Today I had a software demo with a major client in Miami Dade. As I reflect on how things went I think I could have performed much better. My 2 biggest struggles during the presentation were:
Not communicating effectively – I sometimes sound confusing when delivering an answer on items I either can’t speak to or about. For example, someone asked me how much the software cost for one unit? This should be a straight answer but if you are selling a number of units on a massive scale the cost can vary considerably. I can try to verbalize that (and I did) but it comes across as dodging the question. Instead of moving past my answer, I try to answer his or her question in a different way or from a different angle. This creates more confusion and anxiety for my potential client and I.
Not trying to establish a good relationship – I am currently reading the book (actually listening to it) SPIN Selling by Neil Rackham. Mr. Rackham does a good job breaking out the sales cycle and touches upon how to increase the perceived value of your offering in big sales. He goes on to state that as a product’s price increases the buyer’s emotion on making a decision increases as well. For example, if you need an overhead projector that cost $100, the emotional decision to buy this item is almost irrelevant. The overhead projector fits the bill, is a low cost item and no one will judge you for it. However, if you are buying computers for the whole company the decision to make this purchase is more complex. If the buyer in this example makes the wrong choice with respect to the computer purchase he or she will be exposed, judged or even fired. Therefore, there is a lot more to think about (or feel about it) when there are consequences at stake. This is why a good sales person will try to build a relationship early on to make this person feel comfortable when making a big purchase like the example above.
Today’s post is a short one but I think this is an important topic to think about. At the very least, being aware of these issues in a selling scenario is a good starting point and can help you sell more in your environment. At the end of the day, I really like the idea of building a relationship with a buyer or client regardless of the price tag. Coming across as a sales person just trying to close the deal in my opinion is counter productive. I need to work on establishing these good relationships early on and I will work on that moving forward. 🙂
Having been in the software business now for about 12 years I have learned a thing or two about the industry. Today, I would like to touch upon the difference between 2 models of running a software business, which are: 1) building customized software for clients or 2) operating a Sell as a Service (SaaS) software company. A customized software model is pretty straightforward; it means building software for a client where the application is unique and specific to the business. Conversely, a SaaS model is basically building a product that your company sells to a particular market and this same audience pays a monthly fee to use the product. Both models have their distinct advantages and disadvantages. I have spent years deciding on what is a better business model and what scales a company better. Below I will break down the advantages and disadvantages of both and I will recommend the better option.
CUSTOMIZED SOFTWARE MODEL
Building customized software solutions can be very attractive. There are a couple of advantages, which are:
Revenue – Generally, when you enter into a contract with a client who wants to build something exclusively for the company there is a big price tag associated with the project. We have done work for a large printing company in Miami, FL and the cost of the software and added functionality they want is costly at times because of the complexity and unique nature of their business. Basically, the software is tailored heavily on how they do business and the specific business rules/workflow of that company.
Credibility – If you’ve built a complex enterprise application for a business this may provide a sense of comfort for future potential customers. This can serve as marketing reference too, which can propel your brand and credibility in the industry — if you do a good job of course.
The two advantages listed above are indeed attractive components of running a customized shop but there are more disadvantages with this model in my opinion. These are listed below:
No reusable value – What I mean by this is that you cannot use the solution for another client. The software is so unique and specific to your client that there is no market for it. Therefore, the code base or application has no re-sale value.
More customization – My experience has been that once you build a version 1.0 for a client there will always be more functionality expected. More functionality means even more customization and further down the “customization” rabbit-hole you go.
Difficult to price – I don’t care how long you have been in this industry every new custom project has its own unique functionality that you’ve never addressed before. This may require R & D and some roadblocks before finding a solution. Moreover, determining how much time it will take and how to price that out correctly is very difficult. Trust me, it is!
Risk of termination – This one is big for me. If you are a software firm that builds customized software for a couple of clients then your risk of financial cash-flow may be threatened. For example, if you are a smaller software shop and have 5 big clients and one goes out of business, 20% of your business is now lost. What’s worse is that you now have software that is worthless.
