{"id":6906,"date":"2014-05-14T10:00:00","date_gmt":"2014-05-14T14:00:00","guid":{"rendered":"https:\/\/www.wework.com\/creator\/?p=6906"},"modified":"2020-04-03T18:01:16","modified_gmt":"2020-04-03T22:01:16","slug":"3-mistakes-stall-revenue-startups-avoid","status":"publish","type":"post","link":"https:\/\/www.wework.com\/ideas\/professional-development\/3-mistakes-stall-revenue-startups-avoid","title":{"rendered":"Three mistakes that stall revenue for startups and how to avoid them"},"content":{"rendered":"

We\u2019d all like to see that swooping, hockey stick incline in revenue when we\u2019re ramping up our startups.<\/p>\n

But more often than not, the hockey stick breaks, and revenue stalls at some point in the growth process. This trend is a daunting reality for startup founders, and one that they would obviously like to avoid.<\/p>\n

We\u2019ve identified the common mistakes that cause tension on that hockey stick growth until it inevitably snaps \u2014 and how to avoid making them.<\/p>\n

You don\u2019t understand your total addressable market.<\/b><\/h3>\n

Do not mistake early adopters for the majority.<\/p>\n

The first people who use your product are typically aggressive users of technology, who make conscious efforts to stay ahead of the crowd. This automatically makes them different than the average user in your total addressable market.<\/p>\n

You want to get past the early adopters, to the \u201cpragmatists in pain\u201d. This population, as Geoffrey Moore describes in his sales staple, Crossing the Chasm<\/a>, <\/i>is made up of buyers who are stuck with a business problem, and they\u2019re willing to try something new to fix it. They may not seek you out like the early adopters, but if you can connect with them on the problem they\u2019re facing and present the obvious solution in what you\u2019re offering, they will likely give it a try.<\/p>\n

\u201cMost companies are not specific enough in their customer targeting,\u201d said Aaron Ross in an interview with Inc. Magazine<\/a>. \u201cYou want to be a big fish in a small pond.\u201d<\/p>\n

Finding and understanding these small ponds, rather than allowing your early adopters to define your market, is critical. If you ramp based on growth with the early adopters, before \u201ccrossing the chasm\u201d to the \u201cpragmatists in pain\u201d, your market will dry up quickly and that hockey stick will snap.<\/p>\n

But don\u2019t stop there.<\/b><\/h3>\n

Keep testing new markets to identify as many small ponds as possible. Do your research, test, and run with it when you find the perfect fit.<\/p>\n

You don\u2019t have a repeatable lead generation process.<\/b><\/h3>\n

Lead generation should run like a marathon \u2014 not interval sprints. A steady, rhythmic process is essential in filling the pipeline and avoiding a sudden dry well.<\/p>\n

You\u2019ll need a combination of inbound and outbound efforts, with an awareness that not all leads are equal.<\/p>\n

Your business should skew towards one side, depending on your target audience. If your product costs less than $300 a month, you should not be making outbound calls in 99% of cases. Conversely, if you\u2019re only targeting large enterprises, you should be using a mix of direct outreach and content. Social media and blogging are great, but until you\u2019re seeing proven ROI, don\u2019t depend too heavily on these types of leads.<\/p>\n

Ross provides a handy infographic<\/a> on his Predictable Revenue blog, illustrating the efficiency of different generation methods. His calculations place outbound leads at the top and social media at the very bottom.<\/p>\n

Systemizing your lead generation process will make everything easier down the line, from predicting revenue to making hires. Activate and master the programs you\u2019ll use in your lead generation process as soon as possible.<\/p>\n

Your board tells you to keep hiring\u2026and you do.<\/b><\/h3>\n

There\u2019s an unfortunate attitude amongst investors that more bodies equals more money.<\/p>\n

But ramping up too quickly is the ultimate downfall of most startups. Both founders and investors tend to jump the gun at the first sign of success, but a core network and early adopters often create inflated results at this stage. This misguided sense of confidence leads to unwarranted acceleration \u2014 working the hockey stick too hard, too fast.<\/p>\n

Then the network dries up, and the early adopters become distracted by something even newer. You\u2019re left with too many people and not enough business to go around.<\/p>\n

Another problem is that you\u2019ve yet to perfect your hiring profile. When you haven\u2019t been selling for long, it\u2019s difficult to identify who else can sell for you. You\u2019ll eventually need a system and process for interviewing that will increase the chances of a successful hire. Until you\u2019ve developed these, your hiring process is based on gut alone \u2014 which is rarely a reliable source.<\/p>\n

A perfect example of this setback comes from Ameet Ranadive in an article on Medium<\/a> where he describes a pivotal moment for his startup.<\/p>\n

\u201cHere were some really experienced investors who themselves had been CEOs of companies in the past, and they were telling us with a lot of confidence that we had an execution problem that would be fixed if we hired more salespeople,\u201d describes Ranadive.<\/em><\/p>\n

He goes on to explain how his startup\u2019s burn rate grew dramatically, it became difficult to pivot, and their cash was depleted \u2014 all because they took their investors\u2019 advice and hired more salespeople.<\/p>\n

Turns out, as is usually a case, Ranadive and his team didn\u2019t have an execution problem, like their investors predicted. They had a market problem. \u00a0\u201cWe really should have kept our team lean and focused on solving the market problem.\u201d<\/p>\n

\"hockeystick\"<\/a><\/p>\n

 <\/p>\n

The solution? Plan, run, adjust, repeat. <\/b><\/h3>\n

Avoiding these common pitfalls is going to require constant evaluation and re-evaluation. The \u201cPlan, Run, Adjust, Repeat\u201d model ensures that you\u2019re constantly observing your outcomes and adjusting your processes.<\/p>\n

Plan<\/strong>: Lay out a detailed game plan for lead generation and sales.<\/p>\n

Run:<\/strong>\u00a0Work hard to carry out your plan and track the results.<\/p>\n

Adjust:<\/strong>\u00a0Take the results into account when re-evaluating your plan and adjust accordingly.<\/p>\n

Repeat:<\/strong>\u00a0Run again!<\/p>\n

These adjustments will allow you to avoid defining your total addressable market by the first early adopters. It will help you gradually perfect your lead generation process until it\u2019s an efficient machine of potential. And, it will make it clearer when hiring is in fact, the right option.<\/p>\n

Has your startup faced the broken hockey stick? How did you fix it \u2014 or even better, avoid it altogether?<\/p>\n","protected":false},"excerpt":{"rendered":"

We\u2019d all like to see that swooping, hockey stick incline in revenue when we\u2019re ramping up our startups. But more often than not, the hockey stick breaks, and revenue stalls at some point in the growth process. This trend is a daunting reality for startup founders, and one that they would obviously like to avoid. […]<\/p>\n","protected":false},"author":1160,"featured_media":6949,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[43902],"tags":[],"class_list":["post-6906","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-professional-development"],"acf":[],"yoast_head":"\nThree mistakes that stall revenue for startups and how to avoid them<\/title>\n<meta name=\"description\" content=\"We\u2019d all like to see that swooping, hockey stick incline in revenue when we\u2019re ramping up our startups. 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