation, maintenance and training is imperative. Evaluate the startup’s business needs and present your solution in plain language and terms.

Speaking to costs alone only stands to diminish your own value premium rather than …

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… supporting your prices. One SaaS company I recently worked with stated upfront that it wouldn’t discount its offerings to make a sale. What it did do is actively engage in helping entrepreneurs account for the expense of the product in terms of its effect on the business’ revenue and costs. To support the no-discount position, its solutions are presented with real examples of increased efficiency and often supported with a demonstration in a client’s environment.

Remember, Data Is Also Money

I don’t have a horse in the accounting software race. But far and away the most horror stories I hear from businesses involve porting data from one accounting suite to another. The same issue extends to everything from supply-chain management to manufacturing operations.

Data migration, and what I would term “data longevity,” are at the very least a nuisance issue for small businesses. Considering that a fair number of SMBs will remain small over their lifetimes, moving, porting or losing data as a result of a switch in technology is a real fear. Thus, entrepreneurs will respond well to flexible reporting and data formats. Don’t try to lock them in.

Many small businesses have the aforementioned “boot strap” IT shop making use of custom and often antiquated reporting systems. Asking an SMB to rework existing processes and data formats to accommodate your service is a huge imposition. It’s a drain on productivity and a turnoff when evaluating new technology.{ad}

In many cases, manipulating any data you provide to bring it into a format the entrepreneur is able to manipulate on her own is well worth doing. One SaaS company I spoke with that provides logistic management services says it often gets requests during sales calls to provide data in different formats. The sales team has made a practice of delivering standard out-of-the-box data reporting as designed, but with a few accommodating data reports thrown in upon the request of individual clients, often at the close of a new sale. 

The portability of data can also have significant psychological value to entrepreneurs. Support for a variety of cloud storage and mobile-device platforms are well worth the development cost. Small businesses are all over the map with regard to IT environments, often adding support for multiple devices at the whim of their employees. 

Remember: Most of the technology details that bedevil startups are problems for all businesses regardless of size — think reliable domain and web hosting services, basic network security, storage/backup solutions and kludged together cloud-based collaborative tools built from freely available services. In a sense, the underpinnings of most small-business IT systems are layer upon layer of stuff that worked, cost short money, and that through sheer effort can be maintained by the entrepreneur’s own knowledge base.

Alleviate that pain and you’ll have a customer for life.

Gregory Yerxa owns a consulting firm in Boise, Idaho, specializing in improving management and operations through technology integration. Previously he was an associate technology editor for Network Computing Magazine, responsible for internet traffic management and office productivity beats and owned an IT consulting business in Madison, Wisconsin. Currently he is a lender relations specialist with the U.S. Small Business Administration.