Difficult to grow – Chances are that if you are a software boutique building custom solutions you don’t have that many customers. By “that many” I mean over 10 or so. I mean even at 10 customers with large applications you are a pretty big firm already. Because every new client brings its own challenges and scenarios it’s difficult to grow accordingly. I will say that sometimes the price points are attractive so it may not be such an issue. Still, a SaaS type business can scale and grow a lot faster.
SaaS SOFTWARE MODEL
Building a SaaS business is difficult but has incredible upside if it is received well by your audience or target market. A couple of my recent SaaS favorites are: Intercom and Freshbooks. Some of the main advantages of such a model are:
(Test) Iterate, rinse and repeat– Ah…my favorite of all advantages! Once your product has been properly tested and is ready for live market then it’s a matter of signing up users to use the service. That’s it. You do this over and over again without having to change the code base or application each and every time. In addition, if the system is built correctly, the onboarding process will be automatic and a new user can start using the software immediately.
Sales positioning – Because everyone is on the same platform, this provides the business with great sales positioning. What I mean by this is that you can focus more on selling and not be overwhelmed with new tailor-made request or problem logs from 10 different customers. Instead, you can focus on one product and all development updates are published to the same environment. Again, just to reiterate, this allows the company to be more lean and to shift focus on selling the product over and over again — iterate, rinse and repeat.
Decreased financial risk – With a SaaS model you generally want to sell your product to many users. So take for example that 1,000 users begin to use your product the first month. If there is a %2 churn (attrition) rate or 20 people drop the service at the end of that month you have only lost 2% of your business. There is less financial risk because the collective size of your user community.
Like any business model there are also disadvantages to note:
No usage risk – Because you are building the software for your company there is a risk of your audience not receiving or using the software. Perhaps, the software is missing features or does not work as expected. There is always a risk that the software is problematic and users don’t appreciate the service. This is different than building software for a client because you know you will be paid a certain amount for the project.
There are definitely more granular advantages and disadvantages of each model but this serves as a simple analysis based on my experience. I would certainly recommend a SaaS type software model any day. The upfront labor can be exhaustive and tedious but it’s worth the effort. In my opinion, the better positioned a company is to sell and support an application the better. Then you can really scale and grow the business at a rapid rate. 🙂
Today is billing day, so this means all the invoices that pertain to my business(es) go out to clients. My accounting process is a little sporadic and should be consolidated but as of right now it consists of 2 different accounting systems (Freshbooks and LessAccounting) and a manual process. For 2016, I would like to organize my accounting framework, as accounting can become very messy if not addressed promptly and correctly. My story has to do with my manual accounting process and a payment mix up with one of my clients.
My manual process is to create an invoice as a PDF document and then to send the invoice out as an attachment together with a nice personalized email. In my opinion, this creates a personalized touch and it creates an opportunity to address any issues a client may be facing, etc. As soon as I sent out my email to this one particular client I received a phone call from her stating that there was a problem with payments. She stated to me that they had paid one extra month already and this invoice should be voided. Essentially, she paid for an extra month in error. I keep a pretty tight grip on my books (even though this process is manual) and I abruptly interrupted her to explain my process. A few minutes into immediate response, I suddenly stopped and let her continue on with her explanation. My client communicated to me “X”, “Y” and “Z” reason for the mix up and she recommended I go back and reconcile the accounts to make sure all was correct. After we ended our phone conversation I went back and looked at my books and sure enough she was outstanding one month.
The truth of the matter is that when she started to explain her situation I was initially very frustrated. The key take away with respect to this scenario is to quickly think about how we can make any negative issue into a positive one. From a customer service standpoint if I don’t get paid this month and agree to void this month’s invoice she will be a happy client. Plus, she has been my client now for about 3 years so why not void the invoice regardless? I proceeded to tell my client that this month would be free (mix up or not) and I hope I was able to gain some goodwill. I can tell you she was happy with our discussion and at the end of the day that is the most important thing.
Did I address this issue appropriately? Would you have done the same thing? Please let me know by providing a comment below or emailing me at firstname.lastname@example.org, as I would love to hear how you would have handled this situation.
Trying to make it in this tech world is not easy. It’s a grind. Operating 2 startups and working at a mature business is insane work at times and it’s no coincidence that this leads to complications at my home sometimes. I often ask myself: what it is that I am working towards? Sure, money is a motivator but is it a legacy that I want to leave behind? Is it that I want to show my friends and family that I am successful? I love what I do and I absolutely have a passion for the software space. There is nothing like solving a complicated problem by hacking some code together to make something work. The best part is that you are in full control. Whatever you tell this piece of code to do it will do it. I love that 🙂
Clearly, I enjoy the technology industry. I can tell you I have been through many highs and lows during this business journey but it has been very fulfilling. I have rubbed elbows with some of the finest businessmen in the tech industry and I have worked with Google’s development team in Cambridge, MA. I have also felt demoralized after failed ventures and I have lost money due to poor decisions. However, the inner personal growth experienced during this quest is invaluable and the lessons learned unforgettable. The issue with this type of reflection sometimes is, it is private. Trying to capture and communicate these experiences with family and friends is a difficult task and that is why balance is so important. That is why I am committed to implementing more of a balance in my professional and personal life moving forward.
I have laid out a plan to provide more of this balance mentioned above. I have started to institute 5 strategies on a weekly basis to help balance my life more effectively. They are the following:
I plan out my week on paper every Sunday night. This helps me organize my week better and it helps me start thinking about objectives for the week ahead. The more organized I am the more discretionary time I have because I am not in a reactionary type of state. Nothing really hits me by surprise when I following a strict schedule.
I only stay up late ONCE a week. I used to stay up late multiple days a week and my sleep suffered. I have learned that a good night’s rest is very important and it helps make better decisions the following day. Plus, if I am staying up late often, I am not spending time with family as a result.
I exercise twice a week at a minimum. This is by far the most important change I would like to make for 2016. Health is really important when it relates to business. In my opinion, you not only feel better and are in a better mood but your mind is clearer as well. It also has a downstream effect because you also feel more inclined to eating well.
I’m trying to be more present. I wrote an article about this the other day, which you can find here. I am making an effort to give people more of myself when I am with them. This is especially true with my kids! I am trying to give my wife, children and friends all of my attention. I am trying to be more intentional with my time; if I make a decision to have lunch with someone then my intent is too be there 100% and to listen and communicate with 100% focus.
Checking up on one friend per week. I have to admit that I have fallen out of touch with a lot of friends over the years. I have been so consumed with business and having a family that it’s difficult to make time for friends. When you are trying to make it out there it is difficult to put these issues into perspective. At the end of the day, your connections with friends and family are very important and should be part of a balanced life.
There are a list of other strategies that I would like to implement in my life in 2016 but I think this is okay for now. I have to take incremental steps to create good habits moving forward. I am definitely feeling a little more zen after writing this article, lol. If you have some strategies that you think can help me or someone else please share by leaving a comment below. You can always email me at: email@example.com
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“Be where you need to be, when you need to be there”
Are you always present when you’re somewhere with someone? In this mobile era, it is easy to get lost or distracted by continuously checking your email or social media accounts. Just the other day my family and I were at a restaurant and everyone was on a device. My wife on her phone and my 2 daughters on tablets. I personally was checking my email on a Friday night like if it was that important. It is amazing how many people are the same when getting together to share quality time together.
As of today, I am making a commitment to be more aware of being present when I am with family, friends and professional peers. When I meet with someone I will try to give them my undivided attention and really be PRESENT. When working on a particular project or task, I will make it an effort to give it my full attention. The key here is to be intentional and giving people more of YOU.
I think if we institute being more present at our meetings, lunches and family outings we will benefit in our relationships. We will also be better listeners and that is something that is very noticeable and a rare quality we find in people these days. I am interested in what other people think about this notion of being present and please contact me if you have any suggestions or recommendations at firstname.lastname@example.org
I have over 10 years of experience in the software business. I am interested in the areas of technology and accounting. I graduated from the University of Notre Dame and hold an MBA from Barry Univerisity.